The main role of a depositary is to safekeep (act as a custodian of) an investment fund’s assets. This function can be delegated to a prime broker or custodian, as set out below. Other depositary functions include cash flow monitoring and ensuring fund subscriptions, redemptions, distributions and cancellation of units and valuations, carried out in accordance with the rules of the fund and national law.
The key depositary obligations are set out in Article 21 of Directive 2011/61/EU (the Alternative Investment Fund Managers (AIFM) Directive) (AIFMD) (which was implemented in the UK prior to Brexit through the Financial Conduct Authority (FCA) Handbook, Investment Funds sourcebook (FUND) (FUND 3.11 R)) and Articles 22–26 of Directive 2009/65/EU (the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive) (as was implemented in the UK through the FCA Handbook, Collective Investment Schemes sourcebook (COLL) (COLL 11.4 R)). For further information, see Practice Notes:
Key provisions of UK UCITS—depositaries: This Practice Note considers the role of depositaries of UCITS funds (ie open-ended collective investment schemes which are undertakings for...
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