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*{{aifmdprov|custodian}}, but will have certain conditions to that appointment; | *{{aifmdprov|custodian}}, but will have certain conditions to that appointment; | ||
*"{{aifmdprov|Depositary lite}}" to certain non-EU domiciled {{aifmdprov|AIF}}s | *"{{aifmdprov|Depositary lite}}" to certain non-EU domiciled {{aifmdprov|AIF}}s | ||
Depositary can only delegate in certain circumstances: | |||
*It must have an "objective reason". | |||
*it must exercise due skill, care and diligence in the selection, appointment and ongoing monitoring of the {{aifmdprov|sub-custodian}}; | |||
*{{aifmdprov|sub-custodian}} must: | |||
**have structures and expertise proportionate to the nature, scale and complexity of the assets of the AIF | |||
**be subject, in acting as a custodian, to effective prudential regulation and supervision in its local jurisdiction and periodic external audits; | |||
**segregate {{aifmdprov|AIF}} assets from its own and the {{aifmdprov|depositary}}'s assets | |||
**reuse the AIF’s assets without the AIF's express consent. | |||
===Liability=== | |||
The {{aifmdprov|depositary} has almost - eek - [[strict liability]] for the performance of its functions: if it loses an {{aifmdprov|AIF}}'s [[custody assets]], it must return identical financial instruments or the corresponding amount even if the instruments were lost by a [[sub-custodian]]. The {{aifmdprov|depositary}} will not be liable for losses casued by [[force majeure]] which were unavoidable despite all reasonable efforts to the contrary. However there are strict rules which make it less extensive than it seems. Note especially insolvency of a sub-custodian is not covered. | |||