Global Trends in Asset Servicing – Extending
Beyond the Traditional Custody Model
Presentation to: Atlantic Connection
Date: July 13, 2011
FOR LIMITED DISTRIBUTION
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Speaker
Benjamin Johnson, VP, State Street Global Services, Latin America and Caribbean
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Agenda
Overview Of The Traditional Custody Model
Market Events And The Impact On Financial Services
The Custody Model - Today
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Overview Of The Traditional Custody Model
• Safekeeping – Maintaining a record of the securities owned.
• Settlement – Processing of trade orders and transmitting payments.
• Asset Servicing – Processing the rights and obligations associated with
securities which includes:
–
–
–
–
–
Income Collection
Corporate Action Notifications
Tax Withholding and Reclaims
Proxy Voting
Statement of Holdings
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Market Events And The Impact On Financial
Services
• Global Financial Crisis
• Basel III
• Dodd Frank Wall Street Reform and Consumer Protection Act
• Troubled Asset Relief Program
• Flight to Quality
• Growth of Global Economies
• Countries Enact Pension Reforms
• Large Pool of Institutional Assets Demand Global Solutions
• Increase in Cross Border Investments
• Regulatory Reporting
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Today’s Pressures on Asset Owners and Managers
In the wake of the financial crisis, institutional investors and investment
managers like you face significant new challenges
Cost and
revenue
pressures
Regulatory
scrutiny
Institutional Investors
and
Investment Managers
Increased
complexity of
investment
structure
Market
volatility
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Asset Owner Requirements in Today’s Environment
Asset Owners
Investment Diversification
Liquidity Management
Monitor Increasing Market Volatility
Manage Risk
Keep up with new regulations
Operational Costs Management
Focus on Alpha
Consistent service solution across regions
Required Solutions
Analytics across all asset and instrument types
Comprehensive reporting and modeling capabilities
Timely and accurate performance and risk metrics
Services to understand complex portfolio dynamics
Broader compliance coverage
Reduced cost of ownership
Analytics for traditional and alternative investments
Global solutions and presence
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The Custody Model - Today
• Safekeeping – Maintaining a record of the securities owned.
• Settlement – Processing of trade orders and transmitting payments.
• Asset Servicing – Processing the rights and obligations associated with
securities which includes:
–
–
–
–
–
Income Collection
Corporate Action Notifications
Tax Withholding and Reclaims
Proxy Voting
Statement of holdings
• Fund Services – Core services for investment portfolios which includes:
–
–
–
–
–
Investment Accounting
Net Asset Valuation
Performance Measurement
Compliance Monitoring
Risk Reporting
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Types of Custodians
• Single Market Custodian – A custodian who provides services in a home or local market
to serve domestic customers. Common terms used to refer to this custodian are local
custodian, agent bank, sub-custodian.
• Multi-direct Custodian – A custodian who tries to capture cross border business by
establishing a presence in multiple markets.
• Global Custodian – A custodian who provides services in all the world’s markets to asset
owners regardless of their domicile.
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The Complete Investment Picture
Financial and
Regulatory Reporting
Performance and
Analytic Services
Risk
Services
Compliance
Services
Information Delivery
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Performance
Services
Analytic
Services
Risk
Services
Compliance
Services
Information Delivery Options
Delivering Services for Your Entire Portfolio
DASHBOARDSM
REPORTS
PDF
FILES / DATA FEED
TXT
XLS
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The Role Of A Custodian Has Evolved Into More
Than Just The Safekeeping Of Assets
ADDITIONAL SERVICES REQUIRED
• Continuous Linked Settlement
• FX Execution
• Derivatives Processing
• Securities Lending
• Collateral Management
• Financial and Regulatory Reporting
• Transition Management
• Research and Trading
• On-line Applications
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Thank you!
Benjamin Johnson, Vice President
State Street Global Services
Latin America & Caribbean
bmjohnson @statestreet.com
(617) 664-9410
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