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Monday, 09 August, 2010 |
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We have observed an alarming trend from some of the corners of the custody industry recently, whereby clients’ fees have been increased by its custodian bank as a result of the client suspending or withdrawing from the custodian’s securities lending program.
Thomas Murray has always maintained that, whilst securities lending is always going to be an attractive revenue earner for both client and custodian, there should never be such clear cross-subsidisation of custody fees. Any fee increase as a result of suspending or withdrawing from lending is a penalty that no fund should be exposed and once again, highlights the importance of getting the custody agreement and fee schedule right at the outset of the relationship. Although this is not being widely observed across the industry, hopefully it is a trend that won’t gain popularity!
Stephen Merry, Managing Consultant, Investor Services
smerry@thomasmurray.com |
