U.S. BANK GLOBAL FUND SERVICES
technology, Brexit and other
factors, it’s obvious the
investment environment is
changing—but how remains
less clear. Barry O’Brien
of U.S. Bank Global Fund
Services tells Cayman Funds
about these topics and how
they might affect the future
of hedge funds.
CAYMAN FUNDS | 201 45
Shutterstock / katjen
What’s the future of depositary?
The Alternative Investment Fund Managers Directive (AIFMD) aimed
to install a layer of protection after various high-profile frauds affected
professional investors across the globe. Its requirement for a depositary
(especially depositary-lite) caused much grumbling when it was first
rolled out in 2013–2014. Four years in, however, we can see the benefit
of a fiduciary providing oversight, monitoring cash movements and
acting as a proxy for the regulator on general and specific restrictions
Now, investors would likely baulk at the idea of removing the
depositary protective layer. Managers appreciate the endeavour in
terms of professional investor protection.
The Central Bank of Ireland (CBI) has begun to acknowledge that not
all funds present the same risk characteristics. It issued an update in
November 2018 that would potentially allow for specialised depositaries
or real asset depositaries. Specialised depositaries would not be
able to act for Undertakings for Collective Investment in Transferable
Securities (UCITS) funds. Rather, they could only act for alternative
investment funds (AIFs) that meet the following criteria:
• The AIF allows no redemptions for a five-year period.
• It generally doesn’t invest in assets that must be held in custody.
• It generally doesn’t invest in issuers or non-listed companies in order
to acquire control (private equity investments).
U.S. Bank, in preparation for every eventuality, was authorised as a
full depositary in Ireland in September 2018. We made a considerable
investment in people and technology so we can offer the full array of
depositary services—covering UCITS funds to private equity funds—
now and into the future.