|
|
| (7 intermediate revisions by the same user not shown) |
| Line 1: |
Line 1: |
| {{a|cass|}} | | {{a|cass|}}A [[sub-custodian]] is a sub-contractor appointed by a main custodian as part of its [[custody network]], to hold [[client asset]]s on behalf of a [[main custodian]] — usually to carry out functions that the main custodian can’t. for example, to hold assets in a jurisdiction where the [[main custodian]] has no licence to do so. |
| A topic of some recent interest in light of {{tag|AIFMD}} and {{tag|UCITS V}} legislation. Under both regimes a single [[depositary]] must be appointed having strict liability for the safe keeping of assets. | | |
| ===Delegate versus sub-contractor===
| | A [[sub-custodian]] therefore doesn’t have a direct [[contract]]ual relationship with the client.<ref>Compare with a ''[[delegate]]'', who carries out the [[main custodian]]’s client-facing function on its behalf, as described below.</ref> |
| Note though that being ''[[Delegation|delegated]]'' a custody function - where you agree to act as main custodian to a fund on behalf of the [[depositary]] whom the fund has appointed to carry out that function — quite common for AIFs, whose local depositary is obliged to be nominal custodian, but whose prime broker is usually very keen to have custody of fund assets it has [[margin loan|lent against]], so it can [[rehypothecate]] them — is a different thing from the [[depositary]] (or, for that matter, the prime broker) appointing another entity as a [[sub-custodian]].
| | |
| *A delegating [[depositary]] won't hold the assets ''at all'': it will pass that responsibility to the [[prime broker]], who will record the end client's interests in the custody assets directly in its books and records. It may have to report this all to the depositary, but the depositary will not carry record of the client’s assets in its own books and records.
| | {{subcustodian risk}} |
| *A [[subcustodian]] is an entity who stands behind the main custodian and holds the [[custodian]]'s client assets in a single [[omnibus]] account, in the [[custodian]]'s name but marked as "client assets" and therefore unavailable for the prime broker's creditors. A [[sub-custodian]] won’t know who the custodian's clients are, let alone which assets are attributable to which clients, much less have a contractual relationship with those clients, and won’t be in a position to [[rehypothecate]] any assets it holds.
| | |
| | {{delegate vs subcontractor}} |
|
| |
|
| ===[[No lien letter]]s=== | | ===[[No lien letter]]s=== |
| {{No lien letters}} | | {{No lien letters}} |
|
| |
|
| ===See also===
| | {{sa}} |
| *[[Custodian]] | | *[[Custodian]] |
| *[[No lien letter]] | | *[[No lien letter]] |
| *[[Prime broker]] | | *[[Prime broker]] |
| *{{aifmdprov|Depositary}} ({{tag|AIFMD}}) | | *{{aifmdprov|Depositary}} ({{tag|AIFMD}}) |
| *{{ucitsprov|Depositary}} ({{tag|UCITS V}}) | | *{{ucits5prov|Depositary}} ({{tag|UCITS V}}) |
| | |
| | {{ref}} |