Segregation obligation - AIFMD Provision

AIFMD Anatomy™ →Go uptown Directive 2011/61/EU (EUR Lex) | Implementing regulation 231/2013 (EUR Lex) Navigation directive - 21 (depositary) | 21(4) (conflict management) | 21(8) (custody function) | 21(11) (custody delegation) | 21(12) (liability for loss of assets) | 21(13) (discharge of liability on delegation) | 21(14) (discharge of liability for Non-EU subcustodians) | 36 (depo-lite) | 36(1) implementing regulation DR20 (Due diligence when appointing counterparties and prime brokers) | DR76 (objective reason) | DR89 (Safekeeping duties with regard to assets held in custody) | DR91 (reporting obligations for prime brokers) | DR98 (due diligence) | DR99 (segregation obligation) | DR100 (Loss of custody asset) | Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Delegated Regulation DR99 relates to the depositary’s obligation to segregate custody assets.

In the main DR99 is of scant interest to prime brokers, though the depositary might insist on copying screeds of the regulation out and popping it into the custody delegation contract. This is an understandable instinct, but a misguided one which you must all the same resist, for the simple reason that regulations change. Even EU regulations. By all means refer to the obligations under DR99 as in force from time to time, or something similarly laborious, as long as it merely tracks the actual regulatory requirement that impacts what the delegate must do, for the time being, not what it was eight years ago when you signed its stupid contract.

An assiduous pedant might also argue that DR99 doesn’t actually impose obligations, per se, on the delegate sub-custodian, but only on the depositary, so the delegate should not have to give these reps, or agree to be subject to these regulations at all.

You have the chance to do the whole world a favour here, by not being that guy.