Custody Risk spring 2012
Welcome to the spring 2012 issue of Custody Risk
Regulation could be a source of certainty, instead of the confusion currently surrounding it, writes editor of Custody Risk Andrew Tjaardstra
We are still in turbulent times. The debt crisis in the eurozone is unresolved and the best we can hope for is to muddle through. However, one area where we could see certainty is regulation.
Instead, we are seeing back-tracking, confusion and a complete lack of clarity. The deliberations continue and the goalposts keep changing.
In Europe, for example, the final version of the European Market Infrastructure Regulation was agreed between the European Commission, European Parliament and Council of the European Union in February - several months behind the anticipated schedule. Attention now turns to the European Securities and Markets Authority (Esma), which must draw up a number of technical guidelines in a matter to months to ensure Europe is able to meet the Group of 20 deadline to clear standardised over-the-counter derivatives by the end of 2012.
That could be a problem. In February, Steven Maijoor, chair of Esma, complained about the "unreasonable deadlines" facing the agency. Questions are being asked about how many resources and funds are at Esma's disposal, and how much political support it has from individual nations. The UK, for example, is not happy with Esma's remit, and the tension between national power and centralised European power is here to stay.
In this issue, John Van Verre, head of global custody at HSBC, asks for clarification over depositories' liabilities as considered in the alternative investment fund managers (AIFM) directive. He has strong reservations about the burdens the directive could place on custodians - in particular, whether custodians are being expected to act like insurers, covering all losses. Most of all, you can sense his frustration that no final decisions have yet been made.
Custody Risk has several articles looking at the implications of regulation from the Lsoc (legal segregation with operational commingling model) ruling produced by the Commodity Futures Trading Commission for the segregation of assets, the relationship between sub-custodians and custodians over depository liability under the AIFM directive and the implementation of the key investor information document.
As long as regulation remains in flux, the securities services market is missing out on valuable time to ensure its businesses are fully prepared.
Americas Awards
The submissions are in and the judging has begun for the Custody Risk Americas Awards 2012. We look forward to celebrating the best of securities services in the Americas at an awards ceremony in New York on April 18. For more details please see www.custodyriskawards.com and the best of luck to all entrants.
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