Delegation of depositary functions - UCITS V Provision

According to recital 15 of the level 2 delegated regulations under UCITS V (makes you weep, doesn't it) “when delegating safekeeping functions to a third party in accordance with Article Template:Ucitsprov of 2009/65/EC (EUR Lex), the Template:Ucitsprov is required to implement and apply an appropriate and documented procedure to ensure that the delegate complies with the requirements of Article Template:Ucitsprov of that Directive at all times. In order to ensure a sufficient level of protection of assets, it is necessary to set out certain principles that should be applied in relation to the delegation of safekeeping functions.”

22a - delegation of depositary functions

22a(1) -

22a(2) -

22a(3) -

22a(4) -

Article

1. REDIRECT template:ucitsprov, 91|EU (91|EU_22a|view template)

{{2014|91|EU Article 22a}}

Article 13 level 2 delegated regulations under UCITS V

Safekeeping duties with regard to assets held in custody

1. A Template:Ucitsprov shall be deemed to comply with the requirements set out in point (a) of Article 22(5) of 2009/65/EC (EUR Lex) with respect to financial instruments to be held in custody where it ensures that:

(a) the financial instruments are properly registered in accordance with Article Template:Ucitsprov(a)(ii) of 2009/65/EC (EUR Lex);

(b) records and segregated accounts are maintained in a way that ensures their accuracy, and in particular record the correspondence with the financial instruments and cash held for UCITS;

(c) reconciliations are conducted on a regular basis between the Template:Ucitsprov’s internal accounts and records and those of any third party to whom safekeeping has been delegated in accordance with Article Template:Ucitsprov of 2009/65/EC (EUR Lex);

(d) due care is exercised in relation to the financial instruments held in custody in order to ensure a high standard of investor protection;

(e) all relevant custody risks throughout the custody chain are assessed and monitored and the management company or the investment company is informed of any material risk identified;

(f) adequate organisational arrangements are introduced to minimise the risk of loss or diminution of the financial instruments, or of rights in connection with those financial instruments as a result of fraud, poor administration, inadequate registering or negligence;

(g) the UCITS’s ownership right or the ownership right of the management company acting on behalf of the UCITS over the assets is verified.

2. Where a depositary has delegated its safekeeping functions, with regard to assets held in custody, to a third party in accordance with Article 22a of 2009/65/EC (EUR Lex), it shall remain subject to the requirements of points (b) to (e) of paragraph 1 of this Article. The depositary shall also ensure that the third party complies with the requirements of points (b) to (g) of paragraph 1 of this Article.

UCITS Anatomy

This is an article about undertakings for collective investment in transferable securities directive (UCITS).

Resources: UCITS IV (2009/65/EC (EUR Lex)) | UCITS V (2014/91/EU (EUR Lex)) | ESMA Guidance on UCITS | Depositary comparison under AIFMD and UCITS
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