Avoiding conflicts of interest - AIFMD Provision: Difference between revisions

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===Paragraph 21.4, {{tag|AIFMD}}===
{{aifmdanat|21.4}}
{{aifmdquote|{{AIFMD 21.4}}|21.4}}
Distinguish between a full-blown {{aifmdprov|depositary}} under AIFMD and a {{aifmdprov|depositary lite}}. Most {{aifmdprov|prime brokers}} - especially those domiciled outside the [[EU]] - will be only depo-lites, to which this regime does not appear to apply.
 
{{anat|AIFMD}}

Latest revision as of 16:54, 2 November 2018

AIFMD Anatomy™


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In a Nutshell Section 21.4:

21(4): Conflict management: To avoid conflicts between AIFM, AIF and investors:

(a) AIFM can't be a depositary
(b) a Prime Broker to an AIF can't be a depositary unless appropriate Chinese walls and conflict management processes are in place; however it may delegate of custody tasks as per 21(11) (and 21(8);

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Full text
This is an unoffical transcription, may be wrong, buggered up, out of date etc. You should Google the original.

21(4). In order to avoid conflicts of interest between the depositary, the AIFM and/or the AIF and/or its investors:

(a) an AIFM shall not act as depositary;
(b) a prime broker acting as counterparty to an AIF shall not act as depositary for that AIF, unless it has functionally and hierarchically separated the performance of its depositary functions from its tasks as prime broker and the potential conflicts of interest are properly identified, managed, monitored and disclosed to the investors of the AIF. Delegation by the depositary to such prime broker of its custody tasks in accordance with paragraph 21.11 is allowed if the relevant conditions are met.

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Directive 2011/61/EU (EUR Lex) | Implementing regulation 231/2013 (EUR Lex)
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directive - 21 (depositary) | 21(4) (conflict management) | 21(8) (custody function) | 21(11) (custody delegation) | 21(12) (liability for loss of assets) | 21(13) (discharge of liability on delegation) | 21(14) (discharge of liability for Non-EU subcustodians) | 36 (depo-lite) | 36(1)
implementing regulation DR20 (Due diligence when appointing counterparties and prime brokers) | DR76 (objective reason) | DR89 (Safekeeping duties with regard to assets held in custody) | DR91 (reporting obligations for prime brokers) | DR98 (due diligence) | DR99 (segregation obligation) | DR100 (Loss of custody asset) |
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Distinguish between a full-blown depositary under AIFMD and a depositary lite. Most prime brokers - especially those domiciled outside the EU - will be only depo-lites, to which this regime does not appear to apply.