What are custodian services?
Custodian services are where a company (licensed by ASIC to do so) holds clients’ assets (such as bonds) in safe custody for their clients.
Why do I need a custodian?
If you want to buy bonds using FIIG you will need to have custodian arrangements in place where your bonds are held until maturity or until you sell them.
Can FIIG Securities Limited provide custodian services?
Yes. FIIG is licensed by ASIC to provide custodian services for its clients.
What are my options for custodian services?
You have the following options:
- FIIG provides custodian services whereby your assets can be held in custody in FIIG’s account with FIIG’s custodial service provider. Before this custodian service is provided by FIIG, you will need to accept all terms and conditions in the Client Custody Agreement Terms and Conditions and Financial Services Guide. The beneficial ownership of your assets, held in custody, remains with you at all times. Your assets can only be bought, sold, or otherwise dealt with, on your instructions to FIIG.
- You can also make independent arrangements for the custody of your assets by appointing the custodian of your choice including opening your own custody account direct with FIIG’s custodial service provider.
Does that mean that if something happens to FIIG my bonds are safe?
Yes. Your bonds do not form part of FIIG’s assets.
FIIG as custodian holds the assets under an account in your name which will recognise your asset holdings. You retain 100% beneficial ownership of your bonds. This means that your bonds are your assets at all times and do not form part of the assets of FIIG or the custodial bank. If FIIG or the custodial bank were to cease operations, your bonds will be safe and remain yours.
FIIG holds your assets as bare trustee either in our name or in the name of a sub-custodian or a Securities System (as appropriate). The beneficial interest in your assets is held by you. FIIG and the Custodian acknowledge and confirm that the beneficial interest in your assets held under custody in accordance with the Client Custody Agreement shall, at all times, vest in you. In that regard, either party are unable to affect the 100% beneficial ownership of your assets.
Are there any fees involved with FIIG's Custodial Services?
Yes. FIIG charges the following fees:
Custody Service Fee
- 0.20% p.a. for the first $500,000
- 0.14% p.a. for the next $1.5m
- 0.09% p.a. for the next $3m
- 0.06% p.a. for amounts over $5m
The Custody Service Fee is subject to a minimum monthly fee of:
- $20 (if you have nominated an existing Macquarie Bank CMA or elected to establish a new FIIG Funding Account held in your FIIG account name with Macquarie Bank); or
- $30 (if you have not elected to have a Macquarie Bank CMA as your FIIG Funding Account).
The Custody Service Fee is calculated daily on the value of your account holdings and charged monthly.
Dishonour fee
A dishonour fee may be charged if insufficient funds are available at the time FIIG seek to charge the fee.
In specie transfer fee
An in specie transfer fee may be payable should you transfer existing securities between FIIG and another custodian. This fee will vary according to the complexity of the transfer and will be agreed with you prior to the transfer occurring. However, the fee will not exceed $300 per series of security transferred.
Does FIIG use a sub-custodian?
Yes, FIIG uses J.P. Morgan as a sub-custodian.
J.P. Morgan is a leading global financial services firm and bank with assets of US$2.2 Trillion and operations in more than 60 countries including a major presence in Australia for the Investment Bank, Treasury and Securities Services businesses. A core part of J.P. Morgan’s franchise is the Securities Services business (Custody business) that holds over US$16.6 Trillion in assets under custody globally. J.P. Morgan has been servicing Australian custody customers for over 20 years.
You can read more information on J.P. Morgan’s custody business from the following web site link:
www.jpmorgan.com
Who is the regulator of custodian services?
ASIC is the regulator of custodian services including those provided by FIIG.
Does FIIG provide me with reports of my holdings of bonds held in custody by FIIG?
- Yes. FIIG will provide the following reports to you:A Contract Note recording your purchases and sales of bonds;
- A monthly Holding Statement listing all of your bonds held at the end of the month;
- An Annual Summary Report made up to 30 June in each year showing your transactions in bonds during the financial year;
- Other written reports which you may reasonably request of FIIG in relation to your bonds.
How do I find out if I am a ‘Wholesale Client’ (including a ‘Sophisticated Investor’)?
FIIG can help you to understand if you are a "Wholesale Client" (including a ‘Sophisticated Investor’). One way is to obtain a certificate from a qualified accountant that you have net assets of $2.5 million or a gross income for each of the last two financial years of at least $250,000. FIIG can provide you with the form of this certificate.
FIIG will provide you with a form to complete called, ‘Becoming a Wholesale Client’ which will help you register correctly as a Retail Client or Wholesale Client.
Will I have to provide instructions for every transaction I make through FIIG?
Yes. FIIG will only act upon your instructions which can be made in writing, via facsimile, email or over the telephone.
How do I receive payments on my bonds, such as coupon and interest payment, sale proceeds, pre-payments, maturity payments and other bond related payments?
These payments are received by FIIG into designated trust accounts and then are paid to you by transfer to the bank account that you have nominated in your Client Custody Agreement.
Will my auditor be able to obtain confirmation of my holdings of bonds from FIIG?
Yes. FIIG can provide Holding Statements directly to your auditors (if applicable) if you provide your consent.
When using FIIG’s Custodian Services, do I always own the beneficial interest in my bonds?
Yes. The beneficial ownership of your assets held in safe custody using FIIG’s custodian services remains with you at all times. Your assets can only be bought, sold, or otherwise dealt with, on your instructions to FIIG. This means that your bonds are your assets at all times and do not form part of the assets of FIIG.
Will FIIG’s custodian services be audited?
Yes. FIIG is required to be audited annually by an external auditor. FIIG’s external auditor is Grant Thornton.