Template:Nutshell AIFMD DR89

Article DR89 Safekeeping duties with regard to assets held in custody

1. In order to comply with the obligations laid down in point (a) of Article 21(8) of AIFMD with respect to financial instruments to be held in custody, a depositary shall ensure at least that:

(a) the financial instruments are properly registered in accordance with Article 21(8)(a)(ii) of AIFMD;

(b) records and accounts are accurately maintained to record the correspondence with the financial instruments and cash held for AIFMs;

(c) reconciliations are regularly conducted between the depositary’s internal records and those of any third party sub-custodian delegated under Article 21(11) of AIFMD;

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

(e) all risks throughout the custody chain are assessed and monitored and the AIFM informed of material risks;

(f) arrangements are made to minimise the risk of loss of or diminution to financial instruments through fraud, poor administration, inadequate registering or negligence;

(g) the AIFM’s ownership right over the assets is verified.

2. Where a depositary has delegated its custody functions under Article 21(11) of AIFMD, it shall remain subject to the requirements of points (b) to (e) of paragraph 1 of this Article. It shall also ensure that the third party complies with the requirements of points (b) to (g) of paragraph 1 of this Article and the segregation obligations laid down in Article DR99.

3. A depositary’s safe-keeping duties as referred to in paragraphs 1 and 2 shall apply on a look-through basis to underlying assets held by financial and, as the case may be, or legal structures controlled directly or indirectly by the AIFM or the AIFM acting on behalf of the AIFM.

The requirement referred to in the first subparagraph shall not apply to fund of funds structures or master-feeder structures where the underlying funds have a depositary which keeps in custody the assets of these funds.