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 includes:
• 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
No you don’t. Your licensed custodian will keep an electronic record of your ownership of the bonds. When you invest with FIIG, we provide you with trade confirmations and monthly statements so you can always check what bonds you own. You can also see your holdings 24/7 via our secure website, MyFIIG, along with a range of additional reporting related to your holdings.
FIIG charges a Custody and Administration Fee as follows:
- 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 and Administration 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 and Administration Fee is calculated daily on the value of your account holdings and charged monthly.
Please note that for accounts opened on or before 30 June 2015, the Custody and Administration Fee will be waived until 1 January 2016.