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Custodians should ensure they monitor assets under their custody – CMA – Monitor

The Director Legal and Board Affairs at Capital Markets Authority (CMA), Ms Miriam Ekirapa Musaali. Photo | Courtesy

The custodians in Uganda have been strongly urged to ensure that they monitor people’s assets under their custody and avoid imaginary custodianship to guard against the risk of wrong information/confusion in the market and loss of assets.
In simple terms, a custodian is a specialized financial institution (typically, a regulated entity with granted authority like a bank) that holds customers’ securities for safekeeping in order to minimize the risk of their misappropriation, misuse, theft, and/or loss.
Speaking during the inaugural Investor Services Client Engagement under the theme: “Emerging Trends in the Investor Services Business” organized by Stanbic Bank at Protea Hotel in Kololo, the director of legal and board affairs of Capital Markets Authority (CMA), Ms Miriam Ekirapa Musaali said the custodians should perform their roles that they are licensed to do by monitoring the assets and not just imagining the assets are there and yet they may not be there.
“The custodian should do the work of monitoring to understand that the assets are really existing. Custodians should not be based on imagination because the asset may not be there or the value of the asset under your custody in the market is different from the one you have under custody,” she said.
Ms Musaali said the biggest challenge is having creditable custodians in place amidst growing numbers of retail investors, Collective Investment Schemes (CIS), CMA has been championing over time.
“When it comes to regulatory supervision, the custodians in Uganda are being well regulated by the Capital Markets Authority and also monitored by the Bank of Uganda,” she said.      
Head, Investor Services & Financial Institutions Stanbic Bank Uganda, Mr Andrew Omiel said domestic custody is the main product for Investor Services and all other products are peripheral.
“Custodial Services is an administrative function performed by a financial institution that holds Clients Securities for safekeeping. In addition to the core offering, the custody business provides a range of securities services, including account maintenance, clearing and settlement, reporting, providing market news and information and Corporate Actions which include, but are not limited to, dividend collections and distribution, proxy voting and information on tax-related services,” he explained.
Hari Chaitanya Head – Investor Services Product Management, Transactional Products and Services, Standard Bank Group said three things stand out; clients, products and market.
Mr Chaitanya said in the next five to seven years custodian will act as data sources for investors, pointing out that custodians’ big roles are settlements of transactions of the assets, making sure all the assets under their custody are safe, monitoring the assets and the benefit accruing from payments being made to their clients.  
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.