AFME, responding to ESMA's consultation on possible implementing measures for the AIFMD, comments that the consultation does not address whether the measures should take the form of a Directive or a Regulation. It favours a Directive. On the consultation, it comments that delegation of functions provides necessary flexibility and that the provisions of the Level 1 Directive should be enough to ensure the alternative investment fund manager (AIFM) does not become a "letter box" entity where it has delegated. In terms of the depositary acting as a hub for cash flows, it supports option 2, which allows a workable framework for cash monitoring, rather than the "overly burdensome" option 1. It stresses the need to allow cash to be held at a non-credit institution. On the options on how financial instruments in custody are held, it prefers option 2, which gives flexibility by not requiring them to be in the name of the depositary. On ownership of assets, it asks for more guidance. It believes it is not necessary for the depositary to give approval to dealings of assets of the alternative investment fund (AIF), and that it is unnecessary to require the depositary to mirror transactions in a position keeping record. It also wants clarification on how a depositary should assess what oversight procedures are appropriate. On segregation, it does not think a depositary should have a duty to notify the AIF or AIFM of changes in custody risks and welcomes the acknowledgement that sub-custodians may use omnibus accounts. On liability, it has significant comments on how losses from unaffiliated sub-custodians should be viewed and on what is within the depositary's reasonable control. (Source: AFME responds on AIFMD Level 2)