When you buy bonds in the over-the-counter (OTC) market, you are required to hold them in the safe keeping of a licensed custodian until they mature or you decide to sell them. CHESS, a company owned by the ASX, is one example of a custodial service provider for financial products such as shares, warrants and units in trusts. However, CHESS does not cater for OTC bonds.
Licensed custodial service providers, such as FIIG, hold an electronic record of an investor’s beneficial ownership of a bond. They also provide a range of services including account administration, transaction settlements and reporting.
FIIG is an incidental provider of custodial services, as we provide custodial services for the purpose of facilitating our other main services, which includes client trading of, and investment in bonds via our DirectBonds Service, or MIPS.
FIIG’s Custodial, Settlement, and Administration Services
FIIG’s Custodial, Settlement, and Administration Services include:
- Holding and safekeeping your fixed-income assets
- Maintaining adequate records with respect to beneficial owners
- Notifying you of any event which may affect your assets (i.e. corporate actions, consent events)
- Transaction settlements
- Collection and processing of payments, including coupons and maturity payments
- Settlement in other currencies facilitated via our Foreign exchange service
- Account administration including the processing of contract notes and corporate actions
- Reporting, including monthly and annual statements
You can access your portfolio valuations and reports via the MyFIIG secure on line portal. MyFIIG also includes market data and forecasting tools to help you manage your portfolio.
FIIG usually undertakes an annually independent assurance report on internal controls relating to FIIG’s custody service (GS007 type 2), which is an international standard to which Global Custodians adhere. This audit is performed by KPMG ensuring an independent review of the service. The GS007 audit report is available to FIIG clients on request.
Ownership of your bonds
The beneficial ownership of your bonds, held in our custody, remains with you at all times. Your bonds can only be bought, sold, or otherwise dealt with in accordance with your instructions to FIIG. This means that your bonds are your assets and do not form part of the assets of FIIG or the custodial bank. Therefore, if FIIG or the custodial bank were to cease operations, your bonds are safe and remain yours.