Global Custody

Baker & McKenzie’s Banking and Finance Practice Group, working with colleagues in other practice areas, advise financial institutions acting as global custodians, local custodians of all types, and sub-custodians for securities and cash held in cross-border custody for institutional investors, including mutual funds, pension funds, insurance companies, corporate trusts, and governments.

We advise custodians on all issues relating to the safe custody of assets, clearance and settlement of trades, the collection of income, the settlement of transactions, and on matters arising out of custody-related securities services and taxation. Also reviewing issues of liability, efficiency, and credit risk, the Banking and Finance Practice Group provides a full range of advice regarding cross-border and global custody arrangements to ensure compliance with applicable US securities laws and other regulatory regimes affecting assets held in foreign custody.

We have been substantially involved in drafting and negotiating custody agreements, reviewing negotiated agreements for compliance with applicable regulations, and preparing annual reports containing information in compliance with requirements of different jurisdictions.

We advise global custodians, institutional investors, master trusts, insurance companies, and other financial institutions with respect to foreign and domestic regulations applicable to their securities lending programs.

Representative projects in this area include:

• Representation of a major French bank in connection with title transfer issues with respect to its securities lending program with Japanese corporate counterparts.
• Representation of several major global banks — headquartered in North America and in the UK — with legal updates in over 100 jurisdictions regarding local laws applicable to certain country-risk issues affecting sub-custody arrangements.
• Representation of major US banks on the holding of Japanese government bonds through a Japanese sub-custodian, concerning issues arising from the custody of letters of transfer for such bonds signed in blank by the transferor.
• Representation of a major Canadian bank with advice on its proposed sub-custody arrangements in Israel, Botswana, Ghana, Kenya, Zambia, and Zimbabwe.
• Representation of a major international insurance company with respect to their selection of a US custodian for their assets and preparation of a model global custody agreement for holding of its assets with a global custodian.
• Ongoing representation of an informal coalition of global custody banks that provide cross-border custody and related asset-servicing functions to institutional investors located around the globe. Our representation of this group has included advocacy in numerous US and foreign regulatory proceedings involving clearance and settlement and market structure issues as well as issues affecting custody, including the SEC's rulemaking regarding Investment Company Act Rules 17f-5 and 17f-7. In addition, work with this group includes completing an annual information-gathering exercise in which approximately 140 central securities depositories are surveyed.