On 24 March 2016, the European Commission Delegated Regulation EU 2016/438 supplementing the UCITS V Directive with regard to obligations of depositaries (the “Delegated Regulation”) was published in the Official Journal of the European Union. The text of the Delegated Regulation as published does not depart from the text adopted by the European Commission on 17 December 2015.
The Delegated Regulation provides for inter alia:
- The minimum elements that are to be included in a depositary agreement.
- The obligations of depositaries. These include oversight duties, cash monitoring, safekeeping duties with regard to assets held in custody and other assets, due diligence when selecting and appointing third parties, segregation and insolvency protection of UCITS assets when delegating custody functions.
- The conditions and circumstances under which financial instruments held in custody are considered to be lost. In this respect, the Delegated Regulation confirms the strict liability regime that was introduced by the UCITS V Directive and lays down limited instances in which the depositary will not be held liable for the loss of a financial instrument.
- Independence requirements for management companies, investment companies, and depositaries.
The Delegated Regulation comes into force on 12 April 2016 and will apply from 13 October 2016.
The Delegated Regulation may be accessed at: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ%3AJOL_2016_078_R_0004&from=EN.