(1) This regulation applies where a financial instrument held in custody in accordance with rule 6.6B.18 of the Collective Investment Schemes sourcebook by -
(a) the depositary, or
(b) a third party to whom custody of the financial instrument has been delegated or sub-delegated,
has been lost in the conditions or circumstances described in Article 18 of Commission Delegated Regulation (EU) 2016/438 of 17 December 2015 supplementing Directive 2009/65/EC of the European Parliament and of the Council with regard to obligations of depositaries.
(2) Subject to paragraph (3), the depositary is liable to the UCITS and to the unit-holders of the UCITS for loss of the financial instrument and must return a financial instrument of an identical type or the corresponding amount to the UCITS, or to the management company acting on behalf of the UCITS, without undue delay.
(3) The depositary is not liable under paragraph (2) nor is it required to comply with the obligation in that paragraph if it ca
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