Clearstream Releases Report to Provide Custody Chain Transparency

Clearstream has released “Domestic Markets Monitoring Report,” a series of 90 reports, each of which corresponds to one of Clearstream’s links, providing details on the underlying custody chain of assets held via Clearstream.
By Jake Safane(2147484770)
Clearstream has released “Domestic Markets Monitoring Report,” a series of 90 reports, each of which corresponds to one of Clearstream’s links, providing details on the underlying custody chain of assets held via Clearstream. The service was developed as a result of client requests, in order to support these depositary banks in managing their obligations under the Alternative Investment Fund Manager Directive (AIFMD).

“While depositary banks are providing reports to AIFMs regarding performance, the view and responsibility that we have is for the underlying assets the alternative investment funds are holding,” says Clearstream. “It’s the depositary banks that are our customers, and we ultimately see how that security is held in the custody chain below Clearstream. In most cases, a significant volume of securities are held through direct links we have to CSDs, however, others go through a more traditional custody chain with a commercial bank as sub-custodian.”

The service initially covers 30 markets and each report is issued as a PDF, but a full service that includes all of Clearstream’s market links—53 domestic markets and 90 links to local central securities depositories (CSDs)—will be issued before the July 22 AIFMD deadline. Clearstream is also working on revamping its website to allow users to pull the reports from there.

Each report provides full transparency on the structure of the domestic market, such as account structures and audits, and the reports also include information on Clearstream’s sub-custodian selection and review process. Depositary banks can use this information to support the due diligence and regulatory obligations that they may need to perform.

Berthold Kracke, member of the executive board of Clearstream and head of business management, says: “Market participants must now mobilize for AIFMD which will enter into force on 22 July 2014. Our Domestic Markets Monitoring Report is a first step to increase transparency in the custody chain and thereby supports our depositary bank customers in complying with AIFMD.”

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