Depositary liability

The liability regime in a classic global custody agreement is straightforward. The global custodian undertakes to provide the safekeeping services to the high “standard of care” – this is the actual phrase used – expected of a first class service provider. Asked to describe what makes a custodian first or second class, Peter Richards-Carpenter, a consultant to London law firm Berwin Leighton Paisner, draws on 30 years’ experience of grimy commercial realities. “The first class global custodian is the one that clients expect to make them whole in the event of loss,” he says.

Thomas Murray Data Services' chief risk officer, Roger Fishwick particpated in a webinar with COO Connect around what fund managers will have to do differently under UCITS V. We are delighted to share with you the video of the session, as well as a synopisis of what was discussed.

The EU’s Alternative Investment Fund Managers Directive (AIFMD) imposes a number of requirements on depositary banks. Most significantly, it obligates depositary banks to provide safekeeping of assets, cash-flow monitoring and oversight of assets controlled by alternative investment fund managers (AIFMs), and subjects them to strict liability for loss of assets in custody either through fraud or negligence at either the global custodian or sub-custodian level.

Thomas Murray Data Services' Alex Harborne discusses AIFMD, Depositary Banks and Prime Brokers.

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We spoke to Bill Prew, CEO of INDOS Financial, a provider of depositary lite services under AIFMD (the Alternative Investment Fund Managers Directive), about the depositary landscape four months on from the end of AIFMD transitional phase.

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