Template:Delegate vs subcontractor: Difference between revisions

Template:Delegate vs subcontractor (view source)

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 ===[[Delegate]] versus [[Sub-contract|sub-contractor]]===
-''Be warned: There are cleverer people in the world than your correspondent who have challenged this view.'' Let’s call it a ''dissenting judgment'' therefore. Hell, I am a Contrarian aren't I?
+''Be warned: There are people more learned in the ways of the world than [[your correspondent]] who do not share this view.'' Let’s call it a ''dissenting judgment'' therefore.
 ====The difference betwixt====
-Delegation, according to a natural definition, means “''to entrust (a task or responsibility) to another person, typically one who is less senior than oneself.''”<ref>{{google2|Define|Delegation}}</ref>. Being ''[[Delegation|delegated]]'' a [[custody]] function — agreeing to act as main [[custodian]] to a [[fund]] on behalf of the [[depositary]] whom the [[fund]] has appointed to carry out that function is a different thing from being appointed as a [[sub-custodian]].
+Delegation, according to a natural definition, means “''to entrust (a task or responsibility) to another person, typically one who is less senior than oneself.''”<ref>{{google2|Define|Delegation}}</ref>.
-*'''Delegate''': A delegating [[depositary]] won't hold the assets ''at all'': it will pass that responsibility to the [[prime broker]], who will record the end client’s interests in the custody assets directly in its books and records. It may have to report this all to the depositary, but the depositary will not carry record of the client’s assets in its own books and records.
+:''Dear Sir/Madam: Let me introduce you to my glamorous assistant, Igor, who will carry out this work for you under my supervision. while your day-to-day interaction will be with Igor, I remain your loyal servant, and shall be answerable to you for Igor’s timely and competent performance.''
-*'''Subcontractor''': A [[subcustodian]] is an entity who stands behind the main custodian and holds the [[custodian]]’s client assets in a single [[omnibus]] account, in the [[custodian]]’s name but marked as "client assets" and therefore unavailable for the prime broker’s creditors. A [[sub-custodian]] won’t know who the custodian’s clients are, let alone which assets are attributable to which clients, much less have a contractual relationship with those clients, and won’t be in a position to [[rehypothecate]] any assets it holds.
+Being ''[[Delegation|delegated]]'' a [[custody]] function — agreeing to act, as {{t|AIFMD}} puts it “as the first level of a [[custody]] chain”, as main [[custodian]] to a [[fund]] ''[[on behalf of]]'' the [[depositary]] whom the [[fund]] has appointed to carry out that function is, in our view, a quite different thing from being appointed by the depositary as a [[sub-custodian]].
+*'''Delegate''': A delegating [[depositary]] won't hold the assets ''at all'': it will pass that responsibility to the [[delegate]] — usually a [[prime broker]] with designs on a spot of [[rehypothecation]] — who will record the end-client’s interests in the custody assets directly in its books and records — that is, it will be “at the first level of the [[custody chain]]”. The delegate may well have to report this all to the [[depositary]], but the [[depositary]] will not carry the “golden source” record of the client’s assets in its own books and records. It might copy the delegate’s report, but the delegate’s records are what count.
+*'''Subcontractor''': A [[subcustodian]] stands behind the “first level” custodian and holds the [[custodian]]’s client assets in a single [[omnibus]] account, in the [[custodian]]’s name but marked as "client assets" and therefore unavailable for the [[main custodian]]’s creditors. A [[sub-custodian]] won’t know who the custodian’s individual clients even are, let alone which assets in its omnibus account are attributable to which of those clients, much less have a direct interpersonal or contractual relationship with those clients. A subcustodian won’t be in a position to [[rehypothecate]] any assets it holds — hence it ought to be happy enough signing a [[no lien letter]].
 '''Careful though''': Both CASS  and {{tag|AIFMD}}/{{tag|UCITS}} are a little sloppy in their use of the word “[[delegation]]”, using it on occasion to mean something that is probably meant to refer to a [[subcontract]]ing arrangement<ref>See, for example {{tag|CASS}} {{cassprov|6.3.4}}, and the flush text after {{tag|AIFMD}} Article {{aifmdprov|21(11)}}(d).</ref>. {{tag|CASS}} only really talks about [[subcontract]]s, though {{tag|AIFMD}} and {{tag|UCITS}} deal with true [[delegation]] ''and'' [[subcontract]]s.