(1) This regulation applies where a financial instrument held in custody in accordance with rule 3.11.21 of the Investment Funds sourcebook by the depositary or a third party to whom the custody has been delegated or sub-delegated is deemed to have been lost under Article 100 of the Commission Delegated Regulation.

(2) Subject to paragraphs (3) and (4), the depositary must return a financial instrument of the identical type or the corresponding amount to the AIF, or the AIFM acting on behalf of the AIF, without undue delay.

(3) The depositary is not required to comply with the obligation in paragraph (2) if it can prove that the loss arose as a result of an external event beyond the depositary's reasonable control, the consequences of which would have been unavoidable despite all reasonable efforts to the contrary.

(4) The depositary is not required to comply with the obligation in paragraph (2) if it can prove that -

(a) the lost financial instrument was held in custody by a third party;

(b) the depositary had delegated its functions to the third party in accordance with rule 3.11.28 of the Investment Funds sourcebook;