!css
01/09/2017

ESMA opinion on asset segregation and delegation rules to CSDs

On 20 July 2017, ESMA has published an opinion addressed to the European Parliament, the Council of the EU and the European Commission

On 20 July 2017, ESMA has published an opinion addressed to the European Parliament, the Council of the EU and the European Commission on:

  • the optimal approach to asset segregation in case of delegation of safe-keeping duties by the appointed depositary of fund (UCITS or AIF) and
  • how the depositary delegation rules should apply to central securities depositaries (CSDs).

In its opinion, ESMA suggests defining a regime which ensures:

  • assets are clearly identifiable as belonging to the alternative investment fund / UCITS consistent with any reuse (where this is permitted by the applicable legislation); and
  • investors receive adequately robust protection by avoiding the ownership of the assets being called into question in case of the insolvency of any of the entities in the custody chain.

Considering the above policy goal, and feedback received to earlier consultations, ESMA has come to the conclusion that only minimum EU wide segregation requirements should be prescribed, leaving room for stricter requirements or different account structures if national (ownership, insolvency, tax or fiscal) laws in specific Member States make them necessary.