EFAMA considers the ongoing review of the UCITS depositary regime to be a crucial issue. A sound and safe depositary regime is indeed one of the key components of the high level of protection that UCITS investors already enjoy nowadays, which has largely contributed to the success of the UCITS brand worldwide. EFAMA is therefore fully committed to supporting the Commission’s efforts towards further improvements of the existing UCITS depositary regime.
When considering changes to the existing standards of depositary liabilities in particular, EFAMA nevertheless believes that it is important to bear in mind that investment in financial markets (either directly or through investment funds) inevitably involves a number of risks for investors (which are not limited to market risks only). These risks should obviously be reduced, managed and mitigated as much as possible but cannot be completely avoided. As a basic principle of investing, risk is inherently linked to returns, and trying to regulate all the risk away will – if possible at all – have a profoundly negative impact on investors’ returns due to associated costs.
Further, as the Commission rightly mentions in the introductory part of its Consultation Paper, EFAMA wishes to underline the need to take into account the significant impact that other ongoing legislative initiatives (in particular the “Securities Law Directive”) may have in the context of the clarification of the depositary functions. Consequently, an alignment of both efforts is crucial.
EFAMA considers that the envisaged clarification of the depositary functions and duties, as well as the strengthening of depositary liability standards along the lines suggested by the Commission in its Consultation Paper (and taking into account EFAMA’s recommendation), will provide retail investors with an even higher level of protection, therefore making it unnecessary to include UCITS and their unit‐holders in the scope of the Investor‐Compensation Schemes Directive.
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