ADVOKS GLOBAL · KENYA
The Capital Markets (Collective Investments Schemes) Regulations, 2023
71. Delegation by custodian
Edition: 2023-12-15 · In force
71. Delegation by custodian
(1)A custodian shall not delegate to third parties any functions under these regulations except as provided in subregulation (2).(2)The custodian may delegate its functions to third parties only where—(a)the tasks are not delegated with the intention of avoiding the requirements prescribed in these regulations;(b)the custodian can demonstrate that there is an objective reason for delegation; and(c)the custodian has exercised due skill, care and diligence in the selection and appointment of any third party to whom it intends to delegate parts of its tasks, and continues to exercise all due skill, care and diligence in the periodic review and ongoing monitoring of any third party to which it has delegated parts of its tasks and of the arrangements of the third party in respect of the matters delegated to it.(3)A custodian may only delegate to a third party where that third party at all times during the performance of the tasks delegated to it—(a)has structures and expertise and approvals necessary for it to operate as a custodian;(b)segregates the assets of the sub-custodian’s client from its own assets and from the assets of the principal custodian in such a way that they can, at all time, be clearly identified as belonging to the clients of a particular custodian;(c)takes all necessary steps to ensure that in the event of insolvency of the third party, assets of a collective investment scheme held by the third party in custody are unavailable for distribution among, or realisation for the benefit of creditors of the third party.(4)The delegation of custodial authority to a sub-custodian does not relieve the custodian from any of its obligations to the collective investment scheme, the fund manager or to the Authority.