The Special Depositary
Between opportunities and challenges
The AIFMD (Alternative Investment Fund Managers Directive) is an important piece of regulation that brings the world of alternative investments under a single roof.
One of the centrepieces of AIFM is an extensive set of requirements for depositaries of assets, covering their duties and liability. They considerably reinforce the conditions for the delegating of safekeeping duties over an Alternative Investment Fund’s (AIF) assets, the selection and monitoring of these service providers and the supervision of assets with full liability for the depositary in the event that financial instruments held in custody are lost.
Acting as a depositary for an AIF means facing considerable changes and challenges but is also an excellent opportunity for new business models to emerge in a world that is becoming more complex and
more demanding. Our aim is to highlight some of the challenges and opportunities in this article.
A wide universe of assets
The universe of investments that can be made by AIFs is driven by the appetite of investors to invest in different and very diverse types of assets. Many of these assets are actually not financial instruments at all.
Understanding the nature of asset classes is an important
starting point when it comes to looking into the opportunities and challenges for special depositaries. Furthermore, the general duties of the depositary differ depending on whether an AIF holds financial or non-financial assets and the lines between both asset classes are not as clear-cut as they seem. Depositaries and asset servicers are therefore well advised to fine-tune their understanding of these definitions, and to draw clear lines.
Inside magazine issue 4, March 2014
Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.
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