ESMA peer review report on the supervision of depositary obligations

The European Securities and Markets Authority (ESMA) has published a peer review report on the supervision of depositary obligations under the Undertakings for Collective Investment in Transferable Securities Directive (UCITS) and Alternative Investment Fund Managers Directive (AIFMD) frameworks. The review assessed five jurisdictions: Czechia, Ireland, Italy, Luxembourg and Sweden, with a focus on compliance with oversight and safekeeping obligations. While all national competent authorities (NCAs) have foundational supervisory frameworks in place, ESMA identified notable divergences in the depth and maturity of supervisory practices across jurisdictions. Czechia and Luxembourg fully met expectations, Ireland and Italy largely met expectations and Sweden only partially met expectations, prompting calls for an overall scale up of supervisory assessments, intrusiveness and intensity.

Key findings highlight the need for more frequent and risk-proportionate supervisory engagement, particularly given the concentration of depositaries and their potential systemic importance. There are also concerns over the depth and intrusiveness of supervisory assessments where depositaries entrust significant tasks to third parties. The report recommends that NCAs strengthen risk-based supervision by increasing the frequency and intrusiveness of engagement with higher-impact entities and ensuring risks are properly identified, assessed and mitigated. Jurisdiction-specific recommendations are detailed in the report's tables. ESMA will follow up on these recommendations and continue discussions on strengthening depositary supervision.

Return to main website.