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AIMA said that institutions authorised by one European Union country to act as a UCITS depositary should be granted automatic rights to provide the same services throughout the EU. Currently, the Directive limits the provision of depositary services to funds located in the same Member State as the depositary institution.
Such a UCITS depositary “passport” would allow for cross border provision of depositary services, based on harmonisation of depositary obligations which at present often differ from EU member state to member state, AIMA said.
The AIMA paper makes a number of recommendations, including several relating to the obligations and liabilities of UCITS depositary institutions.
In the paper, AIMA also called on the European institutions to align UCITS depositary regimes and remuneration requirements with those of the Alternative Investment Fund Managers Directive (AIFMD), which will be implemented in July 2013. AIMA also said the UCITS V Directive should allow depositaries to discharge their liabilities in certain circumstances. Another of AIMA’s recommendations was that the list of eligible assets in which a UCITS fund can invest should be expanded to include commodity derivatives.
The European Commission published its proposal for a UCITS V Directive in July. The final text may be adopted during 2013 although there is no formal timetable at present.
Andrew Baker, AIMA’s CEO, said: “We welcome much that is contained in the Commission’s proposal to amend the UCITS Directive, but as our position paper makes clear, we believe that the time has come for a proper discussion about introducing a depositary passport. Such a passport would bring more competition and more choice for managers and investors and would remove a significant barrier to the single market. Without it, there is a risk of a lack of competition in the depositary space and increased systemic risk as a result."