Client asset safeguard policy

Transcription

1 Client asset safeguard policy

2 Index Index i Introduction 2 1. General principles of safeguard of client financial instruments Distinction between clients' and own assets Account reconciliation 2 2. Aspects to contemplate in the case of subcustody 3 3. Review and evaluation of the safeguard policy 4 RBC Investor & Treasury Services is a global brand name and is part of Royal Bank of Canada. RBC Investor & Treasury Services is a specialist provider of asset servicing, custody, payments and treasury services for financial and other institutional investors worldwide. RBC Investor Services operates through two primary operating companies, RBC Investor Services Trust and RBC Investor Services Bank S.A., and their branches and affiliates. In the UK, RBC Investor Services Trust operates through a branch authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. This information is provided for the general information of RBC Investor & Treasury Services (RBC I&TS) clients from sources reasonably believed to be reliable. However, RBC I&TS accepts no responsibility or liability of any kind for the accuracy, reliability or completeness of the information, or for any action taken, or results obtained, from the use of the information. Client asset safeguard policy Page i

3 Introduction To meet the objectives of protection that MIFID establishes in Articles 16, 17, 19, 20, 30.1g and 32 of Directive 2006/73 and in Article 13.7 of Directive 2004/39 with regard to safeguarding financial instruments, RBC Investor & Treasury Services ("RBC I&TS ), has established the policy that follows: 1. General principles of safeguard of client financial instruments 2. Aspects to contemplate in the case of sub-custody 3. Review and evaluation of the safeguard policy 1. General principles of safeguard of client financial instruments As specified in the articles mentioned above, institutions should take appropriate measures to safeguard the property rights of clients, especially in cases of insolvency, and to prevent the use of client instruments for own account Distinction between clients' and own assets RBC I&TS has set in its IT system, a securities account structure that allows to differentiate the financial instruments for own account from those of our clients, and among these, the system allows to identify the assets owned by each client. This structure - own account/client account is kept at all the Central depositaries (CSD) or subcustodians that RBC I&TS uses to support their clients in the different markets in which they trade. In the Spanish market, RBC I&TS maintains the following account structure with the CSD (IBERCLEAR), as a participant entity with full capacity, and MEFF, as a trading, settling and custodian member: Own account and third party account. In the case of MEFF, client accounts In international markets, RBC I&TS uses sub-custodians to settle and custody the assets and financial instruments, being the account structure as follows: Own account, third-party account (under registration name RBC I&TS clients account) and CIVs account, (meeting CNMV's requirement for the asset safekeeping of this type of clients). Regulatory requirements in certain countries do not allow the existence of third-party accounts and require the opening of accounts for each client Account reconciliation RBC I&TS guarantee the accuracy of the internal records of financial instruments owned by customers regarding those owned by third parties, which they hold, by observing the following processes: Spanish market: Fixed income instruments: The CSD, Iberclear, reports on a daily basis of positions. RBC I&TS does reconcile their records with the positions kept by Iberclear. Equities: RBC I&TS reconciles positions with Iberclear every month. Derivative financial instruments traded in organised markets: Daily information received on positions. RBC I&TS performs daily reconciliations of them. Physical certificates held in the vault: RBC I&TS performs yearly reconciliations. Client asset safeguard policy Page 2

4 International markets: International equity and fixed income instruments: RBC I&TS performs monthly reconciliations of the positions held at each of the accounts open at the different sub custodians. Derivative financial instruments traded in organised markets: RBC I&TS performs daily reconciliations of the positions held at each of the accounts open at the different sub custodians. Shareholding of international CIVs: RBC I&TS performs monthly reconciliations of the positions held at each of the accounts open at the different asset management companies. All these reconciliation and control processes are the responsibility of individual departments that make up the Area of Financial Operations at RBC I&TS. The Internal Audit Dept performs periodical reviews according to their audit plan. The annual External Audit in order to make their own balances they include in their checklist these reconciliation processes, requesting the sub custodians and the CSD information on the records that RBC I&TS keeps in each account. 2. Aspects to contemplate in the case of subcustody Article 17 of Directive 2006/73 allows institutions to deposit financial instruments held by them on behalf of its customers through accounts opened with a third party as long as they act with due competence, attention and diligence in the selection, designation and periodical review of the latter. RBC I&TS s sub cusctodian scheme is as follows: Spanish market: RBC I&TS is member of the different custody and settlement platforms under Iberclear and MEFF: Government debt, private fixed income (AIAF), equities, derivatives traded in an organised market. Therefore, it uses no deputy party for the custody of its clients financial instruments. Internationla Markets: RBC I&TS uses subcustodians for the settlement and custody services in the different markets where its clients operate. Within this scheme, RBC I&TS has adopted an approach to outsource this activity with operating entities that meet the requirements and market practice relating to the safekeeping of such assets in the different markets they cover. RBC I&TS, in compliance with article 17 of the Directive in relation to the designation of third party depositaries and in compliance with their internal policies has established an internal assessment for the selection of international subcustodians. Is these assessment, RBC I&TS takes into account different aspects, among others ratings, speciality, quality market coverage, frequency and access to information regarding custody and settlement service The appointed entities are prestigious, experienced and solvency at global level to perform their duties, and the countries in which they operate have the necessary regulations and supervision in custodial and settlement matters. The appointed entities are the next: Clearstream Banking Euroclear Citibank Client asset safeguard policy Page 3

5 Deutsche Bank Altura 2.1 Operational processes RBC I&TS has a set of connectivity mechanisms with their sub custodians that allow RBC I&TS to obtain constant access to the information of the transactions, both settlement and corporate actions related taking place on the clients holdings. Yearly, meetings are held with the different sub custodians to analyse detected issues, speed up processes or analyse new functionalities. On a regular basis, contacts are made with the different sub custodians to hear first hand the existing offers, both operational and fees. The reconciliation processes have been detailed in point Review and evaluation of the safeguard policy The review and evaluation of policy for safeguarding financial instruments is carried out at different times: Regular reviews carried out by the Compliance Department Internal audit based on the timetable set out in its audit plan Annual external audit Client asset safeguard policy Page 4