A global custodian agreement (GCA) is a legal contract between a financial institution and a client, which establishes the terms of custody and safekeeping of the client`s assets. A global custodian is a bank or financial institution that offers custody and administration services to clients across the world. In simple terms, a global custodian takes care of all the operational aspects of the assets, such as safekeeping, settlement, and reporting.
The global custodian agreement outlines the services that are to be provided by the custodian, including asset safekeeping, record-keeping, income collection, and administrative functions. It also sets the fees and expenses associated with these services, as well as the terms of termination and liability in case of any damages.
Global custodian agreements are essential in today`s global financial market, where investors often hold a diverse array of assets across various regions. With the help of a global custodian, investors can reduce operational risks and increase efficiency in their asset management.
When selecting a global custodian, there are multiple factors to consider, including the custodian`s reputation, experience, service offerings, and fees. It is also crucial to review the agreement thoroughly before signing and to seek legal advice if necessary.
In addition to safekeeping and administration services, global custodians may also offer value-added services such as proxy voting, performance measurement, and risk analysis. These additional services can help investors make informed decisions about their assets and improve their overall investment strategies.
In conclusion, a global custodian agreement is a crucial legal contract that facilitates the safekeeping and administration of assets for clients across the world. By partnering with a reliable and experienced global custodian, investors can minimize operational risks and focus on their investment objectives.