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Custody Services Provided by Banks are Important to the Safekeeping and Management of Investments

New TCH White Paper explains the key role bank-chartered custodians play in facilitating client access to and participation in global financial markets


Sean Oblack

Washington, D.C. – July 28, 2016 – The Clearing House today issued a white paper, The Custody Services of Banks, which describes the role of bank-chartered custodians.  The paper discusses the services provided by bank-chartered custodians, their relationships with financial market utilities (FMUs), and describes the different risks associated with custody services in comparison to those associated with other banking activities.

“Custody services -- broadly characterized as the safekeeping and servicing of an investor's assets -- are a unique and critical part of the global financial market,” said Paige Pidano, Managing Director at The Clearing House Association.  “These services facilitate client access to and participation in the global financial ecosystem, which includes asset managers, broker-dealers, and FMUs.  In providing such services, custodians help to connect investors and enable capital to be deployed efficiently, thereby helping to support overall economic growth and the accumulation of retirement and other long-term savings.”

The white paper highlights the important role that bank-chartered custodians play in the system for safekeeping, clearing, and settling securities.  The services provided by these custodians facilitate client access to and participation in global financial markets.  The white paper also describes the range of administrative services related to clients’ assets that such custodians provide.  These services are critical to the efficient functioning of financial markets, and, in fact, the use of these custody services is often required by law or regulation in order to protect investors from potential misappropriation of their assets by funds and other vehicles in which they have invested. 

About The Clearing House.  The Clearing House is a banking association and payments company that is owned by the largest commercial banks and dates back to 1853.  The Clearing House Payments Company L.L.C. owns and operates core payments system infrastructure in the United States and is currently working to modernize that infrastructure by building a new, ubiquitous, real-time payment system.  The Payments Company is the only private-sector ACH and wire operator in the United States, clearing and settling nearly $2 trillion in U.S. dollar payments each day, representing half of all commercial ACH and wire volume.  Its affiliate, The Clearing House Association L.L.C., is a nonpartisan organization that engages in research, analysis, advocacy and litigation focused on financial regulation that supports a safe, sound and competitive banking system.

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