Last Updated on July 8, 2025 by Arnaud Collignon
Understanding UCITS V: Practical Insights and Depositary Aspects
The UCITS V Directive represents a significant evolution in the regulatory framework governing Undertakings for Collective Investment in Transferable Securities (UCITS). This post aims to clarify the practical implications of UCITS V, particularly concerning depositary functions and the management of Part II UCIs (Undertakings for Collective Investment).
Key Changes Introduced by UCITS V
- Enhanced Depositary Responsibilities: The directive imposes stricter obligations on depositaries, including the requirement to ensure the safekeeping of assets and the oversight of fund management.
- Liability Framework: The liability of depositaries has been expanded, making them accountable for the loss of financial instruments held in custody.
- Transparency and Reporting: UCITS V emphasizes the need for improved transparency in reporting to investors, ensuring they have access to essential information regarding their investments.
Practical Issues for Fund Managers
Fund managers must navigate several practical challenges under the UCITS V regime:
- Compliance Costs: Adapting to the new regulatory requirements may incur significant compliance costs for fund managers.
- Operational Adjustments: Fund managers need to reassess their operational frameworks to align with the enhanced depositary obligations.
- Investor Communication: Effective communication strategies must be developed to keep investors informed about changes and their implications.
Depositary Aspects Related to Part II UCIs
For Part II UCIs, the implications of UCITS V are equally important:
- Regulatory Alignment: Part II UCIs must align their practices with UCITS V standards to ensure compliance and maintain investor confidence.
- Risk Management: Enhanced risk management frameworks are essential to meet the new regulatory expectations.
- Due Diligence: Conducting thorough due diligence on depositaries is crucial to mitigate risks associated with asset safekeeping.
Conclusion
In summary, the UCITS V Directive brings about important changes that fund managers and depositaries must address. By understanding these practical issues and adapting accordingly, stakeholders can ensure compliance and enhance investor trust in the UCITS framework.
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