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    Custodial Services

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    Hiral Shah
    Custodial services involve holding and managing assets on behalf of other entities. Custodians provide core services like safekeeping, registration, clearance and settlement, income collection, corporate action processing, and tax reclamation. They also offer value-added services such as cash management, securities lending, collateral management, and performance measurement. Regulations require custodians to maintain minimum capital, abide by compliance standards, and enter valid agreements with clients. Oversight bodies monitor custodians, investigate complaints, and can suspend or cancel certificates in cases of noncompliance.

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    Custodial Services

    Uploaded by

    Hiral Shah
    388 views24 pages
    Custodial services involve holding and managing assets on behalf of other entities. Custodians provide core services like safekeeping, registration, clearance and settlement, income collection, corporate action processing, and tax reclamation. They also offer value-added services such as cash management, securities lending, collateral management, and performance measurement. Regulations require custodians to maintain minimum capital, abide by compliance standards, and enter valid agreements with clients. Oversight bodies monitor custodians, investigate complaints, and can suspend or cancel certificates in cases of noncompliance.

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    Custodial services involve holding and managing assets on behalf of other entities. Custodians provide core services like safekeeping, registration, clearance and settlement, income collection, corporate action processing, and tax reclamation. They also offer value-added services such as cash management, securities lending, collateral management, and performance measurement. Regulations require custodians to maintain minimum capital, abide by compliance standards, and enter valid agreements with clients. Oversight bodies monitor custodians, investigate complaints, and can suspend or cancel certificates in cases of noncompliance.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    388 views24 pages

    Custodial Services

    Uploaded by

    Hiral Shah
    Custodial services involve holding and managing assets on behalf of other entities. Custodians provide core services like safekeeping, registration, clearance and settlement, income collection, corporate action processing, and tax reclamation. They also offer value-added services such as cash management, securities lending, collateral management, and performance measurement. Regulations require custodians to maintain minimum capital, abide by compliance standards, and enter valid agreements with clients. Oversight bodies monitor custodians, investigate complaints, and can suspend or cancel certificates in cases of noncompliance.

    Copyright:

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    Download as PPTX, PDF, TXT or read online from Scribd
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    The key takeaways are that custodians provide core services like safekeeping, registration, clearance and settlement, income collection, and corporate action processing. They also offer value-added services such as tax reclamation, network management, collateral management, and performance measurement.

    The core services provided by custodians include self-keeping, registration, clearance and settlement, income collection, corporate action processing, and tax reclamation.

    Some value-added services provided by custodians include network management, collateral management, performance measurement, regulation and compliance advice.

    PREPAED BY:10MBA45 10MBA46 10MBA43

    Meaning and definition Custodial service is a service whereby a person or entity agrees to hold & manage assets on behalf of another person or entity.

    Custodian provide services to a variety of customers, including mutual funds & investment managers , retirement plans fiduciary & agency a\c , bank marketable securities accounts, insurance companies , corporation& private banking clients.

    1) Core services

    2) Value Added Services

    1)
    -

    core services Self keeping Registration Clearance and Settlement Income Collection Corporate Action processing Tax Reclamation Network Management

    safe keeping: Although the majority of share certificates are held either dematerialized or immobilized, there are still physical certificates representing ownership. e.g. atleast every six months. In practice, however, most custodians will reconcile monthly or even weekly.

    i.

    Registration : This is a particularly important feature with a direct impact on the liquidity of an investors portfolio. The custodian will provide a nominee registration service , market permitting , which benefit the investor by eliminating the need for the investor to be involved in completing often lengthy registration documentation.

    i.

    i.

    Clearance and settlement :


    Inefficient clearance and settlement of securities can have direct impact on the investors portfolio performance.

    i. -

    Custodians will & should be judged on their ability to offer Timely settlement, Accuracy of settlement, Timely reporting, Minimal failure, Accurate information.

    i.

    i.

    Income collection : The essential feature of any investment is the collection of benefits arising from that investment. - This is obviously a cost to the custodian & a custodians ability to offer such a service should be regarded as a key indicator of its efficiencies.

    i.

    Corporate action processing :


    This is potentially the area of highest risk as it requires the custodian to be proactive ; by contrast all of the services described above could be classed as reactive.

    i.

    Tax Reclamation : The essence of reclamation is that most foreign countries deduct tax at source on dividends and other income payable on securities at a rate in excess of the negotiated treaty rate of country of the investor & the country of the investment.

    i.

    a) b) c)

    Network Management : A custodians network refers to the service providers it utilizes globally to deliver its custodial services to clients. Own list of selection criteria Credit risk acceptance flexibility Pricing.

    i.

    Cash management : it is simply as getting the best return for surplus cash.
    - As custodians are generally large commel rcial banks with access to a larger pool of cash , it is safe to assume they will be able to get the most favorable rates.

    i.

    Securities Lending : It is a value added service.

    - The custodian will provide full administrative support services, including collateral management, fee calculation, & collection. the custodian will assume all third- party risks & will mark to- market daily in respect of adequate collateral.

    i. -

    Collateral Management : this is a new service. Control of collateral, valuation, greater efficiencies in the automated flow of collateral, multiple asset classes, Collateral substitution.

    i.

    Performance Measurement :
    - the provision of detailed information about the funds under custody & their performance is regarded by many investor as the most important value added service.

    i.

    Regulation & compliance : the custodian will provide advice on various aspect of regulation & compliance as it affects the investors, the markets they invest in, & the most appropriate fund structure.

    1. Registration of custodian of securities 2. General obligations and responsibilities of custodians 3. Inspection and audit 4. Action in case of default.

    (A) Consideration of application for grant of certificate: 1. Minimum Capital Requirement of Rs. 5o Crore. 2. The Applicant has necessary infrastructure 3. The Applicant has adequate & competent persons. 4. Prepare a complete Manual. 5. The applicant is a person who has been refused a certificate by board.

    6. The applicant, his director, his principal officer or any of his employees is involved in any litigation with the securities market. 7. Applicant is a proper and fit person

    It shall not commence any activities as custodian of securities unless it fulfills the specified capital requirement. It shall abide by the provision of the Act and these regulation in the discharge of its factions as custodian of securities. It shall enter into a valid agreement with its client for the purpose of providing custodian service. It shall specified annual fees in specified manner( 10,00,000 or 0.01percent of asset) There is any change in such information it shall inform the board in writing.

    CODE OF CONDUCT SEGREGATION OF ACTIVITIES MONITERING, REVIEW, EVALUATING,& INSPECTING SYSTEMS & CONTROLS PROBHIBITION OF ASSIGNMENT AGREEMENT WITH THE CLIENT INTERNAL CONTROLS MAINTENANCE OF RECORDS & DOCUMENTS & FURNISHING OF INFORMATION APPOINTMENT TO THE BOARD

    To ensure that the books of account, record & documents are being maintain bys the custodian of securities in the manner specified in this regulation. To investigate into complaints received from investors, client or any matter having a bearing on the activities of the custodian of the securities. The provision of the Act and this regulations are being complied with by the custodian of securities. To investigate interest of investor.

    SUSPENSION OF CERTIFICATE CANCELLATION OF CERTIFICATE

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