Custodial Services

Key Highlights

• Custodial services refer to the safekeeping, administration, and management of financial assets on behalf of investors, including securities, cash, and other investment instruments.

• Types of custodial services includes domestic, international / global, sub-custody arrangements and specialized custody services.

What are Custodial Services?

Custodial services refer to the safekeeping, administration, and management of financial assets on behalf of investors, including securities, cash, and other investment instruments. Custodians act as trusted intermediaries, ensuring the security of assets and the smooth execution of transactions.

Key Functions of Custodial Services

• Safekeeping of Assets: Physical and digital custody of securities to prevent loss, theft, or misappropriation.

• Settlement of Transactions: Ensuring timely and accurate settlement of trades in equities, bonds, mutual funds, and other instruments.

• Record-Keeping & Reporting: Maintaining detailed records of holdings, transactions, and corporate actions, and providing periodic reports to clients.

• Income Collection & Corporate Actions: Managing dividends, interest, and rights issues, and handling other corporate events on behalf of clients.

• Regulatory Compliance: Ensuring all transactions and holdings adhere to applicable regulatory standards and investor protection guidelines.

Types of Custodial Services

Custodial services can be categorized based on the scope, geography, and level of involvement provided to clients.

1. Domestic Custody:

Custodians hold and manage assets within the investor’s home country. This is suitable for clients whose investments are largely local, ensuring regulatory compliance and simplified reporting.

2. International / Global Custody: Global custodians manage cross-border investments, holding securities in multiple countries. They coordinate with local sub-custodians, enabling investors to access international markets while maintaining centralized reporting and oversight.

3. Sub-Custody Arrangements: In some cases, a global custodian may delegate the safekeeping of assets in specific markets to local sub-custodians. This allows for local expertise, regulatory compliance, and smoother execution of transactions.

4. Specialized Custody Services:

• Securities Custody: For stocks, bonds, and mutual funds.

• Alternative Asset Custody: For private equity, real estate, or hedge fund holdings.

• Digital Asset / Crypto Custody: Safekeeping of cryptocurrencies or tokenized assets with secure digital wallets.

Benefits of Custodial Services

Custodial services provide a range of advantages, especially for high-net-worth individuals, family offices, and institutional investors:

• Safety and Security of Assets: Custodians safeguard financial assets, reducing risks of theft, loss, or fraud.

• Operational Efficiency: They handle trade settlement, income collection, and corporate actions, allowing investors to focus on strategy and decision-making rather than administrative tasks.

• Regulatory Compliance: Custodians ensure adherence to local and international regulations, reducing compliance risk for investors.

• Accurate Record-Keeping and Reporting: Clients receive timely reports on holdings, transactions, and portfolio performance, facilitating informed investment decisions.