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Depositary's obligations re safekeeping of assets - AIFMD Provision: Difference between revisions
Depositary's obligations re safekeeping of assets - AIFMD Provision (view source)
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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). | 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 | That said, {{aifmdprov|depositaries}} can ''delegate'' custody tasks to prime brokers provided that they meet certain conditions: | ||
{{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}}. | *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}}. | ||
{{ref}} | |||