UCITS depositary regime clarified by the CSSF

On 11 July 2014, the Commission de Surveillance du Secteur Financier (CSSF) issued a new circular 14/587 applying to undertakings for collective investment in transferable securities (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 organisational rules and rules of conduct that a credit institution should comply with to be approved as a UCITS depositary…

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