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{{aifmdanat|21(8)|}} | |||
A fully authorised {{aifmdprov|AIFM}} must appoint a single {{aifmdprov|depositary}} for each {{aifmdprov|AIF}} it manages. See Article {{aifmdprov|21}}. | A fully authorised {{aifmdprov|AIFM}} must appoint a single {{aifmdprov|depositary}} for each {{aifmdprov|AIF}} it manages. See Article {{aifmdprov|21}}. | ||
===Functions=== | ===[[Depositary]]’s Functions=== | ||
The depositary may not be affiliated with the {{aifmdprov|AIFM}} and must be domiciled in the same jurisdiction. Its main roles are | The [[depositary]] may not be affiliated with the {{aifmdprov|AIFM}} and must be domiciled in the same jurisdiction. Its main roles are: | ||
*monitoring cashflows; | *monitoring cashflows; | ||
*providing safe-keeping of custodiable assets (i.e., being a {{aifmdprov|custodian}}); | *providing safe-keeping of custodiable assets (i.e., being a {{aifmdprov|custodian}}); | ||
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*ensuring the AIF’s receives consideration for the sale of its assets within the usual time limits; and | *ensuring the AIF’s receives consideration for the sale of its assets within the usual time limits; and | ||
*maintaining accurate records of the above. | *maintaining accurate records of the above. | ||
===[[Depositary]]’s 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 caused by [[force majeure]] which were unavoidable despite all [[reasonable]] efforts to the contrary. | |||
However, there are strict rules which make this liability less extensive than it seems. Note especially insolvency of a [[sub-custodian]] is not covered. | |||
===Depositaries delegating to [[prime broker]]s=== | |||
A [[prime broker]] to an {{aifmdprov|AIF}} ''could'' be its depositary, but for a bunch of reasons would most likely not be (for one thing, the depositary has to be domiciled in the same jurisdiction and the {{aifmdprov|AIF}}, and [[PB]]s tend to be domiciled in London, New York, Hong Kong etc, and not [[espievie]] jurisdictions; for another, there is an inherent conflict of interest between a depositary function and the [[margin lending]] relationship which is at the heart of what a PB does and how it makes money). | |||
That said, {{aifmdprov|depositaries}} can ''delegate'' custody tasks to prime brokers provided that they meet certain conditions: | |||
{{aifmddepositarydelegation}} | {{aifmddepositarydelegation}} | ||
====Discharge of {{aifmdprov|depositary}}'s strict liability==== | ====Discharge of {{aifmdprov|depositary}}'s strict liability==== | ||
Upon delegation the {{aifmdprov|depositary}} remains strictly liable for loss caused by the sub-custodian. The depositary may discharge its liability if it can prove that: | Upon delegation the {{aifmdprov|depositary}} remains strictly liable for loss caused by the sub-custodian. The depositary may discharge its liability if it can prove that: | ||
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The following will be deemed to be objective reasons: | The following will be deemed to be objective reasons: | ||
{{sa}} | |||
*The {{aifmdprov|depo-lite}} regime which is applicable only to {{aifmdprov|Non-EU AIF}}s marketed on a private placement basis to professional investors (especially Article {{aifmdprov|36}}. | |||
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