(Article 12(1) of Directive 2011/61/EU)
1. When selecting and appointing counterparties and prime brokers, AIFMs shall exercise due skill, care and diligence before entering into an agreement and on an ongoing basis thereafter taking into account the full range and quality of their services.
2. When selecting prime brokers or counterparties of an AIFM or an AIF in an OTC derivatives transaction, in a securities lending or in a repurchase agreement, AIFMs shall ensure that those prime brokers and counterparties fulfil all of the following conditions:
(a) they are subject to ongoing supervision by a public authority;
(b) they are financially sound;
(c) they have the necessary organisational structure and resources for performing the services which are to be provided by them to the AIFM or the AIF.
3. When appraising the financial soundness referred to in paragraph 2(b), the AIFM shall take into account whether or not the prime broker or counterparty is subject to prudential regulation, i
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