General Regulation

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Financial services providers & Fintech Depositaries

Depositaries of UCITS and AIFs

Published on September 20, 2017

The Autorité des Marchés Financiers (AMF) examines authorisation applications for custody account keeping activities filed with the Autorité de Contrôle Prudentiel et de Résolution (ACPR) by institutions wishing to exercise the function of depositary. The AMF defines the attributions and obligations relating to this function in its General Regulation.

Missions of the depositary

Depositaries of undertakings for collective investment in transferable securities (UCITS) and alternative investment funds (AIF) have two main missions: custody of the assets held by the undertakings for collective investments (UCIs) and ensuring that any decisions by the UCITS, the AIF or its management company comply with the applicable laws and regulations and with the provisions set out in its prospectus.

The UCITS V Directive, whose purpose was to amend Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009, known as the “UCITS IV Directive”, shed more light on and considerably extended the obligations incumbent upon depositaries of UCITS, the aim being to enhance investor protection and bring rules into line with those introduced by Directive 2011/61/EU of 8 June 2011, known as the “AIFM Directive”, which came into force on 22 July 2013.

The Directive introduced compulsory monitoring of UCITS’ cash flows and reinforced obligations pertaining to custody, record-keeping and ownership, as well as the diligence that should be carried out when selecting and monitoring third parties to which functions have been delegated.

The Delegated Regulation also defines the rules on independence and conflict of interest management that should be put in place by the depositaries and management companies.

The UCITS V Directive was transposed into French law and the new rules came into force on 18 March 2016 (“Level 1 measures”).

The tasks and responsibilities of UCITS depositaries were then further clarified in a Delegated Regulation which was published on 24 March 2016 and came into force on 13 October 2016.

Lastly, AMF instruction DOC-2016-01, which came into force on 19 April 2016, clarified the procedures performed to authorise investment firm UCITS depositaries and review the performance specifications of the other UCITS and AIF depositaries.

Which entities can be depositaries?

The following entities can be UCITS depositaries:

  1. Banque de France;
  2. Caisse des Dépôts et Consignations;
  3. Credit institutions with their registered office in France;
  4. French branches of credit institutions with their registered office in the European Union or a country that is party to the Agreement on the European Economic Area;
  5. Investment firms with their registered office in France (subject to certain capital requirements).

In order to be able to operate as a UCITS depositary, the entities mentioned in 3° to 5° above must be authorised to perform the related service of custody account-keeping.

The following entities can be AIF depositaries:

  1. Banque de France;
  2. Caisse des Dépôts et Consignations;
  3. Credit institutions with their registered office in France;
  4. Investment firms authorised to perform the activity of custody account-keeping;
  5. Insurance and capitalisation firms governed by the French Insurance Code;
  6. French branches of credit institutions with their registered office in the European Union that are authorised depositaries in their own country and are authorised under Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions;
  7. French branches of investment firms with their registered office in the European Union that are authorised as depositaries in their own country and subject to capital requirements in accordance with article 20, paragraph 1 of Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions, including the capital requirements associated with operational risk.

In order to be able to operate as an AIF depositary, the investment firms must be authorised to perform the related service of custody account-keeping and permanently have capital equal to or greater than the initial capital level specified in article 9 of Directive 2006/49/EC.

Depositary authorisation process

  • UCITS

The UCITS V Directive states that entities other than national central banks and credit institutions (and branches of credit institutions) that wish to perform the function of UCITS depositary must be authorised.

The AMF, the French Prudential Supervisory Authority (ACPR) and the Treasury have decided to implement an authorisation for investment firms acting as UCITS depositaries, which can be obtained in the same way as the ACPR's authorisation for investment services providers.

Investment firms must first get their programme of activity approved by the AMF and then get an authorisation from the ACPR. They do not, however, have performance specifications (the various points from the performance specifications are replicated in the programme of activity drawn up specially for the depositary business).

French credit institutions and French branches of EU credit institutions must submit their performance specifications for approval. These performance specifications outline the conditions in which the depositary performs its activity (resources, organisation, procedures, etc.).

  • AIF

Credit institutions and investment firms (operating under French law or via a French branch) must keep their performance specifications up to date and send them to the regulator.

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Head of publications: The Executive Director of AMF Communication Directorate.
Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02