CP12/32: Implementation of the Alternative ... - BVCA admin

CP12/32
Implementation of the Alternative Investment Fund Managers Directive
firm would not have to provide it as a part of a package of professional services if the
client did not wish to use those other services.
Annex X
9.27 There is also a question about exactly which activities the depositary will perform. The
Directive concession applies to funds that ‘generally do not invest in assets that must be
held in custody’. This implies that it is acceptable for such AIFs to hold assets in custody
in some circumstances. An AIF depositary does not require the separate permission of
safeguarding and administering assets in relation to the AIFs it acts for, so a PE AIF
depositary will be able to hold assets in custody unless we specify otherwise. It is likely,
however, that for some AIFs, there will be no custody obligation and the depositary will
need only to verify the ownership of the AIF’s assets.
Q9: Do you agree with our approach permitting authorised
professional firms and other suitably qualified firms to
be authorised to carry on the activity of acting as a
PE AIF depositary?
Q10: What standards should we apply to determine that a firm,
which is not a professional firm, is fit and proper to perform
this function?
Q11: Do you agree that it may be necessary or desirable for PE AIF
depositaries to be able to hold financial assets in custody?
Capital requirements for firms acting as PE AIF depositaries
9.28 AIFMD does not place any specific prudential requirements on a PE AIF depositary, other
than it being able to provide sufficient professional and financial guarantees. In this
context, we interpret ‘financial guarantees’ as including a capital requirement of the kind
most FSA-authorised firms are subject to.
9.29 We have received consistent feedback from both fund managers and others that a
substantial capital requirement would deter firms from providing AIF depositary services.
This is especially a concern for the PE AIF market where there are very few existing service
providers that might become depositaries. If we required PE AIF depositaries to hold the
same capital as a MiFID firm acting as a depositary to AIFs other than authorised funds,
i.e. minimum capital of €730,000, it is likely this would act as a barrier to market entry for
small firms.
9.30 We recognise the importance of promoting competition for financial services, while at the
same time we need assurance that firms are fit and proper to carry out the depositary
74 Financial Services Authority November 2012