CIR 13.6.3 Guidance
1. If the prime broker holds the legal title to the
Fund assets, the prime broker must, in any event, qualify as an Eligible Custodian. However, even if a prime broker does not hold the legal title to the Fund assets, CIR Rule 13.6.3(c) requires it to meet the Eligible Custodian requirements in certain circumstances. This is where it has the power to use Fund assets as collateral for its financing activities (e.g. by having a charge over the Fund assets) in conjunction with any other assets held by or available to it.
2. In relation to the matters referred to in Rules CIR 13.6.1 and CIR 13.6.2 and in relation to management of
Hedge Fund investments, the DFSA expects Fund Managers of Hedge Funds to have proper regard to best practice standards and guidance set out in CIR App 8, DFSA's Hedge Fund Code of Practice as well as international developments relating to Hedge Funds.