Avoiding conflicts of interest - AIFMD Provision

AIFMD Anatomy™ →Go uptown {{{2}}} 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tasks as per 21(11) (and 21(8); view template Full text This is an unoffical transcription, may be wrong, buggered up, out of date etc.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. view template Directive 2011/61/EU (EUR Lex) | Implementing regulation 231/2013 (EUR Lex) Navigation 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) | Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

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.