Delegation of depositary functions - UCITS V Provision: Difference between revisions

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-{{ucitssnap|22(a)|UCITS}}
+{{ucits5anat|22a}}''See also {{ucits5prov|liability for delegation}} of safekeeping under Art {{ucits5prov|24}} of {{t|UCITS V}} and the scintillating discussion of what counts as an “external event”''<br>
+According to recital 15 of the [http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2016.078.01.0011.01.ENG level 2 delegated regulations] under {{tag|UCITS V}} (makes you weep, doesn't it) “''when delegating safekeeping functions to a third party in accordance with Article {{ucits5prov|22a}} of {{eudirective|2009|65|EC}}, the {{ucits5prov|depositary}} is required to implement and apply an appropriate and documented procedure to ensure that the delegate complies with the requirements of Article  {{ucits5prov|22a(3)}} 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.''”
+{{ucits delegaton versus aifmd delegation}}
+===Article 13 [http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2016.078.01.0011.01.ENG level 2 delegated regulations] under {{tag|UCITS V}} ===
+====Safekeeping duties with regard to assets held in custody====
+.   A {{ucits5prov|depositary}} shall be deemed to comply with the requirements set out in point (a) of Article 22(5) of {{eudirective|2009|65|EC}} 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 {{ucits5prov|22(5)}}(a)(ii) of {{eudirective|2009|65|EC}};
+:(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 {{ucits5prov|depositary}}’s internal accounts and records and those of any third party to whom safekeeping has been delegated in accordance with Article {{ucits5prov|22a}} of {{eudirective|2009|65|EC}};
+:(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.
+.   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 {{eudirective|2009|65|EC}}, 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.
+===The carve out for local regulations===
+Is a lot narrower than it would seem to be, and seems on its face to preclude delegating to a local custodian in a jurisdiction where there is no market practice to fully segregate custodian assets from client assets. Perhaps the EU boxwallahs thought such a jurisdiction was too inherently dangerous for UCITS funds to invest in at all. but at any rate the carve-out literally only applies to the lack of effective prudential regulation and capitalisation, rather than the wider segregation criteria:
+:''Notwithstanding point (b)(i) [i.e., prudent regulation and capitalisation]'' of the first subparagraph, where the law of a third country requires that certain financial instruments be held in custody by a local entity and no local entities satisfy the delegation requirements laid down in that point [i.e., prudent regulation and capitalisation] ...''
+{{sa}}
+*[[UCITS depositary]]
+*[[AIFMD depositary]]