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21(13) - AIFMD Provision: Difference between revisions
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{{aifmdanat|21(13)}} | {{aifmdanat|21(13)}} | ||
The great question of who should be liable for third party {{aifmdprov|sub-custodian}}s. The {{aifmdprov|depositary}} will say, | The great question of who should be liable for third party {{aifmdprov|sub-custodian}}s. The {{aifmdprov|depositary}} will say, “well, by dint of {{aifmdprov|21(12)}}, I am stuck with more or less absolute liability for loss of the {{aifmdprov|AIF}}’s assets wherever they may be, unless I can get my delegate to accept liability for them.” | ||
The delegate says, “okay, I can probably live with that for my own affiliates, but what about unaffiliated {{aifmdprov|subcustodian}}s in weirdo jurisdictions? All kinds of crazy stuff can go on there.” The delegate may start mumbling about capital chargers for liability to third party entities but is unlikely to be specific because it isn't clear whether there would be any, and no-one wants to have to enter the netherworld of dialog with the financial reporting folk, to find out. One is never the wiser after a conversation with financial reporting. | The delegate will says, “okay, I can probably live with that for my own affiliates, but what about unaffiliated {{aifmdprov|subcustodian}}s in weirdo jurisdictions? All kinds of crazy stuff can go on there.” The delegate may start mumbling about capital chargers for liability to third party entities but is unlikely to be specific because it isn't clear whether there would be any, and no-one wants to have to enter the netherworld of dialog with the financial reporting folk, to find out. One is never the wiser after a conversation with financial reporting. | ||
The {{aifmdprov|depositary}} says, “well, do your freaking job would you? You are meant to be a professional {{aifmdprov|custodian}}. You are meant to be able to control these things. It is your sub-custody network. Put some controls in place. At least you have the contractual [[privity]] to exercise controls. I don’t even have that.” | The {{aifmdprov|depositary}} says, “well, do your freaking job would you? You are meant to be a professional {{aifmdprov|custodian}}. You are meant to be able to control these things. It is your sub-custody network. Put some controls in place. At least you have the contractual [[privity]] to exercise controls. I don’t even have that.” | ||