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Regulatory intrusion: Is regulation becoming impossible to manage?

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  • Richards-Carpenter, Peter

Abstract

There is a danger that the liability provisions set out in Article 18a of AIFMD will become the template for ESMA’s eventual regulation of all asset servicing functions within the EU.Obligations created by Article 18a may not be capable of exclusion or restriction by agreement with the fund manager. Article 18a makes the depositary strictly liable for loss of assets, or failure to return assets promptly, subject to limited exceptions.Whether or not the depositary can avail itself of the exceptions will depend upon a series of conditions that are as yet unclear and uncertain, and may prove impossible to meet, even where the depositary is not in any way at fault.Whether or not global custodian banks will be willing (or allowed by their regulators) to act as depositaries, or even sub-custodians, under the conditions imposed by Article 18a, will depend upon how those conditions are further clarified and specified in the secondary legislation and implementing measures that are to follow.

Suggested Citation

  • Richards-Carpenter, Peter, 2011. "Regulatory intrusion: Is regulation becoming impossible to manage?," Journal of Securities Operations & Custody, Henry Stewart Publications, vol. 3(4), pages 333-353, March.
    • Handle: RePEc:aza:jsoc00:y:2011:v:3:i:4:p:333-353
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    More about this item

    Keywords

    AIFMD; Article 18a; depositary liability;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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