Depositaries are required under AIFMD and UCITS V to:
Overview
- Monitor all the cashflows of a fund; and
- Identify inconsistent and unusual cash movements
Types of Cashflow
Cashflows will include:
- Expenses – trustee, auditor, fund accounting, legal, printing, valuation, letting agent for property etc
- Subscriptions and redemptions for investor buy and sells
- Purchases and sales proceeds for buying and selling equities / bonds etc
- Collateral and margin movement on derivatives
- Dividends and income and interest from equity and bond deposits
- Forward FX rates
- Corporate Actions
- Dividend Income
- etc
The monitoring approaches could either be for example:
- Based on a % of scheme NAV
- A fixed level
- Based on the different fee types, asset classes and expected trading and other activity on each portfolio.
HighWire provides flexible framework to set and apply cashflow limits and to manage exceptions.