Sub-custodian

A topic of some recent interest in light of AIFMD and UCITS V legislation. Under both regimes a single depositary must be appointed having strict liability for the safe keeping of assets.

Note though that being delegated a custody function is an altogether different thing to being a subcustodian.

A depositary who delegates its custody function won't hold the assets at all - it will pass that responsibility to the prime broker, who will record the end client's interests in the custody assets directly in its books and records.

It may in turn appoint a subcustodian who will hold all the prime broker's client assets in a single omnibus account, in the prime broker's name but marked as "client assets" and therefore unavailable for the prime broker's creditors.

See also

• Custodian
• Prime broker
• Depositary (AIFMD)
• Template:Ucitsprov (UCITS V)

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