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Sub-Custody Ratings are based on Thomas Murray’s in-depth knowledge of best market practice in the custody business. They are based on information and analysis gathered as part of the Sub-Custodian Monitoring service. The ratings evaluate sub-custodians’ credentials, core services, internal operations, and risk management capabilities, and are produced on the familiar AAA to C ratings scale.
The Sub-Custody Rating is Thomas Murray’s opinion of a sub-custodian, based upon information maintained by the sub-custodian against a detailed questionnaire of key capabilities and legal representations, the results of operational on-the-ground visits, on-going monitoring, feedback from clients, and publicly existing information such as credit ratings and annual reports. Previously unrated sub-custodians are issued with an annual Sub-Custodian Monitoring questionnaire through our proprietary web RFP tool, SupplierSelect for Financial Services, where clients may also review responses. The questionnaire comprises approximately 400 questions designed to capture the capabilities and legal representations of agent banks. Clients may add questions to the monitoring questionnaire for their own analysis.
Rating Methodology
The Thomas Murray Sub-Custody Rating takes into account the following major components:
- Credentials: the sub-custodian’s experience in delivering, and commitment to, domestic custody services, together with its management of the business.
- Core services: the breadth and quality of eight core service offerings, as well as the sub-custodian’s technical ability to deliver the services to a high standard while minimising risk to the client in providing the service. The core services are:
- Settlements
- Corporate actions
- Securities lending
- Safekeeping
- Corporate governance
- Taxation
- Income
- Cash management
- Core operations and internal functions: an evaluation of the sub-custodian’s IT and communications systems, operational reporting, client relationship management capabilities, and local market linkages.
- Risk: an assessment of the sub-custodian’s positions on financial, asset safety, asset servicing, and operational (procedures and controls) risks.
The Ratings Scale
The overall Sub-Custody Rating is provided on the familiar AAA to C ratings scale. A rating of AAA signals that the sub-custodian’s ability to deliver core custody services is extremely strong; a rating of BBB means that the sub-custodian is adequate; and a rating of C indicates that the sub-custodian is unable to deliver at even a minimally acceptable level.
The Outlook Indicator
The rating is complemented by an outlook, indicating the likely direction of the sub-custodian’s custody service abilities going forward. Possible values for the outlook are:
- Stable: there are no factors that Thomas Murray is aware of at this time that would affect the custody rating.
- Positive: the factors that Thomas Murray is aware of may result in an improvement in the custody rating.
- Negative: the factors that Thomas Murray is aware of may result in a deterioration of the custody rating.
- On Watch: the factors that Thomas Murray is aware of may result in a change in the custody rating, but the impact of those changes is uncertain at this time.
If you would like to subscribe to this service, or are interested in learning more about it, please contact:
Derek Duggan at dduggan@thomasmurray.com or call him on +44 (0) 20 8600 2300
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