Safe Custody

Many institutions provide safe custody services for their clients, that is, they agree to hold and manage securities (and cash) for their clients. Such services may be provided not only by custodian banks, but also by brokerage operations. Securities owned by clients but managed by entities providing custodial services must be held in segregated accounts at the relevant custodian.

Fundamental safe custody services provided for clients’ securities accounts include:

• safe custody of bond positions
• receipt and delivery of bonds
• valuation of bond holdings
• updating holdings due to corporate actions
• issuing statements of holdings

For cash accounts, services include the provision of safe custody for cash in different currencies, receipt and payment of cash, and the updating of cash accounts for accrued interest.

The fee charged to a client for custodial services may be based on the size of the client’s bond portfolio or the number of movements in and out of the portfolio.