CSSF Circular 14/587 – Rules applicable to credit institutions acting as depositary of UCITS under Part I of the Law of December 17th, 2010 on undertakings for collective investment and to all UCITS, represented by their management company as the case may be
On Tuesday July 15th 2014 the Commission de Surveillance du Secteur Financier (the “CSSF”) issued Circular 14/587 (the “Circular”) which is applicable to UCITS’ depositary banks and to the UCITS themselves regarding their relationship with their depositaries.
The aim of the Circular is to align the requirements applicable to UCITS’ depositaries with the requirements imposed by Directive 2011/61/EU on alternative investment fund managers (“AIFMD”). Such alignment anticipates the implementation of the UCITS V Directive into Luxembourg law.
The Circular focuses on the following points:
- Asset segregation within the depositary;
- Initial and continuing due diligence procedure on all sub-depositaries;
- Conflicts of interest policy;
- Accounting and follow-up of the cash/liquidity flows.
However, the depositary’s liability regime shall not be affected by the Circular. The liability regime remains subject to the Law of December 17th 2010 on undertakings for collective investment.
Luxembourg credit institutions and UCITS shall have until December 31st 2015 to comply with the requirements of the Circular. At that time, Chapter E of IML Circular 91/75 shall no longer be applicable.