New CSSF Circular 14/587 on the provisions applicable to credit institutions acting as UCITS depositary under Part I of the law of 17 December 2010 relating to undertakings for collective investment, as amended, and to all UCITS, where appropriate, represented by their management company.
On 11 July 2014 the CSSF issued a new circular 14/587 (the “Circular”) applying to UCITS’ depositary banks and to the UCITS themselves regarding their relationship with their depositaries.
The purpose of such Circular is to update the depositary regime of Luxembourg UCITS in order to align it with the requirements imposed by Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on alternative investment fund managers in anticipation of the implementation of the UCITS V Directive into Luxembourg law.
The Circular provides with the new regulations relating, inter alia, to (i) asset segregation within the depositary through the delegation chain, (ii) initial and ongoing due diligence procedure on all sub-depositaries, (iii) conflicts of interest policy and (iv) adequate booking and monitoring of cash flows. It also describes organizational rules and rules of conduct that a credit institution should comply with to be approved as a UCITS depositary.
Nevertheless, the depositary’s liability regime shall not be affected by such Circular. The liability regime remains subject to the law of 17 December 2010 on undertakings for collective investment, as amended.
Luxembourg credit institutions and UCITS shall have until 31 December 2015 to comply with the requirements of this Circular, subject to other transitional provisions that might become applicable once the UCITS V Directive is implemented.