The Commission therefore intends with its proposal to clarify and tighten rules on the obligations of depositaries, the delegation of these functions to sub-custodians and above all the liability of depositaries.
"Raising the requirements will inevitably lead to a situation where depositaries feel that the liability risks they can assume exceed the economics of the business case, leading to reduced service offers or withdrawal from certain segments, Robert Priester, director for financial markets and banking supervision at the European Banking Federation (FEB), told Europolitics.
Depositaries for UCITS funds are obliged, under EU rules, to return all funds originally entrusted to them for safekeeping, but the Commission wants to clarify how to better protect investors if something goes wrong.
The Commission also wants to focus on: clarifying and harmonising depositaries' responsibilities for the assets in their possession; who should be liable if something goes wrong, especially if the assets are distributed in a network of sub-custodians; and what organisational changes should be made.
Steps should be taken to enhance the provision of information in the following areas: the organisation of depositaries
' tasks, measures taken against conflicts of interests, depositaries
' liability and the costs of their services.