In 1996 the International Organisation of Securities Commissions (IOSCO) published a discussion paper Guidance on custody arrangements for collective investment schemes. The paper was intended to provide guidance on the IOSCO Principles for the regulation of collective investment schemes. This was achieved by identifying the principal risks associated with safe custody of cash deposits and non-cash assets, and by identifying the major considerations which are relevant to the selection of custodians, contractual arrangements with custodians, and the monitoring of such arrangements.
In June 2010 IOSCO published Objectives and Principles of Securities Regulation (the IOSCO Principles). In Principle 25 IOSCO recognised that custodians play a key role in the safekeeping on collective investment scheme (CIS) assets by stating that “the regulatory system should provide for rules governing the legal form and structure of collective investment schemes and the segregation and protection of client assets.”
IOSCO has now published a consultation report which seeks to clarify and further develop principles regarding the custody of CIS assets and obtain stakeholders’ views on issues related to the custody of CIS assets consistent with the IOSCO Principles.
The consultation report looks at the role and function of entities which provide safekeeping and in some cases also provide ancillary services (e.g. fund administration, mandate monitoring and record keeping) to a CIS, and the responsibilities of the entity or entities responsible for the overall operation of the CIS in relation to appointing and monitoring these entities.
The deadline for comments on the consultation report is 10 December 2014.
View IOSCO consults on principles regarding the custody of CIS assets, 10 October 2014