Custody - Part 1



Module 1 looks at the registration of the securities and, in particular, the role played in that process by registrars and transfer agents. The distinction between bearer and registered securities is explained, as well as the key differences between securities registered in the names of beneficial owners and those registered in nominee names. The functions of various other agents – many of which are performed by custodians – are described in detail, along with the requirements for the different types of security registration.

Module 2 proves an overview of the role of custodians in modern-day financial markets. It explains the different aspects and dimensions of the custodial business, describes some of the basic tools used by custodians, and describes the key services they provide to their clients.

The extent of a custodian’s role in the life of trade depends on the capacity in which the custodian is operating. In some cases, it may be operating purely in a custodial capacity – obtaining instructions from clients to receive/delivery securities versus cash and effecting the settlement of these instructions. In other situations, the custodian may be involved with the actual marketplace – executing and clearing trades, as well as effecting their settlement. Module 3 looks at the role played by custodians in the processing of trades, from trade execution right through to trade settlement.


On completion of this course, you will be able to:
- Recognize the different forms of security ownership that may be maintained and the requirements for the various types of security registration
- Describe the role of a custodian when acting in the capacity of transfer agent, paying agent, or agent for corporate actions
- Understand the reasons why issuers convert domestic shares to depositary receipts
- Explain the fundamental business of custodians and differentiate between the different types of custodian
- Describe some of the basic tools used by custodians in their business
- Understand the key role of custodians in relation to safekeeping, possession, and control of assets
- Outline some of the ancillary services provided by custodians
- Understand the various capacities in which a custodian may operate in the life of a trade
- Describe the basics of trade execution
- Outline the role played by custodians in the recording and reporting of trades
- Explain the key role played by custodians in the settlement of transactions


Module 1: Registrar & Transfer
Topic 1: Security Registration
Topic 2: Custodians as Agents
Topic 3: Depositary Receipts

Module 2: Role of a Custodian
Topic 1: The Custodian as a Business
Topic 2: Custodian Database
Topic 3: Safekeeping, Possession, & Control
Topic 4: Ancillary Services

Module 3: Role of a Custodian in Trade Processing & Settlement
Topic 1: Capacity of Custodian
Topic 2: Trade Execution
Topic 3: Trade Recording & Reporting
Topic 4: Trade Settlement


SFC:3.00, PWMA:3.00