Depositary lite - AIFMD Provision: Difference between revisions

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-{{aifmdanat|36}}===The Brexit bugger’s muddle===
+{{aifmdanat|36}}
-If you wanted an example of the bugger’s muddle that [[Brexit]] created, look no further than the depositary lite regime under AIFMD. Already, beyond a shade of doubt, a bugger’s muddle; now some kind of poan dimensional bugger’s muddle.
+For EU AIFMs that market non-EU AIFs to professional investors in the EU, AIFMD does away with the need for the fund to have a full-blown [[Depositary - AIFMD Provision|depositary]], but you do need to monitor cash flows, look after [[custody]] assets and manage [[subscription|subscriptions]] and [[redemption|redemptions]].
-So the UK has left the EU, but has adopted its directives into UK law, while EU regulations were already part of municipal UK law, were the law anyway, so didn’t need to be specifically adopted. AIFMD, like many financial services regulations, is composed of a directive, which is supported by regulatory technical standards imposed by regulation. I’m sure there was a good reason for this, but I don’t have the energy to find out what it was.
+These three functions don’t have to be carried out by the same dude. An administrator might handle [[subscription]]s and [[redemption]]s and cashflow monitoring, and a [[prime broker]] might handle the [[custody]] function. When a prime broker does this, we call this a “depositary lite”, or “depo-lite” function. Unlike a full-blown {{aifmdprov|depositary}}, a depo-lite does ''not'' have strict liability for loss of a {{aifmdprov|Non-EU AIF}}’s  assets, but it still has to give some commitments, and — it being the labyrinthine European Union and everything — these are described in a convoluted way, involving
-Now: the depo lite regime is designed for ''innie'' fund managers — those resident ''inside'' the EU — marketing ''outie'' funds — funds incorporated ''outside'' the EU — to ''innie'' investors, resident in the EU.
+{{Quote|“carrying out the Article 21(8)(a) ''[custody]'' function, as it applies to an entity appointed under Article 38(1)(a) ''[as a depo-lite]'' and in compliance with the technical standards laid out in Article 88 - 91 of the delegated regulation. ''[reporting and safekeeping obligations]''”}}
+This is drastically tiresome, and made only more so by the United Kingdom’s unexpected and lamentable decision to leave the European Union, while trying its best to stay subject to its financial services regulations. as to which:
+===== The Brexit bugger’s muddle =====
+If you wanted an example of the bugger’s muddle that [[Brexit]] created, look no further than the depositary lite regime under AIFMD. Already, beyond a shade of doubt, a bugger’s muddle; now some kind of pan-dimensional bugger’s muddle.
+So the UK has left the EU, but has adopted its ''directives'' into UK law, while EU ''regulations'', which were automatically incorporated into municipal UK law, were the law anyway, so didn’t need to be specifically adopted.
+AIFMD, like many financial services regulations, is composed of a directive, but is supported by regulatory technical standards imposed by regulation. I’m sure there was a good reason for this, but I don’t have the energy to find out what it was.
+Now: AIFMD’s depositary lite regime is designed for ''innie'' fund managers — those resident ''inside'' the EU — marketing ''outie'' funds — funds incorporated ''outside'' the EU — to ''innie'' investors, resident in the EU.
 UK, of course, used to be an innie, and the idea is, as nearly as possible, for all the damage Brexit has done, we remain an innie afterwards, with harmonised alternative fund management regulation. But there’s a little gap: a UK domiciled fund is an ''innie'' for UK AIFMD, but an ''outie'' for EU AIFMD. But conversely, an fund domiciled in the EU is an ''innie'' for the EU, but ''also an innie'' for the UK, because a “third country” AIF means one resident outside the EEA.
 ==Depo-lite in general==
-'''Cut-down depositary function''': Non-{{tag|EU}} [[AIF]]s marketed by an {{tag|EU}} [[AIFM]] to EU investors through [[private placement]] — call them {{aifmdprov|Non-EU AIF}}s — have to comply with everything else in {{tag|AIFMD}} ''but they don’t have to have a {{aifmdprov|depositary}}''.
+'''Liability''':
-But {{aifmdprov|Non-EU AIF}}s ''do'' have to have someone to monitor cash flows, look after [[custody]] assets and manage [[subscription|subscriptions]] and [[redemption|redemptions]] of fund units, functions which are carried out by a {{aifmdprov|depositary}} in a full-blown [[AIF]]. These three functions don’t have to be carried out by the same dude. An administrator might handle [[subscription]]s and [[redemption]]s and cashflow monitoring, and a [[prime broker]] might handle the [[custody]] function.
-'''Liability''': Unlike in a full-blown {{aifmdprov|depositary}}, a depo-lite does ''not'' have strict liability for loss of a {{aifmdprov|Non-EU AIF}}’s  assets.
 For all these reasons this regime for  {{aifmdprov|Non-EU AIF}}s is referred to as “{{aifmdprov|Depositary-Lite}}” or “{{aifmdprov|Depo-Lite}}” regime.