US and EU regulation to impact way custodians do business

European Union and US regulations could impact the way custodians do business with hedge funds. At the same time the relationship between custodians and prime brokers is also evolving.


The European Securities and Markets Authority (Esma) made its final recommendations to the European Commission on the latest draft of the alternative investment fund managers (AIFM) directive in November. The key issues at stake for custodians are around asset liability and its definitions.

First, there is the question of what securities are defined as being within the custodian safe-keeping. “Currently it’s a relatively wide universe including hedge fund holdings and other types of securities

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