The Good, the Bad and the Unsettled
Lee, John Paul. Reactions. London: Jul 1989., Iss. 7; pg. 43, 4 pgs
http://proquest.umi.com/pqdweb?did=1394413&sid=39&Fmt=2&clientId=68814&RQT=3
09&VName=PQD
Abstract (Document Summary)
In their capacity as fund managers, insurance companies need specialized services from
banks, especially in trade settlement. With the exception of the Prudential, which has
traditionally relied upon in-house expertise to handle much of its own settlement, most
insurance companies have instructed custodial banks to initiate and settle trades, collect
coupons and dividends, and notify them of corporate actions arising from scrip issues,
rights issues, and tender offers. The choice of custodian is often determined by the type
of investments the manager handles. Essential to all global custodians is a good
computer system, through which the firm can provide added value services, such as
investment accounting, securities lending, fiduciary and trust services, and risk analysis.
A crucial area of ongoing inconvenience that can affect management performance has
been a failure to settle transactions. Global custodians can offset the risk of failure by
offering contractual settlement. Custodians are concentrating on managing their fees in
response to the demands for greater cost efficiency.