Template:Nutshell AIFMD DR89: Difference between revisions
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Art. {{aifmdprov|DR89}} '''{{aifmdprov|Safekeeping duties with regard to assets held in custody}}''' <br> | Art. {{aifmdprov|DR89}} '''{{aifmdprov|Safekeeping duties with regard to assets held in custody}}''' <br> | ||
{{aifmdprov|DR89(1)}}. To comply with the obligations in Art. {{aifmdprov|21(8)}}(a) of {{t|AIFMD}} with respect to {{aifmdprov|financial instrument}}s to be held in custody, a {{aifmdprov|depositary}} must at least: <br> | {{aifmdprov|DR89(1)}}. To comply with the obligations in Art. {{aifmdprov|21(8)}}(a) of {{t|AIFMD}} with respect to {{aifmdprov|financial instrument}}s to be held in custody, a {{aifmdprov|depositary}} must at least ensure that someone: <br> | ||
:(a) properly | :(a) properly registers the {{aifmdprov|financial instrument}}s per Art. {{aifmdprov|21(8)}}(a)(ii); | ||
:(b) accurately | :(b) accurately maintains accounts to record the {{aifmdprov|financial instrument}}s and cash held for {{aifmdprov|AIFM}}s; | ||
:(c) regularly | :(c) regularly reconciles the {{aifmdprov|depositary}}’s own records with sub-custodian it appoints per Art. {{aifmdprov|21(11)}}; | ||
:(d) | :(d) takes due care over custody {{aifmdprov|financial instrument}}s to ensure a high standard of investor protection; | ||
:(e) | :(e) assesses and monitors all risks throughout the custody chain and inform the {{aifmdprov|AIFM}} of material ones; | ||
:(f) | :(f) minimises the risk of loss of or diminution to {{aifmdprov|financial instrument}}s through fraud or negligence; | ||
:(g) | :(g) verifies the {{aifmdprov|AIF}}’s ownership right over the assets. | ||
{{aifmdprov|DR89(2)}}. | {{aifmdprov|DR89(2)}}. A {{aifmdprov|depositary}} who delegates custody functions under Art. {{aifmdprov|21(11)}} of {{t|AIFMD}} is still subject to {{aifmdprov|DR89(1)}}(b) to (e) and must ensure that the third party complies with Art. {{aifmdprov|DR89(1)}}(b) to (g) and the segregation obligations in Art. {{aifmdprov|DR99}}. | ||
{{aifmdprov|DR89(3)}}. A {{aifmdprov|depositary}}’s safe-keeping duties in Art. {{aifmdprov|DR89(1)}} and {{aifmdprov|DR89(2)}} apply on a look-through basis to underlying assets held by financial or legal structures controlled directly or indirectly by the {{aifmdprov|AIF}} or its {{aifmdprov|AIFM}}. | {{aifmdprov|DR89(3)}}. A {{aifmdprov|depositary}}’s safe-keeping duties in Art. {{aifmdprov|DR89(1)}} and {{aifmdprov|DR89(2)}} apply on a look-through basis to underlying assets held by financial or legal structures controlled directly or indirectly by the {{aifmdprov|AIF}} or its {{aifmdprov|AIFM}}. | ||
Art.{{aifmdprov|DR89(1)}} will not apply to [[fund of funds]] structures or [[master-feeder structure]]s where the underlying funds have their own {{aifmdprov|depositary}} who is responsible for custody of their assets. | Art.{{aifmdprov|DR89(1)}} will not apply to [[fund of funds]] structures or [[master-feeder structure]]s where the underlying funds have their own {{aifmdprov|depositary}} who is responsible for custody of their assets. | ||
Revision as of 10:52, 21 December 2018
Art. DR89 Safekeeping duties with regard to assets held in custody
DR89(1). To comply with the obligations in Art. 21(8)(a) of AIFMD with respect to financial instruments to be held in custody, a depositary must at least ensure that someone:
- (a) properly registers the financial instruments per Art. 21(8)(a)(ii);
- (b) accurately maintains accounts to record the financial instruments and cash held for AIFMs;
- (c) regularly reconciles the depositary’s own records with sub-custodian it appoints per Art. 21(11);
- (d) takes due care over custody financial instruments to ensure a high standard of investor protection;
- (e) assesses and monitors all risks throughout the custody chain and inform the AIFM of material ones;
- (f) minimises the risk of loss of or diminution to financial instruments through fraud or negligence;
- (g) verifies the AIF’s ownership right over the assets.
DR89(2). A depositary who delegates custody functions under Art. 21(11) of AIFMD is still subject to DR89(1)(b) to (e) and must ensure that the third party complies with Art. DR89(1)(b) to (g) and the segregation obligations in Art. DR99.
DR89(3). A depositary’s safe-keeping duties in Art. DR89(1) and DR89(2) apply on a look-through basis to underlying assets held by financial or legal structures controlled directly or indirectly by the AIF or its AIFM.
Art.DR89(1) will not apply to fund of funds structures or master-feeder structures where the underlying funds have their own depositary who is responsible for custody of their assets.