Advisory and benchmarking

Our custodian capabilities review benchmarks custodian capabilities with those of other major custodians.

A questionnaire is sent once a year to the major custodians and answers will be ranked using the our proprietary RFP weighting and scoring application.

The following services are evaluated and ranked:

• commitment to the custody business
• financials and ratings
• custodian strategy
• global custody network
• technology infrastructure
• account and relationship management
• asset protection and risk mitigation
• asset servicing and operation efficiency
• investment accounting
• performance measurement and compliance
• exchange traded and OTC derivatives
• alternative investments

Sometimes there is a need to review or change custodian. We have developed a fundamentally different and unique approach in this area which relies on our peer group data and market knowledge and not on promises made to clients in presentations. This means that our clients are better equipped to assess what they are being offered.

There are three key stages to our search and selection process:

1) Review the operating model and develop RFP:

• gather data
• review current operating model
• identify key issues and objectives
• understand potential changes planned
• recommend and agree on future model
• agree on key criteria and weightings
• produce customised RFP

2) Evaluation of responses and client deliverables:

• evaluate responses, fee proposals and contractual commitments
• identify product and service gaps/strengths
• prepare findings report and detailed fee benchmarking
• present findings and recommendations

3) Finalists' presentations, due diligence and selection:

• prepare agendas
• conduct shortlist meetings / due diligence
• prepare summary observations, findings, and recommendations
• negotiate fee and contract
• finalise/update changes to the findings report
• prepare contract review on the preferred provider

There are currently more than 100 Dutch, French, German, UK, Canadian and US institutions relying on our custody and treasury services.

Automated links have been established with 10 global and 6 regional custodians, allowing for faster, more accurate analysis.

Over 300,000 trades worth USD 700 billion are benchmarked every month, providing unparalleled coverage.

The contract review compares (on a commercial and/or legal basis) the provisions and terms of the client’s existing custodian contract with best practice.

From a commercial perspective, we have identified 25 key provisions that, in our view, should be included in any custody contract entered into. For each of these key provisions, we outline up to six differing levels used by different custodians across their clients. We will benchmark how each of these key provisions have been treated within your own contract, against other clients of your own custodian, the market in general and also against what we consider as the preferred position.

Within the reporting and analysis that we provide, we will highlight key areas within the contract, both good and bad, along with suggestions of where the contract falls below our expectations and could be strengthened to the benefit of the client.

With our digital asset custodian search and selection, move forwards with greater confidence when considering how digital assets are held securely within the safe custody environment, and how to choose the appropriately qualified custodian.

The first step in the process of appointing a digital asset custodian is due diligence, assessing the capabilities across all specialised service providers.

Digital asset custody capabilities

We provide comparable reference data on facts and capabilities across the digital asset service providers, presented in a report designed around our client’s key areas of focus.

Full digital asset custody RFP

Once shortlisted we support our clients in expertly managing the RFP process resulting in a final selection of the right service provider suited to their individual requirements.

We benchmark the client custody, administrator and fund accountant fee against the rate card of a peer group with similar investment and trading activities.

Among the costs benchmarked are:

• safekeeping
• transactions
• accounting
• performance
• compliance

Comparisons are made based on the clients own value of assets under safekeeping and their own trading patterns, in each market where the client is invested. The analysis we produce is objective, highlighting both positives and negative aspects of the clients fee arrangement. As a result of this work, clients have reduced annual custody fees by up to 30%.

We benchmark an annual volume of around 800,000 FX deals worth over USD 2 trillion annually for more than 80 clients.

We source FX data directly from custodian banks or sometimes from the client (when requested). We analyse the transaction costs of all the FX trading data for any chosen peer group, counterparty or group of counterparties.

The “opportunity loss” associated with the FX trades can be analysed by:

• deal size
• trade type
• currency
• counterparty

With our FX services the client can obtain:

• tangible financial benefits for their accounts ranging from $1 million to $20 million per annum;
• demonstration of proven due diligence process to third party clients; and
• improved counterparty management

We undertake both ongoing FX benchmarking and also one-off historic audits.

We monitor and analyse data from 12 fund accounting organisations on behalf of over 40 fund manager clients.

We cover the universe of UK, Dublin and Luxembourg domiciled mutual funds, UK unit-linked funds and Canadian fund range. We benchmark 50,000 fund level NAVs per month, representing an AUM of more than USD 1.5 trillion.

We benchmark the “middle office” services of large fund managers.

Most larger managers have outsourced these functions to custodian banks, however we assist those who have not by benchmarking their internal operations against a peer group of clients where these functions have been outsourced.