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| See also Article {{aifmdprov|DR100}} of the delegated regulation for even more detail. | | See also Article {{aifmdprov|DR100}} of the delegated regulation for even more detail. |
| | | {{External event beyond its reasonable control}} |
| ===“[[External event beyond its reasonable control]]”===
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| So the unexpected insolvency of a delegate or subcustodian is an event beyond the {{aifmdprov|depositary}}’s reasonable control, right? This was certainly the hopeful expectation of the European Bankiung Federation in its submissions to that effect of September 2013<ref>See [http://www.ebf-fbe.eu/uploads/documents/positions/FinMark/D1444E-2011_EBF_Response_to_ESMA_AIFMD_implementing_measures_consultation.pdf here].</ref>.
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| ''Wrong''. According to ESMA’s final 500-page bunker-busting advice from 2011<ref>Which you can find [https://www.esma.europa.eu/system/files_force/library/2015/11/2011_379.pdf here, at page 182].</ref>:
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| :''The {{aifmdprov|depositary}} will not be liable for the loss of financial instruments held in custody by itself or by a subcustodian if it can demonstrate that all the following conditions are met:
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| :''1. The event which led to the loss is not a result of an act or omission of the {{aifmdprov|depositary}} '''or one of its {{aifmdprov|subcustodian}}s''' to meet its obligations.
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| :''2. The event which led to the loss was beyond its reasonable control i.e. it could not have prevented its occurrence by reasonable efforts.
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| :''3. Despite rigorous and comprehensive [[due diligence]], it could not have prevented the loss.''
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| The [[omission]] of a {{aifmdprov|subcustodian}} to meet its obligations — albeit through its [[insolvency]] (and associated failures in internal segregation etc) is thus not an “external event beyond the reasonable control” of the {{aifmdprov|depositary}}.
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| {{sa}} | | {{sa}} |