New report on Clearstream’s network links to help depositary banks meet asset monitoring and due diligence requirements under AIFMD and UCITS V/Under AIFMD, depositary banks will be required to provide oversight of the fund’s investment activities to keep custody risk under control/Market participants should act now to ensure AIFMD compliance
Luxembourg, 28-5-2014 — /EuropaWire/ — Clearstream’s “Domestic Markets Monitoring Report” will support depositary banks in managing their new obligations as stipulated by regulations such as the Alternative Investment Fund Manager Directive (AIFMD). AIFMD will enter into force on 22 July 2014, imposing tight restrictions on the regulation and supervision of AIFMs to ensure greater market transparency and increased investor protection.
The directive directly affects depositary banks offering custody services on behalf of alternative investment funds. These institutions will be required to provide a general oversight of the fund’s investment activities to keep custody risk in a market or a sub-custodian under control. In the event of a loss of financial instruments, depositary banks will be liable for restitution.
Following close consultations with clients, Clearstream’s new monitoring report will ease the burden on depositaries to monitor the structure and performance of their underlying custody chain for assets held directly via 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 AIFMD and UCITS V.
Clearstream’s new reporting service initially covers 30 domestic markets; an enhanced service including the full set of market links that Clearstream offers will be available for customers before AIFMD enters into force.
The report provides full transparency on the structure of the domestic market (i.e. account structures, audits) and information on Clearstream’s extensive network of 53 domestic markets and 90 links to local central securities depositories (CSDs) as well as information related to its sub-custodian selection and review process. Depositary banks can use this information report when reporting to Alternative Investment Fund Managers (AIFMs).
Berthold Kracke, Member of the Executive Board of Clearstream and Head of Business Management, said: “Market participants must now mobilise for AIFMD which will enter into force on 22 July 2014. Our Domestic Markets Monitoring Report is a first step to increase transparency in the custody chain and thereby supports our depositary bank customers in complying with AIFMD. As a highly secure market infrastructure and securities settlement system, we are a natural partner for customers seeking to take on their responsibilities and manage their risk profile for the safekeeping of assets under AIFMD.” As an (International) Central Securities Depository (CSD) and Securities Settlement System (SSS) subject to the strictest regulatory oversight and rated AA by major credit agencies, Clearstream is best positioned to support depositary banks seeking to manage their risk profile for the safekeeping of assets under AIFMD.
Clearstream is the post-trade services and global liquidity provider within Deutsche Börse Group. As an international central securities depository (ICSD) headquartered in Luxembourg, Clearstream provides the post-trade infrastructure for the Eurobond market and services for securities from 53 domestic markets worldwide. Clearstream’s customers comprise approximately 2,500 financial institutions in more than 110 countries. Its services include the issuance, settlement and custody of securities, as well as investment fund services and global securities financing. With EUR 12.1 trillion in assets under custody, Clearstream is one of the world’s largest settlement and custody firms for domestic and international securities. As a central securities depository (CSD) based in Frankfurt, Clearstream also provides the post-trade infrastructure for the German securities industry.
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