EUROPE: UCITS Depositary Review “de-prioritised”

Wednesday August 19 2009

The Madoff Scandal had brought to light the differences between Member States with regards to their implementation of UCITS Depositary Rules. The European Commission had on this basis asked CESR to review the manner in which Member States have implemented the relevant provisions of the UCITS Directive, and evaluate how responsibilities and liabilities of depositaries are defined having regard to national law. A source from CESR has confirmed to Funds-Axis that work on this review has now been “de-prioritised ` in order to enable CESR to respond to the mandate on UCITS IV `s implementing measures by the end of October 2009. The objective of the review was to identify any practices or provisions which dilute the basic responsibilities and liabilities of the Directive and hence to seek to clarify the responsibilities of UCITS depositaries for safe-keeping, and the modalities by which depositaries can exercise those responsibilities (including use of sub-custodians). This work by CESR was to feed into the Commission `s July Consultation on UCITS Depository Functions. This review which seeks views and evidence in the key areas of Duties of the Depository, Responsibilities of the Depository, Organisational requirements as per MiFID and supervision is open for comments until 15th of September 2009. CESR have also sought to clarify some misinformation regarding the extent to which the review had been completed as the Commission had in May indicated that CESR had completed this Review which is not the Case.