A draft proposal for ‘UCITS V’ has been published by the European Commission. The proposal contains amendments to the current UCITS Directive (2009/65/EC) rather than a complete overhaul. Changes include the introduction of rules on remuneration policies for key members of the UCITS management company and the duties and liabilities of the depositary.

Article 22 of UCITS IV is rewritten and will now include, amongst other things, the duty of a depositary to ensure that the cash flows of UCITS are properly monitored and that investors subscriptions are properly booked.

Article 23 will be amended so that only credit institutions and MiFID firms that provide the ancillary service of safe-keeping and administration will be eligible to be a depositary.

Article 24 clarifies the depositary’s liability in case of the loss of a financial instrument that is held in custody.

The proposal document is relatively modest, consisting of only 33 pages cover to cover including the ‘Explanatory Memorandum’, and all the proposed changes can be viewed using the link supplied (there is also a link to UCITS IV for reference purposes). It is expected that UCITS V will apply by the end of 2014.

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