AIFMD segregation power lies with depository banks

Prime brokers forced to comply and change models, says lawyer

quotation-marks
Jacqui Hatfield, partner, Reed Smith

The fact that Esma is forcing segregation of alternative investment fund (AIF) assets from non-AIF assets is not surprising, especially given the AIFMD language requiring the identification of assets of AIFs at the sub-custodian level. The segregation will be welcomed by depositories who have liability for the assets held with sub-custodians, but no effective control over them. Esma is consulting on two options, both of which require segregation of AIF assets