FIN-FSA conducted, via a survey, a thematic review on the organization of depository activities. The survey was sent to all depositories that have the right to operate in Finland as a depository for a common fund or an alternative investment fund. The depositories were requested to provide information on the quality and scope of their depository activities, the organization of the depository activities, and the performance of supervisory duties. The thematic review did not address how the custody of the funds’ assets was arranged.
Twelve operators responded to the survey, five of which were branches of a foreign European economic area credit institution. The responses showed that the market for depository services is highly concentrated—only ten depositories provided depository services and the majority of assets was kept in custody by the three most significant agents. FIN-FSA wishes to point depositories’ attention to adequate personnel resources in supervisory duties and to the need of developing automated systems in order that the depositories have the genuine capacity to perform all of their statutory duties.
With respect to the duties reviewed, FIN-FSA was unable to ascertain that the depositories perform statutory supervision in all circumstances with a frequency required by fund-level risk assessment. The supervisory procedures observed by a depository must be based on a risk assessment conducted by the depository, which, in the view of FIN-FSA, should be documented, for example, in a supervision plan. Depositories must also note that ESMA has provided interpretations on the application of regulation on depositories.
Keywords: Europe, Finland, Banking, Securities, Depository, Thematic Review, Supervision, ESMA, FIN-FSA
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