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Thomas Murray helps institutional investors manage the quality, costs and risks of the post-trade services they must employ when they buy, sell and hold securities and other financial assets in multiple markets around the world. The third of the three principal ways in which the firm assists its clients to do this is by the provision of advisory services to institutional investors that wish to choose or change their custodian bank. Thomas Murray also advises regulators, stock exchanges, central securities depositories (CSDs) and central counterparty clearing houses (CCPs) on matching and maintaining international standards in post-trade services.
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Every major institutional investor now makes use of a global custodian bank to look after its assets in the various markets around the world where it has investments. The global custodian will sub-contract some of this work to a network of agent or sub-custodian banks based in each market, and the responsibilities of the global custodian rarely extend to indemnifying investors against loss at the sub-custodian level. It follows that the appointment of a global custodian bank is an important decision, and should be taken on the basis of full information about the service capabilities, financial soundness and risk management policies of all the contenders for the role. It is equally important to monitor the performance of a global custodian after an appointment is made, to ensure it lives up to the promises made at the time of the appointment, and is not falling behind the banks setting the standards in the industry as a whole. This is why Thomas Murray advises clients not only on initial appointments, but also provides a range of post-appointment services.
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Markets looking to attract international investors need to ensure that their infrastructure of securities trading platforms, clearing houses, settlement utilities and cash payments systems keep pace with global standards. Although infrastructural or operational risks rarely alter an investment decision, they can sometimes be sufficient to deter investors. It is more common for a sub-custodian bank to explain to a network manager at a global custodian bank that the quality of service they have come to expect cannot be delivered with the current infrastructure in a particular market. This is why one of the principal means by which global custodian network managers now judge sub-custodian banks is by their ability to lift a local market infrastructure to international standards. This is especially true of emerging and exotic markets. It is to help the authorities in developing markets that Thomas Murray provides advisory services that help local market infrastructures achieve best practices in trading, clearing, settlement and payments.
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