BBA has responded to ESMA's consultation on possible implementing measures for the AIFMD. BBA's response concentrates on issues related to depositaries. It broadly supports ESMA's suggestions on what a contract with a depositary should include. It is more critical about some proposals relating to depositary functions. Specifically, it says a requirement to tell the depositary before opening a new cash account is impractical for all parties, and it would be difficult to implement (and ultimately unnecessary to impose) a requirement for subscription/redemption accounts to be opened at the depositary. It also suggests a method for deciding how often different types of reconciliation of cash flows should take place. On the part of the consultation that asks for views on whether depositaries could act as hubs for cash flow, BBA strongly supports ESMA's option 2, which it feels would present little difficulty given current market practice whereas the option that would turn the depositary into the hub with prescribed requirements and little flexibility would be impractical and fails to consider significant issues. On the question of safekeeping duties, BBA is concerned the proposals in some ways go further than the Level 1 Directive.  It does not support the proposal that the depositary should mirror all transactions in a position keeping record. It believes a depositary should verify ownership of assets where SPVs and subsidiaries are controlled by the relevant AIF but wants a consistent application of the concept of "control". Turning to oversight requirements on depositaries, it notes the high costs involved in implementing the proposals. It raises specific concerns that the new requirements may result in the depositary duplicating oversight that is already the responsibility of other parties. It does not support any obligation to require the depositary to confirm suitability, eligibility and other conditions of investment into an AIF. Finally, on depositary liability, BBA comments there is no "one size fits all" approach to deciding what is an "external event" and it does not think the AIFM should be the sole determinant of when an instrument is lost. It also thinks transfer of liability to sub-custodians will be difficult to implement in practice. (Source: BBA Responds on AIFMD Level 2)