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 *A “{{aifmdprov|depositary lite}}” to certain non-EU domiciled {{aifmdprov|AIF}}s who aren’t obliged to have a full-blown {{aifmdprov|depositary}}. The depo-lite regime, and the delegated safe-keeping regime, are different but in many respects quite similar things and it is easy to conflate them. A specialist will find you out if you do.
-===“[[Delegation]]” versus “sub-contracting”===
+{{delegation vs subcontract}}
-So this is a weird one. Delegation, according to a natural definition, means “to entrust (a task or responsibility) to another person, typically one who is less senior than oneself.”<ref>{{google2|Define|Delegation}}</ref>. A custodian ''delegating'' its safekeeping responsibility to a second custodian means (to the Jolly Contrarian, at any rate) that it will not be the first custodian that is looking after your assets, kind sir, but the second one. Your custody arrangement, and your claim, will be with the second custodian directly though, thanks to the ministrations of AIFMD, you may still have a pop at the first one if the second one proves to be a dolt.
-This accounts perfectly for delegation to a [[prime broker]].
-:“Hold on,” says the PB. “If your [[depositary]] holds the assets, then I can hardly [[rehypothecate]] them, can I, and we know how important [[rehypothecation]] is to my business model, don’t we?”
-:The [[Depositary]] shrugs. “So, I'll make you my sub-custodian,” he says, “re-hypothecate to your heart's content.”
-:“No can do, Depo,” says the PB. “I can only rehypothecate against indebtedness, and you don't owe me anything. And besides, as a sub-custodian I only see an omnibut account. I don't know who owns what. I have to have a direct contractual relationship with the fund. That's how the whole thing works.”
-Contrast that with a [[custodian]] who ''sub-contracts'' his responsibility to a [[sub-custodian]]. This is not a delegation in the same way: the [[custodian]] stays liable the whole time, whatever the [[sub-custodian]] does, and unless the contract says otherwise<fref>Okay, I grant you: this is a big ''unless''.</ref> the client has not [[privity|direct claim]] against the subcustodian at all.
 Yet AIFMD appears to conflate these two, especially in its chat about “where the law of a third country requires that certain financial instruments be held in custody by a local entity ...”. This is much more akin to a [[subcustodian]] arrangement.