Section 17Part 3 — Operating Conditions for Private FundsAmended
Safekeeping of fund assets
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Amended by LG49/S6
Subject to subsection (3), a private fund shall appoint a custodian to perform the duties set out in subsection
. ( 2 ) The custodian shall —
hold in custody, in segregated accounts opened in the name , or for the account, of the private fund, the custodial fund assets; and
verify, based on information provided by the private fund and available external information, that the private fund holds title to any other fund assets and maintain a record of those other fund assets.
A private fund sha ll not be required to appoint a custodian if it has notified the Authority and it is neither practical nor proportionate to do so, having regard to the nature of the private fund and the type of assets it holds.
Where a private fund notifies the Authority of its intention not to appoint a custodian pursuant to subsection (3) , the private fund shall appoint one of the following persons to carry out the title verification described in subsection (2)(b) —
an administrator or another independent third party; or
the manage r or operator , or a person with a control relationship with the manager of the private fund, provided that —
the title verification function is independent from the portfolio management function; or
potential conflicts of interest are properly identified , managed, monitored and disclosed to the investors of the private fund. 6
Where the title verification described in subsection (2)(b) is not performed by a custodian, an administrator or another independent third party appointed in accordance with subsections (1) or (4)(a), the Authority may require the private fund to have its title verification verified by an appropriately profe ssionally qualified independent third party .