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The Central Securities Depositories Regulation (CSDR)

The CSDR is an EU regulation that aims to ensure that transactions between buyers and sellers of securities are settled in a safe and timely manner by introducing common settlement standards across the EU. One of the ways in which it seeks to achieve that is by harmonising the rules governing the central securities depositaries (“CSDs”) that operate the infrastructures that enable settlement. The principal impact of the CSDR on our business concerns the way in which we transact on your behalf using the CREST system (which is the UK’s CSD) operated by Euroclear UK and Ireland Limited (“EUI”).

Article 38 of the CSDR imposes a requirement on participants in CSDs to offer their clients the choice between omnibus client segregation and individual client segregation at the CSD. In brief, omnibus client segregation means that the securities of a number of clients are held on a collective basis at CSD level whereas individual client segregation means that the securities of a single client are held separately from the securities of any other clients at CSD level. The omnibus segregation approach is the standard operating model we use to manage our clients’ assets within the CREST system.

From the point at which EUI receives authorisation from the Bank of England (as the competent authority responsible for the authorisation and supervision of UK CSDs), we will be required to offer you the option of individual client segregation for your assets held by us in the CREST system. However, because of the additional operational overheads incurred in maintaining separate CREST accounts, there will be a charge for the provision by us of the individual client segregation model.

The CSDR also requires us to publish certain disclosures about the risks and costs associated with both the omnibus and individual client segregation models referred to above. We will be publishing such disclosures on this webpage in due course and our current expectation is that EUI will granted authorisation at some point later this year. We have no control over this timescale but, in the meantime, should you require any further information on the CSDR or have any questions, please contact your Investment Manager.

The value of your investments and the income from them can fall and you may not recover what you invested.