Knowledge Base
Describe the functions and regulatory obligations of fund depositaries in post-trade processes
Which entity is explicitly mentioned as authorized to act as a depositary under Article L.214-10-1 of the Code monétaire et financier?
Under Article L.214-10-1, entities authorized to act as depositaries include the Banque de France, the Caisse des dépôts et consignations, credit institutions with their registered office in France, as well as their European branches and investment firms meeting certain capital requirements. This list is exhaustive and aims to ensure the reliability of depositaries.
Which article of the Code monétaire et financier requires the appointment of a single depositary for each entity?
Article L.214-10 of the Code monétaire et financier requires the appointment of a single depositary for each entity. This requirement aims to avoid dilution of responsibilities and to ensure consistent supervision of the fund's assets.
What sanction was imposed on CACEIS Bank by the AMF in December 2025 for breaches of its depositary obligations?
In December 2025, the AMF sanctioned CACEIS Bank with a fine of 3.5 million euros for breaches of its depositary obligations. These breaches included insufficient monitoring of investment ratios and imperfect validation of the valuation of unlisted securities.
What is the first fundamental function of a fund depositary according to the text?
The first function of the depositary is asset safekeeping. This duty involves holding financial instruments, either physically for paper securities or through book-entry registration. This obligation of result is particularly demanding, as the depositary must be able to return the securities at any time.
The depositary may delegate cash flow monitoring to a third party.
Cash flow monitoring is a non-delegable duty of the depositary, as emphasized by the European legislator. This function involves daily reconciliation of cash movements and the detection of flows inconsistent with the fund's activity. The depositary therefore cannot delegate this responsibility.
The depositary may be exempted from liability in the event of loss of financial instruments if the loss results from an external event beyond its reasonable control.
Under Article L.214-10-5 of the Code monétaire et financier, the depositary may be exempted from liability in the event of loss of financial instruments if it proves that the loss results from an external event beyond its reasonable control and whose consequences would have been unavoidable despite all reasonable efforts made.
Categorize items by dragging them to the appropriate zones
Items to categorize:
Obligation of result
Obligation of means
The depositary's obligations can be classified into obligations of result (such as the restitution of securities) and obligations of means (such as the verification of non-custodial assets). This distinction is crucial for understanding the nature of the depositary's responsibilities.
Directive that introduced cash flow monitoring for depositaries:
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The UCITS V Directive (2014/91/EU) introduced the cash flow monitoring function for depositaries. This directive strengthened depositary obligations, particularly regarding the oversight of cash movements.