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Clearstream helps depositories with AIFMD
27 May 2014
Introduces monitoring report to aid depositary banks in meeting new due diligence requirements
Clearstream has launched a monitoring report to help
depositary banks comply with the Alternative Investment Fund
Manager (AIFM) directive as the July deadline approaches.
Depositary banks must meet asset monitoring and due diligence
requirements under the directive. The Domestic Markets
Monitoring Report is designed to help support them manage these
"Market participants must now mobilise for the AIFM
directive which will enter into force on July 22 2014," said
Berthold Kracke, member of the executive board of Clearstream
and head of business management.
He said the report was a "first step to increase
transparency in the custody chain".
The report will also help them to meet similar requirements
under Ucits V which will come into force at a later date.
Depositary banks offering custody services on behalf of AIFs
will be required to provide a general oversight of the
funds’ investment activities to control custody
risk in a market or a sub-custodian. In the event of a loss of
financial instruments, depositary banks will be liable to
restore those instruments.
Clearstream said the monitoring report would ease the burden
on depositary banks to monitor the structure and performance of
their underlying custody chain for assets held directly through
Clearstream in their domestic markets. This information will
support the due diligence and regulatory obligations that a
customer may be required to perform, particularly when acting
as a depositary bank under either the AIFM directive or Ucits
The reporting service will initially cover 30 domestic
markets and an enhanced service including the full set of
market links that Clearstream offers will be available for
before the AIFM directive enters into force.
The report provides "full transparency" on the structure of
the domestic and information on Clearstream’s
network of 53 domestic markets and 90 links to local central
securities depositories (CSDs), as well as information on its
selection and review process of sub-custodians. Depositary
banks can use this information report when reporting to
ICSDs such as Clearstream can directly link to CSDs in local
markets but may have to use sub-custody banks in order
to link to some CSDs.