Template:Delegate vs subcontractor: Difference between revisions
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===[[Delegate]] versus [[Sub-contract|sub-contractor]]=== | ===[[Delegate]] versus [[Sub-contract|sub-contractor]]=== | ||
''Be warned: There are | ''Be warned: There are people more learned in the ways of the world than [[your correspondent]] who do not share this view.'' Let’s call it a ''dissenting judgment'' therefore. | ||
====The difference betwixt==== | ====The difference betwixt==== | ||
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>. Being ''[[Delegation|delegated]]'' a [[custody]] function — agreeing to act as main [[custodian]] to a [[fund]] on behalf of the [[depositary]] whom the [[fund]] has appointed to carry out that function is a different thing from being appointed as a [[sub-custodian]]. | 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>. | ||
*'''Delegate''': A delegating [[depositary]] won't hold the assets ''at all'': it will pass that responsibility to the [[prime broker]] | :''Dear Sir/Madam: Let me introduce you to my glamorous assistant, Igor, who will carry out this work for you under my supervision. while your day-to-day interaction will be with Igor, I remain your loyal servant, and shall be answerable to you for Igor’s timely and competent performance.'' | ||
*'''Subcontractor''': A [[subcustodian]] | Being ''[[Delegation|delegated]]'' a [[custody]] function — agreeing to act, as {{t|AIFMD}} puts it “as the first level of a [[custody]] chain”, as main [[custodian]] to a [[fund]] ''[[on behalf of]]'' the [[depositary]] whom the [[fund]] has appointed to carry out that function is, in our view, a quite different thing from being appointed by the depositary as a [[sub-custodian]]. | ||
*'''Delegate''': A delegating [[depositary]] won't hold the assets ''at all'': it will pass that responsibility to the [[delegate]] — usually a [[prime broker]] with designs on a spot of [[rehypothecation]] — who will record the end-client’s interests in the custody assets directly in its books and records — that is, it will be “at the first level of the [[custody chain]]”. The delegate may well have to report this all to the [[depositary]], but the [[depositary]] will not carry the “golden source” record of the client’s assets in its own books and records. It might copy the delegate’s report, but the delegate’s records are what count. | |||
*'''Subcontractor''': A [[subcustodian]] stands behind the “first level” custodian and holds the [[custodian]]’s client assets in a single [[omnibus]] account, in the [[custodian]]’s name but marked as "client assets" and therefore unavailable for the [[main custodian]]’s creditors. A [[sub-custodian]] won’t know who the custodian’s individual clients even are, let alone which assets in its omnibus account are attributable to which of those clients, much less have a direct interpersonal or contractual relationship with those clients. A subcustodian won’t be in a position to [[rehypothecate]] any assets it holds — hence it ought to be happy enough signing a [[no lien letter]]. | |||
'''Careful though''': Both CASS and {{tag|AIFMD}}/{{tag|UCITS}} are a little sloppy in their use of the word “[[delegation]]”, using it on occasion to mean something that is probably meant to refer to a [[subcontract]]ing arrangement<ref>See, for example {{tag|CASS}} {{cassprov|6.3.4}}, and the flush text after {{tag|AIFMD}} Article {{aifmdprov|21(11)}}(d).</ref>. {{tag|CASS}} only really talks about [[subcontract]]s, though {{tag|AIFMD}} and {{tag|UCITS}} deal with true [[delegation]] ''and'' [[subcontract]]s. | '''Careful though''': Both CASS and {{tag|AIFMD}}/{{tag|UCITS}} are a little sloppy in their use of the word “[[delegation]]”, using it on occasion to mean something that is probably meant to refer to a [[subcontract]]ing arrangement<ref>See, for example {{tag|CASS}} {{cassprov|6.3.4}}, and the flush text after {{tag|AIFMD}} Article {{aifmdprov|21(11)}}(d).</ref>. {{tag|CASS}} only really talks about [[subcontract]]s, though {{tag|AIFMD}} and {{tag|UCITS}} deal with true [[delegation]] ''and'' [[subcontract]]s. |