Trustee and Depositary Services
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Europe’s investment fund market is more interconnected today than at any point in its history. Yet one critical service remains confined within national borders: depositary services. Introducing a full European Union (EU) Depositary Passport would expand choice, strengthen competition, enhance resilience, directly benefit Europe’s end investors and support the EU’s ambition for deeper, more effective capital markets.
Key Takeaways
- EU rules require depositaries to be local, creating fragmentation across fund markets
- A depositary passport would expand choice beyond national borders for funds
- Increased competition could improve service quality and reduce costs
- Broader provider access may reduce concentration risk in smaller markets
- Passporting aligns with EU goals for more integrated, resilient capital markets
The rules governing depositary services shape how funds operate, how investors are protected and how efficiently capital can move across Europe.
In the EU, the depositary is a cornerstone of investor protection. It performs a vital role in safekeeping fund assets, overseeing cash flows and monitoring key aspects of a fund’s operation to ensure compliance with the regulatory framework.
Today, funds compliant with the Undertaking for Collective Investment in Transferable Securities (UCITS) framework, and most alternative investment funds (AIF), must appoint a depositary located in the same country where the fund is domiciled. As a result, depositary services are fragmented on a country-by-country basis, instead of being fully integrated across the EU.
Where the Current Model Falls Short
The current requirement for funds to appoint a depositary within the country of domicile limits the choice of available services. In smaller EU member states, or for funds pursuing more complex investment strategies, the pool of available depositary services providers may be limited, meaning that funds face restricted access to specialist expertise, less competition and higher costs.
Fragmentation can also introduce broader market consequences, such as reduced resilience. Where only a small number of local providers are able to service an entire market, concentration risk rises, technology investment is more likely to be stifled or delayed and innovation suffers.
A more integrated approach, such as the EU Depositary Passport would support the EU’s goals of enhancing resilience in financial infrastructure, while giving depositary services providers the scale to invest, modernise and innovate.
What a Depositary Passport Could Unlock
The potential benefits of an EU Depositary Passport are practical, immediate and significant:
- Broader choice for funds in selecting a depositary with specialist capabilities and/or one located in other countries
- Stronger competition in depositary services with a wider pool of potential service providers, supporting service quality and pricing
- Reduced concentration risk in smaller markets
- Greater scale and efficiency in the provision of depositary services, with benefits for funds and investors alike
- Expanded access to more high‑quality depositaries with robust balance sheets and advanced custody capabilities
These benefits are particularly relevant in smaller EU jurisdictions, where choice of depositaries is limited. Benefits will accrue to the investment fund, their managers and, most importantly, to the fund’s end investors.
A Natural Fit with Europe’s Wider Ambitions
The introduction of an EU Depositary Passport does not sit in isolation. It aligns closely with the EU’s broader efforts to build deeper, more connected capital markets through the EU’s Savings and Investments Union agenda.
In December 2025, the European Commission proposed changes to the UCITS and the Directive on Alternative Investment Fund Managers (AIFMD) frameworks that would allow funds to appoint a depositary anywhere in the EU.
BNY supports the proposal because it complements wider European objectives: mobilising savings more efficiently, improving market resilience and strengthening investment funds as a source of long-term financing for the economy.
Addressing Common Concerns
Questions around supervision, national rules and insolvency outcomes are often raised in discussions about a depositary passport. These are important considerations. However, Europe’s regulatory landscape has changed markedly over the past 15 years.
Stronger EU-level coordination, more consistent rules and the growing role of authorities such as the European Securities and Markets Authority (ESMA) have significantly improved cross-border oversight. Other essential services, including custody, already operate successfully across borders. That experience suggests that any outstanding issues, relating, for example, to supervisory cooperation, can be solved as part of the implementation of an EU Depositary Passport.
Reflecting the Reality of Experience
BNY’s position is informed by direct experience. The firm operates a European bank headquartered in Belgium, with branches across nine EU member states. That footprint provides a close view of how fragmentation affects clients in practice — not in theory, but in day-to-day operations.
From BNY’s perspective, an EU Depositary Passport would better reflect the reality of an increasingly integrated European regulatory and supervisory framework, while delivering tangible benefits to funds, end investors and the wider market.
Supporting Dynamism and Resilience
An EU Depositary Passport may sound like a niche reform, but its implications are far-reaching. At its core, the proposal aims to advance greater integration across the European funds industry, enabling investors in European investment funds to realise the full benefits of a single market by removing a key barrier.
The European Commission’s 2025 proposal offers a timely opportunity to complete this part of the European Single Market. For investors in European investment funds, the outcome will be greater choice, stronger competition and a more resilient fund ecosystem. For Europe, it will be another practical step towards a deeper, more dynamic capital market.
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