European Commission Adopts Delegated Regulation on Obligations of Depositaries Required by UCITS V

The European Commission has adopted a Delegated Regulation (C(2015) 9160) supplementing the UCITS IV Directive (2009/65/EC) on the obligations of depositaries.

The Delegated Regulation sets out provisions relating to issues including:

  1. Minimum requirements for the contract between the management company or the investment company and the depositary (Article 2);
  2. Obligations on the depositary relating to oversight, due diligence, segregation and insolvency protection (Articles 3 to 17);
  3. The conditions and circumstances in which financial instruments held in custody are considered to be lost (Articles 18 and 19); and
  4. Independence requirements for management companies, investment companies, depositaries and third parties to whom the safekeeping function has been delegated (Articles 20 to 24).

The next step is for the Council of the EU and the European Parliament to consider the Delegated Regulation. If neither the Council nor the Parliament object to the Regulation, it will be published in the Official Journal of the EU and enter into force on the 20th day following its publication.