An investor, whether a hedge or mutual fund, an investment company, a pension fund, or any other institutional investor or a retail investor, who invests in equity or debt securities requires someone, like a custodian, to safeguard the financial assets on their behalf. It also receives dividends, trades securities, keeps records, and processes transactions on behalf of the investor.
Custodians are financial institutions, especially banks, that offer custody and related services by entering into a contract with the investor. They help investors in safekeeping and servicing their assets, as well as assist them in building and maintaining wealth. There are some banks, like DBS, offering global custody services to institutional investors, which include asset managers, investment companies, and asset owners.
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What Are Global Custody Services?
Global custody services include an extension of services to customers in the global market through a network of agent custodians. For instance, DBS offers custody services in the markets like Hong Kong, Singapore, India, Indonesia, and China. It offers direct custody services for cross-border transactions, foreign market investments, and foreign securities. It delivers all essential custodial services, but on a global scale.
These custodians or banks connect with local agents in the markets, where they offer services. With the help of these agents, they offer custody services together to both domestic and international clients in the global markets. Some of the prime custodial services include the management of assets, settling trades in multiple markets, safekeeping of assets, executing corporate activities, keeping records, collecting income, and reporting.
Compliance with international regulatory requirements while keeping up with customer demands in all markets is the bigger challenge in delivering satisfactory global custody services. For services to be delivered effectively, the custodians and their agents have to cooperate, coordinate and act in good faith.
Why Should You Consider Using Global Custody Services?
It is not easy to find custody services that are ideally suitable for your company. A reliable custodian with the right resources and reach can assist you whenever you need it. Several businesses, for this reason, now depend on global custody services to drive growth and ensure future success. Some essential benefits of using them are:
1. Provide State-Of-The-Art Infrastructure
Global custodians have the cutting-edge infrastructure to facilitate easy working and interaction with clients. They are known to provide automation in everything for a seamless client experience.
2. Keep Updating The System
Most global custodians are well-equipped to act or adapt quickly to the changes in requirements and regulations and improve their systems and procedures accordingly. They keep investing in SWIFT integration, robotics, and automation to do away with manual touchpoints, simplify processes, and minimise risk.
3. Manage Cash Efficiently
Global custody services also include prime aspects of liquidity management, from executing trades to analytics that assist you in maximising operational efficiencies. Further, reliable custodians generally use resources to build your investment in money funds, provide options for lending securities, and offer credit facilities.
4. Focus On Risk Management
Your assets should be kept safe and secure through relentless attention to risk management by custodians. They have strong control frameworks, extensive risk management procedures, rigorous training standards, and strong cybersecurity and compliance.
5. Have A Wider Agent Network
Global custodians’ extensive network often results in a more customised experience for customers. Their extensive global network allows them to allocate appropriate resources and competence toward your specific needs and objectives. Further, they also help improve responsiveness and accessibility by having locations in various time zones.
6. Offer Expertise In Regional And Emerging Markets
Non-resident investors have now easy access to emerging markets across the world. With regional expert agents committed to understanding your business, you can have solutions tailor-made to you, as well as your portfolio.
7. Provide Access To New Markets
New opportunities are created as markets expand and evolve. Collaborating with regional or local institutions or organizations, a custodian gives their clients easy access to all markets. These local institutions control foreign exchange activities, facilitate transaction settlement, and process corporate actions, like income events and proxy voting, on positions that are long held.
8. Offer Asset Servicing
Since securities held by a client are mostly held in a securities account by the custodian, the client is frequently unable to exercise their rights or fulfil their obligations concerning the securities without the custodian’s help. Asset administration services are a part of custody services, and they include collateral processing, tax processing, valuation of securities, corporate action processing, and reporting services.
9. Provide Foreign Exchange Services
The value of various currencies changes over time. A custodian who is knowledgeable about many different currencies and markets can easily deal with these fluctuations and take advantage of them.
10. Reporting
It entails giving clients reports on recent transactions, account holdings, and income collections.
To conclude, you can concentrate on taking your company to new heights by taking advantage of the global custody services offered by a reliable custodian, who has the resources to support your financial objectives.
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