UCITS Depositary Seminar. 22 October 2015

Transcription

1 UCITS Depositary Seminar 22 October 2015

2 Agenda Introduction Governance Central Securities Depositary Sub-custody network: negotiation issues Role of the depositary in relation to transfer agents and fund of funds platform Update in relation to the publication of level 2 measures 2

3 Governance Speaker: Stéphane Badey, Executive Director, Arendt Regulatory & Consulting

4 Independence Principles Board of Directors Management Company Staff members Depositary Depositary Management Company CSSF Circular 12/546: Board members of the Depositary may not be elected as Board Members of the ManCo CSSF Circular 12/546: Employees of the Depositary may not be elected as Conducting Officer of the ManCo CSSF Circular 12/546: Members of the Depositary business line may be elected as Board members of the ManCo as long as they don t constitute the majority of such ManCo 4

5 Delegation impact Management Company Management Company Portfolio Management & Risk Management delegating some other functions reporting monitoring results Depositary Depositary or Sub-Custodian Forbidden Accepted No (sub-)delegation relating to the principal function of Portfolio/Risk management can be accepted by the Depositary or Third party custodian Ownership of delegated duties and obligations remains at Management Company level Clear functional and hierarchical segregation Conflict of interest policy 5

6 Delegation impact IM and Custody Global or Sub-Custodian GROUP Investment Management Sub-Custody Sub-Custody Depositary Custody Forbidden Accepted No delegation of Sub-Custody activities to a Global/Sub-Custodian also acting as Investment Manager Delegation of custody intra-group is possible if : Clear functional and hierarchical segregation (i.e. separated companies) and implementation of a proper group conflict of interest policy 6

7 Central Securities Depositary Speaker: Philippe Dupont, Partner, Arendt & Medernach

8 AIFMD Article last paragraph: For the purposes of this paragraph, the provision of services as specified by Directive 98/26/EC by securities settlement systems as designated for the purposes of that Directive or the provision of similar services by third-country securities settlement systems shall not be considered a delegation of its custody functions. Recital 41: Entrusting the custody of assets to the operator of a securities settlement system as designated for the purposes of Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems or entrusting the provision of similar services to third-country securities settlement systems should not be considered to a delegation of custody functions. 8

9 UCITS V Article 22 a 4: For the purposes of this Article, the provision of services as specified by Directive 98/26/EC of the European Parliament and of the Council by securities settlement systems as designated for the purposes of that Directive or the provision of similar services by thirdcountry securities settlement systems shall not be considered to be a delegation of custody functions. Recital 21: When a Central Securities Depository (CSD), as defined in point (1) of Article 2(1) of Regulation (EU) No 909/2014 of the European Parliament and of the Council, or a thirdcountry CSD provides the services of operating a securities settlement system as well as at least either the initial recording of securities in a book-entry system through initial crediting or providing and maintaining securities accounts at the top tier level, as specified in Section A of the Annex to that Regulation, the provision of those services by that CSD with respect to the securities of the UCITS that are initially recorded in a book-entry system through initial crediting by that CSD should not be considered to be a delegation of custody functions. However, entrusting the custody of securities of the UCITS to any CSD, or to any thirdcountry CSD should be considered to be a delegation of custody functions. 9

10 Central Securities Depositaries Definition: operation of a securities settlement system + initial recording of securities in a book entry system; and/or providing and maintaining securities accounts at the top tier level 10

11 Pure CSD Issuer CSD UCI UCI Investor 11

12 I. 1. ICSD - 1 Eurobonds Global Certificate Clearstream Common Depositary Bridge Global Certificate Euroclear Intermédiaire 1 UCI Investor 12

13 I. 1. ICSD - 2 New Global Note Clearstream Bridge Euroclear UCI Investor 13

14 Mixed activities CSD / SSS Issuer Issuer Issuer CSD CSD CSD SSS Issuer CSD Legal Entity Intermediary Broker Investor UCI UCI 14

15 Legal Value of a Recital CJUE C-136/04 Deutsches Milch-Kontor 32. As regards the ninth recital in the preamble to Regulation No 1706/89, it is sufficient to recall that the preamble to a Community act has no binding legal force and cannot be relied on either as a ground for derogating from the actual provisions of the act in question or for interpreting those provisions in a manner clearly contrary to their wording (Case C-162/97 Nilsson and Others [1998] ECR I-7477, paragraph 54, and Case C-308/97 Manfredi [1998] ECR I-7685, paragraph 30). 15

16 IV. 1. Transparent System Issuer Issuer Issuer CPT CPT CSD CPT CPT CPT CSD CPT CSD CPT permanent consolidation of information CPT CPT CPT CPT CPT CPT CPT CPT CPT CPT 16

17 IV. 2. Non-transparent System Issuer CSD DCT I-CPT A B D C E 17

18 Sub-custody network: negotiation issues Speaker: Gaëlle Schneider, Counsel, Arendt & Medernach

19 Role of the depositary in relation to transfer agents and fund of funds platforms Speaker: Yann Fihey, Senior Manager, Arendt Regulatory & Consulting

20 Role of the depositary in relation to transfer agents and fund of funds platforms Capability to get the asset back Due diligence obligations registration model Qualification of the asset CSSF Circular 14/587 Sub-Chapter 5.3. Due diligence obligations with regard to the investment in a target UCI(TS) in which a given UCITS can invest 82. In terms of the due diligence obligations relating to an investment in a target UCI(TS) in which a given UCITS can invest, it is necessary to take into account the manner in which the UCITS proceeds to invest in a target UCI(TS), in particular how the registration of the investment is carried out by the issuer or its agent, for example a registrar or a transfer agent (see Sub-Chapter 7.2.). 20

21 Role of the depositary in relation to transfer agents and fund of funds platforms Subscription/Redemption orders by Fund X : 1 order via Depositary Management Company / Asset Manager Fund X 1 Depositary XYZ Intermediary 1 Transfer Agent Target Fund T 21

22 Role of the depositary in relation to transfer agents and fund of funds platforms Subscription/Redemption orders by Fund X : 2 order via Depositary through an Intermediary Management Company / Asset Manager Fund X 2 Depositary XYZ 2 Intermediary 2 Transfer Agent Target Fund T 22

23 Role of the depositary in relation to transfer agents and fund of funds platforms Subscription/Redemption orders by Fund X : 3 order to the TA through an Intermediary Management Company / Asset Manager Fund X 3 Depositary XYZ Intermediary 3 Transfer Agent Target Fund T 23

24 Role of the depositary in relation to transfer agents and fund of funds platforms Subscription/Redemption orders by Fund X : 4 direct order to the TA Management Company / Asset Manager Fund X 4 Depositary XYZ Intermediary Transfer Agent Target Fund T 24

25 Update in relation to the publication of level 2 measures Speaker: Isabelle Lebbe, Partner, Arendt & Medernach

26 UCITS V Timeline UCITS V (L1) publication UCITS V (L1) Entry into force Circular 14/587 Expected issuance of L2 Circular 15/ XX Now! Finalised L2 version? Implementation of L1 and Circular 14/587 Approved L2 version? Or approved L2 version? XX XX XX

27 Contacts Arendt & Medernach SA Philippe Dupont, Partner Tel: Isabelle Lebbe, Partner Tel: Gaëlle Schneider, Counsel Tel: Arendt Regulatory & Consulting Stéphane Badey, Executive Director Tel: Yann Fihey, Senior Manager Tel: This brochure does not constitute legal advice and is merely intended to raise awareness on specific topics. This brochure however is not a substitute for seeking appropriate commercial and legal advice and should not be relied on in this manner. 27