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What makes depositaries the hidden control centre for the investment sector?


The European Alternative Funds industry is heavily reliant on the crucial role played by AIFMD depositaries in ensuring the safety and protection of investors.

In practice, depositaries serve as a critical filter for investment products available for purchase in the European market. As an example, in Luxembourg, several investment fund products try to enter the market every year. While innovation is essential in developing new investment strategies that satisfy investor needs, depositaries exercise extreme caution before accepting mandates and taking responsibility. This careful scrutiny ensures that only high-quality investment products that meet regulatory requirements are launched, thus contributing greatly to the Alternative Funds ecosystem.

Depositaries are also responsible for ensuring that governance is respected throughout the life of the fund. Poor governance is the first step towards creating dangerous situations for investors. Therefore, depositaries ensure that well-documented cash flows, proof of asset ownership, and constant portfolio transaction monitoring are in place to identify risks promptly. This approach ensures that Fund Managers respect their investment strategy, and that no ghost transactions or fraud occur.

Despite the essential role played by depositaries in protecting investors, their biggest contribution often goes unnoticed and unseen by most. Their work happens behind closed doors and does not produce the fireworks seen in other sexier functions. However, it is fundamental and perhaps even more important than any of the others.

Technological debt to settle

Overwhelmed by information and regulation updates, depositaries are witnessing significant technological debt in the finance industry that frequently appears in everyday processes.  A majority of oversight, safekeeping, and cash flow monitoring procedures still need to be handled by Excel-ling or in multiple solutions struggling with data movement quality and speed Currently, the pressure from customers and even regulators is rising demanding a solid technology solution used in the depositaries.

To address this issue, Depowise has developed a one-step solution that meets depositaries’ needs in every aspect, increasing both efficiency and profitability. Depositaries solution by Depowise automates depositaries’ work, simplifies data handling, reduces paperwork, and eliminates repetitive manual data entry tasks. Depowise stands out as the only platform in the market that covers all essential pillars of depositaries in an integrated solution of oversight, safekeeping, and cash flow monitoring, and offers comprehensive and streamlined services for depositaries operating within the UCITS and the AIFMD regulations.

In case improving the overall quality of work, saving time and money, reducing the risk of errors, and increasing profitability through doubled efficiency speak to you – feel free to learn more about Depositaries solution by Depowise here

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