Custodian bank

As custodian ( Custodian engl. ) is called in Germany under the Investment Act ( Investment Act ) Credit institutions with which the fund will be deposited ( eg securities ) of investment funds in securities accounts. Sometimes also commonly credit institutions in its capacity as custodian, as the custodian ( Custodian engl. ) are referred to.

Background

According to the Investment Act an investment company may not even keep the entrusted funds ( fund assets ). It must be deposited with a body independent of the Investment Company Bank. Among the investment companies in particular include all companies that hang up and sell a fund. Through the Disposal of the Fund to an independent bank ensures that a strict separation of corporate assets and net asset takes place. The fund's assets can not therefore be reduced by misappropriation or insolvency of the investment company or are lost.

Tasks

In addition to the safekeeping of assets, it is the duty of the Depositary to control the fund company ( § 27 of the Investment Act ). This includes for example the calculation of the share certificate price and the examination of whether the activities carried out in the name of fund transactions are at market rates ( market conformity check ).

A number of shops, including borrowing, may only carry out the fund company if the Custodian has agreed to this. The Custodian considers, in this respect, the interests of the investor and is obliged to make claims of the investor towards the fund company claims. The Federal Financial Supervisory Authority may impose on the fund company to change the Custodian, if the Custodian fails to properly fulfilled their legal obligations.

In the settlement of securities transactions, the custodian banks take over the transfer of the securities in the respective depots. In the case of a transaction between two clients of the same Custodian Bank may transfer the securities directly. However, once trade customers from two different custodians with each other, usually the CSD comes into play. This acts as a central instance to which are connected all the custodians and the transactions are effected. This has the advantage that the custodians do not need interfaces to other custodians, but only for CSDs. In Germany this central role is played by Clearstream, as the quasi acts as custodian of all other German custodian banks.

Admission

As Depositary may act for each authorized credit institution. The industry association BVI is currently conducting 48 active custodians.

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