On 3 July 2009, the European Commission launched a public consultation on the UCITS depositary function. The consultation is part of a comprehensive review by the Commission of the existing European regulatory principles which are applicable to depositary functions.
The Commission is particularly interested in taking views and evidence on the following issues:
- Depositary’s duties. The consultation invites views on how depositary safe-keeping and supervisory duties should be better harmonised.
- Responsibility regime. The consultation invites views on how to improve UCITS investors’ protection if a depositary performs its duties improperly or if it becomes insolvent. The Commission also proposes that there should be additional requirements where assets are entrusted for safe-keeping through a network of sub-custodians.
- Organisational requirements. The consultation invites views on the introduction of rules on organisation and conflict of interests based on existing rules under the Markets in Financial Instruments Directive.
- Eligibility criteria and supervision. The Commission’s draft Directive on alternative investment fund managers proposes that depositaries should be credit institutions that are based, authorised and supervised in the EU. The consultation asks whether a similar approach should be adopted for UCITS depositaries and how supervisory rules might be strengthened.
The deadline for responses to the consultation is 15 September 2009.