UCITS Depositary Regime Clarified By The CSSF

New CSSF Circular 14/587 on the provisions applicable to credit institutions acting as UCITS depositary under Part I of the law of 17 December 2010 relating to undertakings for collective investment, as amended, and to all UCITS, where appropriate, represented by their management company.

On 11 July 2014 the CSSF issued a new circular 14/587 (the "Circular") applying to UCITS' depositary banks and to the UCITS themselves regarding their relationship with their depositaries.

The purpose of such Circular is to update the depositary regime of Luxembourg UCITS in order to align it with the requirements imposed by Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on alternative investment fund managers in anticipation of the implementation of the UCITS V Directive into Luxembourg law.

The Circular provides with the new regulations relating, inter alia, to (i) asset segregation within the depositary through the delegation chain, (ii) initial and ongoing due diligence procedure on all sub-depositaries, (iii) conflicts of interest policy and (iv)...