Читать книгу Fundamentals of Financial Instruments - Sunil K. Parameswaran - Страница 64

A custodian bank, a.k.a. a custodian, is a financial institution entrusted with the responsibility of safeguarding the financial assets of an individual or, more commonly, an institutional investor. The custodian typically performs one or more of the following functions:

1 It holds stocks and bonds in safekeeping.

2 It arranges for settlement whenever securities are purchased or sold. In the event of a purchase it ensures that securities are credited and cash is debited, while in the event of a sale it ensures that securities are debited and that cash is credited.

3 It collects dividends on shares and interest on bonds and ensures that the investor's account is credited.

4 It provides information related to the companies whose securities are being held by the investor, such as the schedule of their annual general meetings (AGMs).

5 It provides foreign exchange transactions if required.

Global custodians hold assets for their clients in multiple locations around the globe, using their own local branches or other local custodians. The advantage of employing a global custodian is that a settlement instruction needs to be sent to a single destination. Investors may also opt to use a network of local custodians, one in each financial center where they undertake trades.

If a custodial facility is availed of, the shares will be held in the name of the custodian, with the investor continuing to remain as the beneficial owner of the securities. The advantages of employing the facilities of a custodian may be summarized as follows:

1 It makes it easier and quicker to trade securities, particularly international shares.

2 It simplifies the management and reporting of share transactions. At the end of every financial year, the investor will receive a single consolidated statement giving details of purchases and sales, and any dividend or interest income received during the period.

3 The custodial facility also makes it easier to track the performance of the investor's portfolio.