UBS Fund Services has launched its Depositary “Lite” platform to support managers of offshore funds in fulfilling the requirements of the Alternative Investment Funds Directive (AIFMD). Global Custodian talks to David Rochford about how the extended depot bank offering plays to the Swiss bank’s commitment to this area.
Why is the depot bank lite offering an important business for UBS to be in?
DR: Managers in general are looking at their current service providers to support them, particularly around these new [regulatory] requirements. Depot lite is very much a requirement for offshore funds and we currently service a lot of offshore funds across our global fund services platform for all types of European Economic Area (EEA) managers or soon to be AIFMs. In particular at the moment I suppose one particular jurisdiction where we are hearing more questions is from U.K. managers. Their non-EEA funds require a depot lite service due to the fact that they market the fund into the EEA via the national private placement regime. And our depot lite offering compliments our full depository offering, which we provide for EEA funds and therefore our vision is to meet all our client’s depository needs whether it’s an offshore fund or an onshore fund (EEA product). Our goal is to provide, in addition to depositary services, management company services along with administration and regulatory reporting, and therefore offering a one-stop shop. So that’s our strategy and depot lite is one part of that capability we are looking to meet and deliver for our clients.
What types of services will be offered as part of the depot lite platform?
DR: We can provide the full service or an a la carte selection depending on what the client needs. These are similar to the full depository requirements of cash flow monitoring, safekeeping and general oversight. You can have all three depending on how you are set up or you can pick and choose. At UBS we have a multitude of experience in depository and administration services and we are best placed to implement practical solutions. We want to support managers so that they can focus on performance and we can take care of compliance type duties where applicable. That’s the focus. Another item that’s important for us is that we future proof the depot lite offering. ESMA are talking about perhaps ending the private placement regime by 2018 and the question is how will this impact offshore funds? Will they be able to avail of the passport in 2015 for instance? We feel the offering that we have put together will future proof our client needs. We could provide the full depository service for clients who might be looking to passport their offshore fund and need that service. Separately if clients want an EEA product to sell into the EEA market we can support those as we currently provide depository services for EEA funds.
What will you look to do differently to the other depot bank providers that have entered the space in the last year?
DR: UBS is one of the best-capitalized banks in the world with a strong global brand. With others there are a lot of names being suggested with two to three different types of models out there where some independent providers will provide this oversight duty, which will be a factor for some clients. We can provide that oversight in addition to fund administration. We can also provide the oversight functions from an a la carte selection. So we can provide a one-stop shop or we are flexible. Other models are going to be niche markets for players. We hope we are capturing a large part of the market in terms of the clients’ needs and having a strong global brand behind it in terms of UBS.
How does that play into the bank’s commitment to this area?
DR: The bank is very committed in terms of supporting clients in asset servicing with depository, administration and management company services. There’s a real focus to offer this to clients and its something we are moving forward with as part of the strategy of UBS. We’re looking to enhance our offering rather than reduce it.
Who will this service be for and where do you see the most demand?
DR: Mainly EEA managers with offshore funds (non-EEA), you also have a situation where there are non-EEA managers with non-EEA funds, which are selling into particular jurisdiction, which have gold plated the Directive and need a depot lite offering. We have been working with both EEA and non-EEA clients across numerous jurisdictions managing all types of strategies and most of the clients we are working with are based in the U.K. That is where we are seeing the biggest demand for this type of service and they are looking for solutions primarily for their Cayman funds.
GC Friday Interview: David Rochford, Head of Regulatory Product Development at UBS Fund Services
UBS Fund Services has launched its Depositary "Lite" platform to support managers of offshore funds in fulfilling the requirements of the Alternative Investment Funds Directive (AIFMD). Global Custodian talks to David Rochford about how the extended depot bank offering plays to the Swiss bank’s commitment to this area.