Investors will bear the brunt of the Alternative Investment Fund Managers Directive because depositary liabilities may result in increased costs, according to Jean-Marc Goy from the Luxembourg regulator CSSF.
Goy, counsel for international affairs at the Luxembourg financial regulator CSSF, explained that he feared that the advice from European Securities and Markets Authority regarding the strict liability of depositary might be counterproductive and that costs would just be passed onto investors.
He told the Association of the Luxembourg Fund Industry’s European alternative investment funds conference: “ESMA advice is setting up a system where the depository has a very strict liability through a very sensitive definition of financial assets that can be held in custody, loss of financial of financial assets and a restrictive definition of an external event.
“We fear that this may leave us with a situation where costs [are] increased and passed onto investors. It may increase shadow...