IOSCO consults on CIS asset custody principles: IOSCO is consulting on a set of principles for the custody of collective investment schemes' (CIS) assets. The nine principles focus on:

  • the need for the regulatory regime to cater for CIS asset custody;
  • segregation of CIS assets from the assets of the responsible entity and related parties, all participants in the custody chain and the assets of other clients of the custodian;
  • the need in principle for third-party custodians with additional safeguards where self-custody is allowed;
  • that the custodian be functionally independent from the responsible entity;
  • proper disclosure and transparency of the custody arrangements;
  • that the responsible entity use appropriate care, skill and diligence when it appoints a custodian;
  • that at a minimum the responsible entity should consider legal and regulatory status, financial resources and organisational capabilities when conducting due diligence on a potential custodian;
  • the need for formal documentation of custody arrangements, which include provisions on the custodian's responsibility and liability; and
  • ongoing monitoring of custody arrangements for compliance with the custody agreement.

IOSCO asks for comment by 10 December. (Source: IOSCO Consults on CIS Asset Custody Principles)