EU prime brokers hit by new rules on collateral reuse

Draft AIF and Ucits regulation would oblige more stringent record-keeping along custody chain

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Strings attached: new EU record-keeping rules could make rehypothecation of securities collateral more difficult

New European record-keeping rules for funds could make the rehypothecation of securities collateral more difficult and raise operational costs for prime brokers, as well as conflicting with the standard practices of depositary institutions, custody experts say.

The new rules set out the duties of depositaries – custody institutions that also monitor and audit investment funds – with regard to client assets where safe-keeping is delegated to third parties, including prime brokers.


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