Depositary's obligations re safekeeping of assets - AIFMD Provision: Difference between revisions

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Depositary's obligations re safekeeping of assets - AIFMD Provision (view source)

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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.
===Delegation===
 
You will see the depositary role is not really suitable for a prime broker. the depositary may delegate some of these functions however:
{{aifmddepositarydelegation}}
A prime broker may act as:
*{{aifmdprov|custodian}}, but will have certain conditions to that appointment;
*"{{aifmdprov|Depositary lite}}" to certain non-EU domiciled {{aifmdprov|AIF}}s
Depositary can only delegate in certain circumstances:
*It must have an "objective reason".
*it must exercise due skill, care and diligence in the selection, appointment and ongoing monitoring of the {{aifmdprov|sub-custodian}};
*{{aifmdprov|sub-custodian}} must:
**have structures and expertise proportionate to the nature, scale and complexity of the assets of the AIF
**be subject, in acting as a custodian, to effective prudential regulation and supervision in its local jurisdiction and periodic external audits;
**segregate {{aifmdprov|AIF}} assets from its own and the {{aifmdprov|depositary}}'s assets
**reuse the AIF’s assets without the AIF's express consent.
===Liability===
===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 casued by [[force majeure]] which were unavoidable despite all reasonable efforts to the contrary. However there are strict rules which make it less extensive than it seems. Note especially insolvency of a sub-custodian is not covered.  
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 casued by [[force majeure]] which were unavoidable despite all reasonable efforts to the contrary. However there are strict rules which make it less extensive than it seems. Note especially insolvency of a sub-custodian is not covered.  
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