Asset Custodian Agreement

A career retirement plan would be an example of police custody. Many, if not most, companies charge a third party to manage such plans in order to recover payments from employers and workers, to invest the funds and to pay benefits. The UCITS V directive provides that the custodian is responsible for the actions of the sub-custodian against the CIS and its participants. In the event of a loss of sub-depository, the custodian will therefore return an asset with identical characteristics. And if that`s not possible, it will provide its cash value. However, it is not liable if the damage is due to an unavoidable event that may be out of its control. It is also liable for damages caused by negligence or non-compliance with its obligations by the sub-custodian. As stipulated in the directive, the custodian`s liability is not affected by the sub-depository agreement. In other words, even if the custodian delegates his deposit functions, he remains responsible. The custodian`s liability for the sub-custodian is also governed by section 62 of the ICA. By 4/2016, custodians of non-UCITS ISCs are exempt from their liability by contract. A limitation of this liability is common in contracts with individuals.

The custodian is not liable for the damage caused by the insolvency of the sub-custodian. Except that if the sub-depository has not been properly selected and monitored, it is held responsible. If the sub-custodian does not meet the requirements, for example. B due to a lack of capital, the custodian must inform the administrator. In this case, the custodian must designate another sub-custodian. If the replacement of the partial custodian is not possible, the administrator should immediately sell the financial instruments of the partial custodian. In order to avoid such situations and act quickly, the administrator should develop contingency plans. Normally, this function is performed by banking institutions, but also by brokers or brokers. While controlling the securities, the custodian monitors the action of the management company. It is obliged to inform the CNMV of one of its irregularities. The custodian is the one who calculates the net inventory value on a daily basis.

It is also responsible for the settlement of securities, subscriptions and share withdrawals. It will also collect and pay all interest and dividends that can be generated. As far as custody functions are concerned, the custodian is also designated as a custodian. The custodian holds legal ownership of the securities, but cannot negotiate them. In addition to the retention of the assets that make up the CIS portfolio, the shares of their investors are retained. The result is the obligation to make the corresponding book entries on behalf of the unitholders. An example for an administrator is JP Morgan Chase. The number of custodians is governed by Title V of the Spanish CIS regulation, Article 126 and thereafter. As a general rule, the custodian performs custodian functions at the national level, but copies are prescribed internationally.

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