Custodian Agreement Securities

This measure is a consequence of its responsibility in calculating the net asset value. The UCITS V Directive provides that the depositary is liable for the actions of the sub-depositary against the CIS and its participants. Therefore, in the event of a loss of the sub-custodians, the depositary shall return an asset with identical characteristics. And if that is not possible, it will provide its cash value. However, it is not liable if the damage is due to an unavoidable event that is not controlled. It is also responsible for damages caused by negligence or breach of its obligations by the sub-hired. As provided for in the Directive, the depositary`s liability is not affected by the sub-depositary agreement. In other words, even if the depositary delegates its custody functions, it remains responsible for it. The depositary`s liability for the subcontract is also governed by Article 62 of the LIIC. Circular 4/2016 provides that non-UCITS CIS depositaries may be exempted from contractual liability.

A limitation of this liability is common in contracts with individuals. The depositary shall not be liable for damages resulting from the insolvency of the sub-depositary. Except that if the sub-custodian has not been duly selected and supervised, he is responsible. Self-controlled deposit banks for old-age assets (also known as IRA “self-controlled deposit banks” or “401k self-controlled deposit banks”) should not be confused with a custodian bank that strictly offers securities holding. While a stand-alone deposit bank can keep securities, it usually specializes in non-security assets or alternative investments. .