There is a Finite Appetite For Risk

The experts, especially the legal profession, are still struggling with the question of the extent of liability assumed by depositories under the proposed European UCITS regulations. It is early days and we need to wait for further detail to draw firm conclusions. But there would be huge and undesirable consequences if the view of one of the major law firms, based on the level one wording, were to prevail. Quite simply, that view sees no difference between issuer and investor central securities depository (CSD), no limitation of depository liability for assets in a CSD unless there is loss during a primary market operation and no ability to apply the “beyond reasonable control” concept.