Member News

Two EU regulations on UCITS/AIFMD asset segregation requirements for depositaries upon delegation

By Max WelbesLea Hungerbühler

On 12 July 2018, the European Commission adopted two delegated regulations supplementing the Alternative Investment Fund Managers Directive (AIFMD) and the Undertaking for Collective Investment in Transferable Securities Directive (UCITS) on the safekeeping of assets by depositaries and their delegates.

Their main purpose is to eliminate discrepancies among different national regulations.

The following aspects will be amended:

  • Introduction of additional factors to determine the required frequency of reconciliation of accounts and records between the depository and the third parties to whom safe-keeping functions have been delegated
  • Increased record keeping requirements concerning delegation of custody
  • Specification of the minimum content of contracts between depositories and the parties to whom custody has been delegated and clarification of rules regarding sub-delegation
  • Amendment of asset segregations rules applicable to custodians, in particular regarding the separation of omnibus accounts and the custodian’s own assets
  • Introduction of a requirement to seek legal advice from an independent party regarding the applicable foreign insolvency laws if custody of assets is delegated to an entity outside the EU

The new rules will be applicable as of spring 2020, unless the European Parliament or the European Council raise objections.

 If you wish to read the full text of the regulations, we invite you to click on this link.

Please do not hesitate to contact your trusted Loyens & Loeff adviser or any of our investment management and regulatory specialists to discuss how we can assist in analyzing the impact of the new regulations on your business.

Compliments of Loyens & Loeff, a member of the EACCNY