Financial Markets Atlas: Service Providers (EU)

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Level 1 flows of the service providers of the EU capital markets: the firms that hold, administer, record, rate, price and index the assets, seen from the provider’s side, one diagram per service. The worked example is a European custody bank with its custody hub in Paris and its depositary and central administration business in Luxembourg, also transfer agent, securities lending agent and paying agent (EUR 10,000,000,000,000 of assets under custody, 3,000 clients, a network covering 90 markets, illustrative); the data group has its own examples. Each diagram follows one service with the provider at the center, its clients on one side, its network, the market, T2S and the CSDs and the regulators on the other; the strip above it is the service. Columns are the parties, rows the phases; numbered steps are messages, deliveries, payments or reports between them, with the channel or system in the pill. Hover a step for the detail, click it or use the walkthrough to be taken through the diagram step by step. The clients’ side of the same services is on the asset manager, hedge fund, wealth manager and asset owner pages, the infrastructure on the market infrastructure page. EU market conventions and EUR throughout; all numbers illustrative. New to this? Begin with Start here.

Business

Product

How the diagrams work, the chain common to all 28 diagrams, a map of the services, who provides each service and how it is paid and controlled, and a glossary.

How to read a diagram

Columns are the partiesThe clients on the left, the service provider in dark petrol at the center (the subject of every diagram), its network of sub-custodians and agents, the brokers, counterparties and issuers, the depositories and payment systems, and the regulators and auditors on the right.

Rows are the phasesTime runs down the page in the service’s own cycle: the onboarding and the setup, the trade date to the settlement date, the record date to the payment date of an event, the daily NAV and the month-end, the yearly audit. The band label gives the timing.

Arrows are stepsNumbered in order. Solid arrows are messages, deliveries or payments; dashed ones are standing flows like reports and reviews; two-headed ones are exchanged or matched. Boxes on the provider’s own lifeline are what it does internally: a check, a calculation, a reconciliation, a booking.

Pills are the channelAmber for voice and chat, blue for the portals and platforms, rose for the SWIFT messages (MT540 to MT543 for settlement, MT564 to MT566 for corporate actions, MT535 and MT536 for statements, and their ISO 20022 successors), grey for the rails and the depositories (T2S, T2, the CSDs and the ICSDs), teal for market data, lavender for the provider’s own systems. Each pill shows a one-line definition on hover.

The strip is the serviceAbove each diagram the worked example strip gives the service: the client, the volumes, the network and the systems, the rules, the fees. Hovering a step shows the full detail; clicking it opens the walkthrough.

The grouping is by line of businessThe area tabs are the provider’s businesses (custody, asset servicing, securities lending and collateral, fund administration, transfer agency and fund services, issuer services, data, ratings and indexes, the network and the controls) and the product tabs under each are the services. The facts table lists every service with the same five columns.

A flow can be read two ways: scroll the diagram and hover for detail, or press Walk through the steps above any diagram to follow it one step at a time, with the detail in a card. The arrow keys move forward and back.

The servicing chain every diagram is part of

BankThe service providerClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APISWIFT messageInfrastructure system (payment, clearing, reporting)Internal systemOtherhover an arrow or a badge for the full detail

Every diagram on this page is one link of this chain: the management company appoints the depositary, the trades arrive as instructions, the provider settles them on T2S in central bank money and through its network and the ICSDs elsewhere, services the assets through their life, values and reports them, and is supervised and audited for it. What the EU version shows is a depositary that answers for the funds’ assets under the UCITS and AIFM directives, a central administration and transfer agent in Luxembourg serving funds sold across Europe, and a settlement layer shared by the euro area.

The flows, 28 of them

Each card opens its diagram. The tabs at the top do the same; the search box finds a flow by name, rule, report or keyword.

Who provides each service, what it reaches, what carries it, what governs it, how it is paid and controlled

The same five questions for every service: who provides it and for whom, which markets, agents and counterparties it reaches, which systems and messages carry it, which rules and supervisors govern it, and how it is paid for and controlled. The answers are what make a service provider: a network and a set of systems run at scale, rules that make it the qualified holder of other people’s assets, and fees measured in basis points of what it holds.

Custody and Settlement

Service	Provided by and for	Markets, agents and counterparties	Systems and messages	Rules and oversight	Fees, risk and controls
Onboarding	the bank’s depositary, custody and transition teams for a fund range; the management company runs the RFP; the SICAV board resolves, the CSSF approves the depositary of a UCITS, the AIFM appoints the AIF depositary	the previous depositary and its sub-custodians; the T2S CSDs and the ICSDs; the bank’s sub-custodians in 45 markets with the local registrations; the consultant; the funds’ réviseur d’entreprises agréé	the RFP questionnaire; the client master; the books of record; T2S in ISO 20022 as a directly connected participant; ALERT for the SSIs; SWIFT MT540 to MT543, MT548 and MT535; free deliveries on T2S, at the ICSDs and abroad	the UCITS directive (Articles 22 to 26) and Delegated Regulation 2016/438; the AIFM directive (Article 21) and Delegated Regulation 231/2013; CSDR Article 38 for the account segregation; the Luxembourg AML law and the EU AML Regulation from July 10, 2027; the CSSF	a depositary fee of 1bp and safekeeping by market tier from 0.5bp to 20bp (illustrative); the strict liability for the instruments in custody; the transfer risk (stale SSIs, short deliveries, the first NAV); the ISAE 3402 Type II and the yearly depositary report
Settlement	the bank’s settlement operations for the funds, as a directly connected participant on T2S and its own payment bank; the manager instructs; the broker delivers and receives through its clearing at Euronext Clearing	the executing brokers and Euronext Clearing; CTM and ALERT; Euroclear France, Clearstream Banking Frankfurt and the other T2S CSDs; the Banque de France for the cash and the auto-collateralization	CTM matching and allocation on T; MT541 and MT543 or sese.023, MT548 statuses, MT545 confirmations; T2S matching, the night-time cycles and the real-time day; the dedicated cash account funded from T2; ECMS; the MT537 penalty reports	CSDR and its settlement discipline (the allocation rules of Delegated Regulation 2018/1229, the cash penalties of Delegated Regulation 2017/389 since February 1, 2022); CSDR Refit for the buy-in; T+1 from October 11, 2027 under Regulation (EU) 2025/2075; the UCITS 10% borrowing limit	a fee per settlement (EUR 4 on T2S, illustrative); the intraday credit through auto-collateralization; contractual settlement as credit; the overdraft at €STR plus 2%; the penalties credited or debited to the funds; the fails tracked per broker
Settlement Abroad	the bank’s global settlement operations and network for its clients’ trades outside T2S; the manager instructs; the ICSDs and the sub-custodians settle	Clearstream Banking Luxembourg and Euroclear Bank with the Bridge; the sub-custodians in 70 markets (New York here) and the local depositories (DTC); the dealers and the brokers; CLS and the onshore FX banks	MT541 and MT543 relayed in each market’s practice; MT548 statuses, MT545 confirmations, MT537 penalty reports, MT535 and MT950 statements; CTM affirmation for the US trades; the ICSDs’ batches and the Bridge	CSDR for the ICSDs, with the cash penalties and the banking services; the depositary delegation rules for the sub-custodians; US T+1 since May 28, 2024; the EU at T+1 from October 11, 2027; the ICMA rules for the Eurobonds	safekeeping by market tier and EUR 8 to EUR 50 a transaction outside T2S (illustrative); the ICSD credit lines; contractual settlement in the developed markets; the FX on the trade date for T+1 markets; the penalties passed through
Cash and FX	the bank’s cash services, its markets division’s FX desk and its depositary function for the funds and the managers; the managers choose the standing instruction or the negotiated FX fund by fund	the sub-custodians and the correspondents for the foreign currencies; CLS and its settlement members; the other banks in the managers’ FX competitions; the money market funds; the Banque de France for the euro accounts	the books of record and the cash projection; T2 and the dedicated cash accounts; ECMS for the collateral; the SI FX engine and its windows; 360T and FXall; MT300 and MT304; the CLS pay-ins through T2; MT950 and camt.053 statements	the UCITS directive’s 20% deposit limit and 10% borrowing limit; the depositary’s cash monitoring duty; the Money Market Funds Regulation; the EU LCR for the operational deposits; the ECB’s deposit facility and the minimum reserves at 0%; the FX Global Code	the credit interest at €STR less a spread; the overdraft at €STR plus 2%; the SI FX spread of 3bp to 10bp in the majors (illustrative); the intraday credit limits per sub-fund; CLS against the Herstatt risk; the daily cash monitoring and nostro reconciliation

Asset Servicing

Service	Provided by and for	Markets, agents and counterparties	Systems and messages	Rules and oversight	Fees, risk and controls
Income	the bank’s income team for the 3,000 clients’ accounts; the managers and the central administration use the projections and the confirmations in their books and in the NAV	the issuers’ centralizing and paying agents; Euroclear France, Clearstream Banking Frankfurt and the other CSDs on T2S; Euroclear Bank and Clearstream Banking Luxembourg for the Eurobonds; the sub-custodians outside the bank’s markets; the counterparties of the market claims	seev.031 and MT564 notices; the payments free of delivery on T2S to the dedicated cash account; seev.036 and MT566 confirmations; MT950 cash statements from the sub-custodians; the expected income ledger in the books of record; the client portal	the custody agreement’s credit and reversal terms; the market standards for corporate actions and the T2S standards for the claims; the SRD II Implementing Regulation’s deadlines for the events on shares; CSDR’s settlement discipline; the ECB, the ACPR and the CSSF as supervisors	within the custody fee in basis points of the assets; the credit risk of the contractual income outside T2S; the daily reconciliation of the expected and the received; the aged claims and the reversals; the ISAE 3402 controls over income processing
Tax	the bank’s tax services: the Paris bank as French paying institution, the Paris and Luxembourg entities as Qualified Intermediaries for the US securities; relief and reclaims for the funds, the pension funds and the insurers	the source tax authorities (Germany’s BZSt, the Italian and Spanish agencies, the Swiss ESTV and the others); the CSDs and the sub-custodians that withhold in each market; the local tax agents; counsel for the EU-law claims; the DGFiP and the Luxembourg ACD at home	the certificates of residence and the market forms (Forms 5000 and 5001 for France); the tax vouchers; the reclaim files and the BZSt’s electronic filing; the IFU; the CRS and FATCA reports; the QI withholding statements; the reclaim tracker on the client portal	the national withholding rules and the treaties; the free movement of capital and the Court of Justice’s case law; the QI agreement for the US income; DAC2 and the common reporting standard; FASTER from January 1, 2030	relief at source and standard reclaims within the custody fee; a fee per complex reclaim; contingency fees on the EU-law claims (illustrative); the risk of a lapsed reclaim or a wrong rate; the beneficial ownership checks since the cum-ex cases
Corporate Actions	the bank’s corporate actions team for every account it holds; the managers make the elections, the bank notifies, instructs and allocates	Euroclear France and the other issuer CSDs on T2S; the offers’ centralizing agents and Euronext Paris for the rights; the sub-custodians and their CSDs abroad; two data vendors (illustrative)	seev.031 and MT564 notifications, seev.033 and MT565 elections, seev.034 and MT567 statuses, seev.036 and MT566 confirmations; the golden record; the market claims, the transformations and the buyer protection instructions	the SRD II Implementing Regulation’s deadlines and content for the events on shares; the European market standards for corporate actions; the Takeover Bids Directive and the AMF’s offer rules; the company law directive’s subscription period of 14 days; the custody agreement’s standard of care	within the custody fee, with charges on some elective events abroad, disclosed for each service under SRD II (illustrative); a missed election paid by the bank when the error is its own, by the client when it was late; the second check on every elective instruction; the deadline dashboard
Proxy Voting	the bank supplies the positions, the identification and the chain; the managers vote, with the funds and the pension funds as principals; the vote agent runs the platforms and the transmission for the bank	Euroclear France and the other issuer CSDs as first intermediaries; the vote agent (Broadridge, illustrative); the proxy advisers (ISS, Glass Lewis, illustrative); the companies’ centralizing banks and registrars; the sub-custodians outside the bank’s markets	seev.001 meeting notices, seev.003 entitlements, seev.004 instructions, seev.007 vote confirmations; seev.045 and seev.047 for the shareholder identification; the voting platforms; the record-date position file	SRD II and its Implementing Regulation (EU) 2018/1212 since September 3, 2020; the national company laws (the BALO notice and the record date in France); the managers’ engagement policy and voting disclosure; the GDPR for the identification data	the charges for each service disclosed and proportionate to the costs under SRD II; the vote agent paid by the bank; the advisers paid by the managers; the risks of a lost notice, a late identification response, a vote lost to lent shares

Securities Lending and Collateral

Service	Provided by and for	Markets, agents and counterparties	Systems and messages	Rules and oversight	Fees, risk and controls
Agency Lending	the bank’s securities finance desk as agent for 600 lenders (the UCITS and the AIFs, the pension funds, the insurers, the sovereign funds) under each one’s authorization agreement; the same bank as the funds’ depositary	30 approved borrowers (the prime brokerage and securities finance desks of the banks and the dealers) under the GMSLA; Euroclear Bank and Clearstream as triparty agents for the collateral; the sub-custodians for the loans outside the bank’s markets; the lenders’ managers whose sales trigger the recalls	the lending system and its allocation engine; EquiLend and Pirum for the trades, the marks and the returns; the free deliveries on T2S; the triparty exposures and the MT569; the SFTR reports to a trade repository; the client portal	the ESMA guidelines for the UCITS (the recall at any time, the collateral quality and diversification, the revenue returned net of the fee); the UCITS directive’s reuse rule for the depositary; the GMSLA and the Financial Collateral Directive; SFTR; CSDR’s penalties on late deliveries and returns	the fee split of 85/15 on the gross revenue (illustrative); the borrower default indemnity held as a capital exposure; the collateral haircuts, the borrower limits, the daily marks, the recall and the buy-in; the ISAE 3402 report on the lending controls
Tri-Party	the bank’s collateral services for its clients in the triparty of the two ICSDs (the money market funds, the insurers, the pension funds lending cash or securities), and for its own collateral with the Eurosystem	the banks and dealers as collateral givers; Euroclear Bank and Clearstream as triparty agents; Eurex Clearing and LCH SA for GC Pooling and €GCPlus; the Banque de France and ECMS for the bank’s own credit	the eligibility sets coded at the agents; the MT527 instructions and the MT569 statements; the ICSDs’ books and the links to the T2S CSDs; ECMS, T2 and the auto-collateralization on T2S; the SFTR reports	the GMRA and the triparty service agreements; the Money Market Funds Regulation for the funds’ collateral and counterparty limits; the Financial Collateral Directive; the Eurosystem’s collateral framework and the SCoRE standards in ECMS; SFTR	the agents’ fees on the collateral balances, paid mostly by the givers (illustrative); the bank’s service within the custody fee; the eligibility and the concentration tests on every allocation; the daily reconciliation of the agents’ statements
Initial Margin	the bank as third-party holder for both directions of each relationship: the funds of the managers in phases 5 and 6 as pledgors and secured parties, the dealers on the other side	the bank and non-bank dealers; Acadia for the calls and the comparisons; the SIMM calculation vendors; the fund’s depositary when it is another bank; Euroclear Bank and Clearstream for the triparty model; ISDA for the model and the documents	the segregated pledgor accounts and the eligibility engine; MT542 and the free deliveries on T2S and in the ICSDs; the daily collateral reports and MT535; CRIF files and Acadia for the SIMM results and the calls	EMIR’s margin RTS (Delegated Regulation (EU) 2016/2251): phase 6 since September 1, 2022, the EUR 50,000,000 threshold, the collection by the next business day, the segregation and no reuse; EMIR 3’s model authorization with the EBA’s central validation; the Financial Collateral Directive	a custody fee in basis points of the collateral held and a fee per account (illustrative); the response time to a notice of exclusive control; the eligibility and the haircut checks on every movement; the ISAE 3402 report; the legal review of the segregation

Fund Administration

Service	Provided by and for	Markets, agents and counterparties	Systems and messages	Rules and oversight	Fees, risk and controls
Daily NAV	the bank’s central administration as UCI administrator of a Luxembourg UCITS SICAV, appointed by its management company; the depositary and the registrar agent of the same bank in separate units; the management company owns the valuation policy and the fair values	the pricing vendors (the closing prices, the evaluated bonds, the FX rates, the fair value factors); the registrar agent and the fund platforms for the orders; the depositary and its sub-custodians behind the custody books; the data vendors for the published NAV; the réviseur d’entreprises agréé	the fund accounting ledger as the book of record; the vendor price files and the tolerance checks; the custody books by MT535 and MT950 or files; the TA system; the administrator portal for the exceptions and the NAV pack; the NAV to the data vendors and the fund platforms	the law of December 17, 2010 and the UCITS Directive (Article 22 on the depositary); CSSF Circulars 22/811 (the UCI administrator), 16/644 (the depositary), 04/146 (late trading and market timing), 24/856 (the NAV errors and the breaches), 21/790 (the réviseur’s separate report); Luxembourg GAAP; the subscription tax	a basis point fee on net assets with a minimum per sub-fund (2bp in the example, illustrative); the tolerance thresholds and the indemnification under Circular 24/856, paid by the party responsible; the four-eyes review of the NAV; the price challenge log; the depositary’s oversight; the ISAE 3402 report
Hedge Funds	the bank’s Dublin administrator for an Irish ICAV authorized as a QIAIF, appointed by the ICAV and its external AIFM; the bank’s Irish depositary beside it; the manager in London keeps a shadow NAV; the investors rely on the administrator’s NAV	the prime brokers, the ISDA counterparties and the clearing broker; the pricing vendors, the brokers’ quotes and an external valuer for the level 3 positions; the investors and their banks; the auditor; the ICAV’s money laundering reporting officer	the accounting system with the investor register; the primes’ files and the counterparties’ statements; the manager’s trade file; the administrator portal for the NAV pack; the investor portal for the documents and the statements; the sanctions and PEP screening; the Annex IV report	the ICAV Act 2015 and the Central Bank’s AIF Rulebook; the AIFM Directive (Article 19 on valuation, Article 21 on the depositary, Article 23 on the disclosures) and its 2024 review; the Criminal Justice Act 2010; FATCA and CRS; Irish investment undertaking tax	a basis point fee on net assets with a minimum per fund (3bp in the example, illustrative); the independent prices and the reconciliation with the manager’s NAV; the depositary’s cash monitoring; an AML file per investor; payments only to the investor’s own account; the ISAE 3402 report
Private Markets	the bank’s private markets unit as central administration, registrar and domiciliation agent of a Luxembourg RAIF SCSp, and its depositary unit beside it, appointed by the general partner and the AIFM; the LPs read the notices and the reports; the AIFM keeps the investment decisions and the valuations	the limited partners and their banks; the subscription line’s agent and lenders; the portfolio companies, the sellers, the buyers and the notaries at the closings; the réviseur, the external valuer and the tax adviser	the private equity accounting system with the commitment ledger and the capital accounts; the waterfall model; the investor portal for the notices, the reports and the tax packs; the agent’s portal for the line; SEPA and T2 for the cash; the depositary’s ownership record	the limited partnership agreement and the side letters; the RAIF law of July 23, 2016 and the AIFM law; the AIFM Directive (Articles 19, 21 and 22) and its 2024 review; the Luxembourg AML law and the RBE; IFRS 13 or Luxembourg GAAP with the IPEV guidelines; the ILPA templates by agreement	a basis point fee on commitments, later on NAV (6bp in the example, illustrative); the notices checked by two people and approved by the general partner; the waterfall rerun each quarter and the clawback exposure reported; the call back on any change of bank details; the depositary’s cash monitoring and ownership checks
ELTIF	the bank as administrator and registrar agent of an evergreen ELTIF, appointed by its AIFM, and as its depositary; for the AIFM and, through the distributors, 12,000 retail and private banking investors; the AIFM keeps the investments, the valuations and the liquidity policy	the private banks, the insurers and the online platforms, through Allfunds, Vestima and SWIFT; the flagship funds, the co-investment companies and the borrowers; the external valuer; the data vendors	the fund accounting ledger with the roll-forward of the lagged NAVs; the valuation model; the TA system fed by the platforms (MT502 or ISO 20022); the liquidity data for the AIFM; the EMT, EPT and KID data; the Annex IV report	the ELTIF Regulation as amended in 2023 and Delegated Regulation 2024/2759 on the redemptions and the matching; the AIFM Directive; PRIIPs and MiFID II for the distribution; the law of December 17, 2010 for a Part II SICAV; CSSF Circular 24/856; the subscription tax exemption	a basis point fee on the NAV with a minimum (8bp in the example, illustrative); the limit on the redemptions and the pro rata cut-back; the matching at the NAV; the four-eyes review and the AIFM’s approval of the NAV; the depositary’s checks; the ISAE 3402 report

Transfer Agency and Fund Services

Service	Provided by and for	Markets, agents and counterparties	Systems and messages	Rules and oversight	Fees, risk and controls
Transfer Agency	the bank as registrar and transfer agent of two Luxembourg UCITS SICAVs, appointed by their management company, which keeps the AML responsibility and the distribution; for the funds, their registered investors and the intermediaries that hold nominee accounts	the distributors (the banks, the private banks, the insurers, the online brokers); the fund hubs (Vestima, FundSettle, Allfunds, Calastone) and SWIFT; the ICSDs and T2 for the cash; the depositary; the print and the data vendors	the TA system with the register; the hubs’ order routing and settlement; MT502, MT515 and the ISO 20022 setr messages; SEPA and T2 for the registered investors; the investor portal; goAML; the FATCA and CRS files; the EMT and EPT	the law of December 17, 2010; CSSF Circulars 22/811 (the registrar function) and 04/146 (late trading and market timing); the AML law of 2004, CSSF Regulation 12-02 and the RBE; MiFID II on the inducements; FATCA and CRS; the tax rules of the distribution countries	fees per account and per transaction paid by the funds; the trailer fees paid by the management company; an order priced at the wrong NAV corrected under Circular 24/856; the daily reconciliation of the shares in issue; the réviseur’s separate report; the ISAE 3402 report
ETF Services	the bank as depositary, administrator and registrar of a Luxembourg UCITS ETF, appointed by the SICAV and its management company; for the ETF issuer, its capital markets desk and the authorized participants	the authorized participants (the banks and the dealers) and the market makers behind them; the exchanges’ liquidity providers and the RFQ platforms; the common depositary, Euroclear Bank and Clearstream; the CSDs on T2S and the sub-custodians for the basket; the index provider and the iNAV agent	the PCF on the order portal and to the data vendors; the order portal for the creations and the redemptions; MT540 to MT543 at the ICSDs and on T2S; the global certificate at the common depositary; the fund accounting system for the NAV and the creation records	the UCITS Directive and the law of 2010; ESMA’s ETF guidelines of 2014; the exchanges’ listing rules; CSDR and its cash penalties; T+2 until October 11, 2027; the Luxembourg subscription tax exemption for the index ETFs; the German and UK tax status of the classes	the bundled servicing fee in basis points paid by the fund; the transaction fees and the variable charges paid by the APs; the collateral for the undelivered securities; the risk of a wrong PCF or a missed cut-off; the depositary’s oversight of the dealing; the ISAE 3402 report
Middle Office	the bank’s middle office service in Paris under a long-term agreement with an asset manager, staffed in part by the manager’s transferred staff; the manager keeps the decisions, the OMS and an oversight team	the executing brokers and the OTC counterparties; the manager’s other depositaries and its fund administrators; the clearing brokers at LCH and Eurex Clearing; DTCC’s CTM and ALERT; Acadia; the trade repositories for EMIR and SFTR	the OMS feed (FIX or files); CTM and ALERT for the matching and the SSIs; MT541 to MT543 or sese.023 to the depositaries, settled on T2S; the IBOR and the cash forecast on the bank’s platform; MT535 and MT950 into the reconciliation platform; MT564 and MT565; Acadia; the performance system	the manager’s responsibility under the AMF’s rules and the UCITS and AIFM directives; the Acquired Rights Directive; DORA; CSDR’s settlement discipline and T+1 from October 11, 2027; EMIR and its margin and reporting rules; SFTR; the GIPS standards; the ECB and the ACPR for the bank	a fee in basis points of the assets (1.0bp, illustrative) or per trade over a ten-year term; the service levels and the credits; the ISAE 3402 Type II; the exit plan; the bank liable for its errors (a missed matching, a wrong IBOR, a missed election, a late EMIR report) under the agreement

Issuer Services

Service	Provided by and for	Markets, agents and counterparties	Systems and messages	Rules and oversight	Fees, risk and controls
Registrar	the issuer services arm of a French bank, the market standard, appointed by the listed company as registrar of its pure registered shares, paying agent for the dividend, centralizing agent for the corporate actions and the meeting, and agent for the employee shares	Euroclear France as issuer CSD and its participants, the custodians and brokers that keep the bearer and administered accounts; the agent’s broker on Euronext Paris; the registered holders; the tax authority and the Caisse des Dépôts	the register and the agent’s account at Euroclear France; the deliveries and the dividend cash on T2S; the SRD II identification messages (seev.045, seev.047); SEPA transfers to the registered holders; the issuer services portal and the shareholder site; the IFU tax slips	the Code de commerce (the registered forms, the double vote, the loyalty premium, the free shares); CSDR Article 37 on the integrity of the issue; SRD II; the AMF’s General Regulation on account keeping and the monthly voting rights; the ACPR; the Eckert law; the French withholding	a fee per pure registered account paid by the company and the event fees, the interest on the cash held; the risks of a wrong voting rights count, a misapplied withholding, a forged transfer, a break with the CSD; the daily reconciliation, the ISAE 3402 report
Fiscal Agent	the issuer services arm of a French bank, named in the agency agreement as fiscal agent, principal paying agent, calculation agent and centralizing agent for the issuer; the representative of the masse, a specialist firm, for the holders	Euroclear France as issuer CSD and its participants, Euroclear Bank and Clearstream Banking Luxembourg among them; the noteholders and their custodians; the ad hoc group and its advisers; the administrator and the commercial court in a safeguard	the EMTN base prospectus, the agency agreement and the final terms; the notes in book entry at Euroclear France; the coupon funded through T2 and paid on T2S; the notices through the CSD and the ICSDs; the votes collected through the chain; the exchange as a mandatory corporate action	the Prospectus Regulation and the AMF; the Code de commerce on the masse and its meetings (L.228-46 and following); the French withholding on interest only for the non-cooperative states; the 2021 restructuring reform with its classes of affected parties; the SchVG and the trust deed as the alternatives	a fee at issue and a yearly fee per series for the agent, a small yearly fee for the representative, the interest on the cash held; the risks of a payment made or misdirected, a wrong redemption, a missed notice; no advance of the issuer’s funds; the ISAE 3402 report
General Meeting	the listed company convenes the meeting and pays for it; its issuer agent, the issuer services arm of a French bank, convenes the registered holders, centralizes the votes and the certificates and runs the count for the bureau; Broadridge and Votaccess carry the votes	Euroclear France as issuer CSD; the French account keepers, the global and local custodians and the registered intermediaries; Broadridge for the institutions; the proxy advisers (ISS, Glass Lewis, illustrative) and the proxy solicitor; the proponents of a resolution	the BALO and the company’s website; the SRD II messages (seev.045 and seev.047 for the identification, seev.001 for the notice, seev.004 for the votes); the single voting form; Votaccess and the agent’s shareholder site; the participation certificates; the attendance sheet and the minutes	SRD II and its implementing regulation (2018/1212); the Code de commerce (the BALO notices, the record date, the quorum and the majorities, the say on pay, the results within 15 days, the registered intermediary); the AMF’s recommendations on general meetings; the Transparency Directive and MAR	the agent’s meeting fee, the intermediaries’ disclosed charges, the solicitor’s fee; the risks of a lost notice, a lost or late vote, an over-vote, a record date error, a close count; the vote confirmations; the bureau’s signature on the count

Data, Ratings and Indexes

Service	Provided by and for	Markets, agents and counterparties	Systems and messages	Rules and oversight	Fees, risk and controls
Credit Rating	a credit rating agency registered with ESMA, its analysts and committees, for the issuers that pay (corporates, banks, sovereigns, the structured finance originators) and the investors, banks, insurers and central banks that use the ratings	the issuers with their lead managers and counsel; the originators of the securitizations and the securitisation repositories; the second agency and the smaller EU agencies; the managers, banks and insurers; the Eurosystem’s collateral framework	the data room and the management meeting; the methodologies and the models; the committee records; the press release and the website; the ratings reported to ESMA and the European Rating Platform; the rating feeds to the vendors and the managers’ compliance engines	the CRA Regulation and its 2011 and 2013 amendments: registration, the conflict and fee rules, the rotation, the notice a working day ahead, the sovereign calendar, Articles 8c, 8d and 35a, endorsement and certification; ESMA’s direct supervision; the CRR, Solvency II and the ECAF; the ESG Ratings Regulation from July 2, 2026	issue fees within program and frequent issuer schedules, yearly surveillance fees, subscriptions; the fees non-discriminatory and cost-based and set apart from the analysts; the committee vote; ESMA’s supervisory fee and fines; the civil liability and the reputational risk
Index	the benchmark administrator’s committee and operations for the UCITS ETFs, the index funds, Eurex and the issuers of certificates that license the indexes, and for the managers that benchmark to them	the main venues and their closing auctions (Euronext, Xetra and the others); the data vendors for the prices, the shares and the corporate actions; the brokers and the ETF market makers trading the review; Eurex for the futures and options	the real-time calculation and dissemination through the vendors; the daily and pro forma index data files; the press releases and the consultations; the benchmark statement; the orders for the closing auctions	the Benchmarks Regulation as amended by Regulation (EU) 2025/914 from January 1, 2026 (the significant benchmark threshold of EUR 50,000,000,000, the oversight function, the benchmark statement); BaFin and ESMA’s register; the UCITS index rules and ESMA’s guidelines; MAR; the IOSCO principles	asset-based license fees in basis points, per-contract royalties, data subscriptions; the error and restatement policy; the decisions confidential until announced; the conflicts of the administrator’s own products; the oversight function and internal audit
Market Data	the vendor’s ticker plant, entitlements and billing teams for the banks, brokers, managers and wealth firms that use the data on terminals and in their applications	the regulated markets, the MTFs and the systematic internalizers with their direct feeds; the APAs for the OTC trades; the consolidated tape providers (fairCT, EuroCTP, Etrading Software); the colocation data centers in Bergamo and Frankfurt	the feed handlers and the normalization; the terminal and the real-time feed; the entitlements system; the monthly usage reports; the billing system with the pass-through lines; the tapes’ feeds from their go-live	MiFIR’s reasonable commercial basis and free data after 15 minutes; Delegated Regulation 2017/567 and ESMA’s 2021 guidelines; the 2024 MiFIR review and the consolidated tapes; ESMA for the tapes and most APAs; the NCAs for the venues; the venues’ policies and audits	the vendor’s fees per user; the venues’ fees passed through; the non-display fees by category billed direct; the audit back-billing with interest; the client’s inventory of users and applications
Evaluated Pricing	the pricing service’s evaluators and models for the management companies of the UCITS and AIFs, their central administrations and depositaries, the custodians and the insurers	the venues and the APAs for the trades under MiFIR, the bond tape to come; the dealers and the electronic platforms for the quotes and the composites; the secondary pricing service; the depositary and the réviseur d’entreprises agréé	the end-of-day pricing file at the 17:00 CET snapshot by SFTP and API; the pricing portal for the challenges; the fund accounting system’s tolerance checks; the fund platforms for the NAVs	the UCITS Directive (the management company’s valuation, the depositary’s oversight of the NAV); the prospectus valuation rules; CSSF Circulars 18/698 and 24/856; ESMA’s 2021 to 2022 common supervisory action on valuation; IFRS 13 or Luxembourg GAAP; the 2024 liquidity management tools	per-security daily fees under a yearly license; the challenge process and its statistics; the back-testing against the next trades; the secondary service; the ISAE 3402 report; the NAV error tolerances and the compensation

Network, Controls and Billing

Service	Provided by and for	Markets, agents and counterparties	Systems and messages	Rules and oversight	Fees, risk and controls
Network	the bank’s network management team (the market managers, the network committee) with its depositary function, for all its clients; the management companies and the AIFMs informed of the delegates	90 markets: 20 reached directly (T2S, the ICSDs, own branches), 70 through 50 agent banks; the local depositories; local counsel; the depository rating firms; the EU and national sanctions authorities	the agent RFP and the AFME questionnaire; the industry depository questionnaires; SWIFT in ISO 15022 and ISO 20022 with each agent; the KPI scorecard; the advisories on the client portal; the delegate lists for the prospectuses	Article 22a of the UCITS directive and Delegated Regulation 2016/438; Article 21(11) of the AIFM directive and Delegated Regulation 231/2013, with the 2018 segregation amendments and the 2024 review; CSDR for the depositories; the EU sanctions regulations	the agents paid by the bank (2bp a year plus EUR 10 a trade in a tier 2 market, illustrative) and billed to the clients by market tier; the strict liability kept for every delegate of a UCITS; the ratings, the visits, the credit limits, the legal opinions
ISAE 3402 Report	the bank’s assurance program office and control owners, with the service auditor; for the 3,000 clients, their auditors, the funds’ boards and the management companies	the subservice organizations carved out (the sub-custodians, T2S and the CSDs, the ICSDs, the pricing vendors) with their own reports; the réviseurs d’entreprises agréés and the commissaires aux comptes of the funds	the GRC system for the controls and the evidence; the books of record for the samples; the report and the bridge letter on the client portal; the audit confirmations	IAASB ISAE 3402 with AICPA SSAE 18; IDW PS 951 and AAF 01/20 on request; ISA 402 for the user auditors; CSSF Circular 18/698 for the management companies; the CSSF, the ECB’s joint supervisory team, the AMF; DORA	the service auditor’s fees (EUR 4,500,000 for five reports, illustrative); the exceptions and the opinion as the clients’ quality signal; the remediation tracked to closure by internal audit; the bridge letter as management’s own statement
Billing	the relationship manager and the pricing desk set the schedule; billing operations calculate and invoice; the central administration accrues and pays from the funds; finance reports the revenue; for all the bank’s clients	the management companies and their fee review teams or fee auditors; the consultants who run the depositary searches and the benchmarks; the agents and the CSDs whose fees are the bank’s cost; the Eurosystem for the deposit facility	the books of record for the values and the counts; the billing system; the invoices on the client portal; the payment from each sub-fund’s cash account; the deposits at the Banque de France and in government bonds	the depositary and custody agreements and their fee schedule; the prospectus and the PRIIPs KID; the management company’s duty against undue costs and ESMA’s 2020 briefing; the independence rules of Delegated Regulation 2016/438; the EU LCR for the operational deposits	a depositary fee of 1bp and safekeeping of 1.40bp on average for the example (illustrative), transaction fees, the FX and the net interest income; the minimums; the disputes and the credits; the out-of-pocket expenses at cost; the repricing at renewal

Glossary

The terms that come back on every diagram. Every pill in the diagrams also shows its definition on hover.

Custody and Settlement

Depositary: The bank that holds a UCITS or AIF’s assets, oversees the cash flows and the manager’s compliance with the fund rules, with strict liability for the loss of assets in custody under the directives.

UCITS: The Undertakings for Collective Investment in Transferable Securities directive: the retail fund passport with its investment limits (5/10/40, the eligible assets, the derivatives global exposure), the depositary, the KID, and the management company rules; Luxembourg and Ireland domicile most of them.

AIFMD: The Alternative Investment Fund Managers Directive: the authorization of hedge, private equity and real estate fund managers, the depositary, the Annex IV reporting to the NCA, leverage limits and the marketing passport for professional investors; the 2024 review adds the liquidity management tools and the loan origination rules.

Depositary agreement: The written contract between a UCITS or AIF (or its management company) and its depositary required by the directives: the safekeeping, the cash monitoring and the oversight duties, the information flows and their deadlines, the escalation procedure, the delegation and the list of delegates, the liability, the fees, the termination and the handover to a successor.

Safekeeping: The depositary’s duty over the fund’s assets: the financial instruments that can be held in custody kept in segregated accounts in the fund’s name, and the other assets (OTC derivatives, deposits, interests in private companies and funds) whose ownership the depositary verifies and records in a register.

Cash monitoring: The depositary’s duty to see every cash flow of a UCITS or AIF: every cash account, at the depositary or at a third party, opened in the name of the fund or of the depositary acting for it at an eligible bank, the subscriptions received and booked, the flows reconciled daily and the unexplained ones investigated and escalated.

Oversight duties: The depositary’s checks that the dealing in the fund’s units, the valuation, the investment restrictions, the income distribution and the management company’s instructions follow the law and the fund documents, and that the consideration of each transaction is remitted within the usual time limits; a breach is escalated to the management company and, if not remedied, to the supervisor.

Depositary liability: The strict liability of a UCITS or AIF depositary for the loss of a financial instrument held in custody, by itself or a delegate: it returns an instrument of the same type or the corresponding amount without undue delay unless the loss arose from an external event beyond its reasonable control; no contractual discharge for a UCITS, a written transfer to a delegate possible for an AIF.

Sub-custodian: A local bank appointed by the custodian or depositary to hold its clients’ securities in one market (or a regional network covering several), as a participant of the local depository, in an omnibus account for the clients segregated from its own; for a UCITS or AIF depositary, a delegate of the safekeeping chosen and monitored under the directives.

Standing settlement instructions: The accounts at which a client receives and delivers in each market and currency (the custodian, its CSD account, the sub-custodian, the cash correspondent), kept in a shared database such as DTCC’s ALERT so the brokers’ confirmations carry them without a call.

Depositary transfer: The move of a fund range from one depositary to another: the approval of the new depositary, the prospectus updates, the free deliveries on T2S, at the ICSDs and in each market, the transition of the pending trades, the corporate actions and the tax reclaims, the new SSIs to the brokers, the handover of the oversight file and the reconciliation before the first NAV on the new books.

CSDR Article 38: The CSDR rule on the protection of the participants’ assets: a CSD keeps separate accounts for each participant and offers the choice of an omnibus client account or an individually segregated account, and the participants offer their own clients the same choice with the costs and the risks disclosed.

T2S: TARGET2-Securities: the Eurosystem’s single settlement platform on which the participating CSDs (Euroclear’s ESES, Clearstream Banking Frankfurt, Monte Titoli, Iberclear and others) settle securities against central bank money, delivery versus payment, on T+2.

Directly connected participant: A CSD participant that connects to T2S itself to send and receive its settlement instructions and statuses in ISO 20022, without going through the CSD’s own interface, while remaining contractually a participant of the CSD; the model of the large custodians and the CCPs.

Dedicated cash account: The central bank money account in T2 that a CSD participant uses on T2S for the cash legs of its settlements, in its own name or through a payment bank; funded from the participant’s T2 account.

Auto-collateralization: The intraday credit T2S triggers automatically when a participant’s dedicated cash account is short for a settlement, secured on the eligible securities being received or already held: the central bank’s auto-collateralization to the payment banks, and the client collateralization the payment banks grant their own clients on the same model.

ECMS: The Eurosystem Collateral Management System, live since June 16, 2025: one platform for the collateral the banks pledge to their national central banks for the Eurosystem’s credit operations and the intraday credit in T2, in place of the national systems.

Night-time settlement: The T2S settlement cycles that start at 20:00 CET on the business day before the settlement date and settle, in sequences, the instructions already matched against the positions and the dedicated cash accounts; most of the value of the euro area settles there before the European morning.

Cross-CSD settlement: A settlement on T2S between participants of two different CSDs, done in one movement on the platform with the realignment of the CSDs’ own accounts at the issuer CSD at the same instant, so an investor can hold the securities of many euro area markets through one CSD.

Partial settlement: The settlement of the part of a delivery the seller holds when it cannot deliver the whole, in the partial settlement windows of T2S and other CSDs, for the instructions that allow it; the rest keeps failing and recycling.

Contractual settlement: The custodian’s service of posting a trade to the client’s account on the contractual settlement date whether the counterparty has delivered or not, the custodian advancing the cash or the securities; a credit facility offered in the developed markets, with the right to reverse a trade that keeps failing.

Allocation and confirmation: CSDR’s first settlement discipline measure (Delegated Regulation 2018/1229): the investment firm obtains the professional client’s written allocation by the close of the trade date, or by 12:00 CET the next day for a client more than two hours away, and confirms it, so the instructions can match before the settlement date.

Settlement discipline: CSDR’s rules on fails: the allocation and confirmation deadlines for institutional trades, the matching and the T2S functions that reduce fails, the cash penalties on every failing instruction, the reporting of settlement efficiency; the mandatory buy-in was suspended and then removed.

Cash penalties: The daily penalties CSDR imposes on the party that causes a settlement fail, computed by the CSD on the value of the instruction and the instrument’s liquidity, collected monthly and paid to the other party.

CSDR Refit: The review of CSDR (Regulation (EU) 2023/2845, in force January 16, 2024): the mandatory buy-in removed as a default and kept as a backstop the Commission may impose by implementing act, the penalty parameters open to revision, the passporting and the banking services of the CSDs eased.

Mandatory buy-in: The CSDR rule, never applied, under which a failing delivery would have been bought in after a set extension period at the failing party’s cost; CSDR Refit removed it as a default, and the Commission can impose it by implementing act for the instruments whose fails the cash penalties do not reduce.

EU T+1: The move of the EU’s standard settlement cycle for the transferable securities traded on its venues from T+2 to T+1 on October 11, 2027, under Regulation (EU) 2025/2075, the same day as the UK and Switzerland.

ICSD: An international central securities depository, Euroclear Bank or Clearstream Banking Luxembourg: where Eurobonds, international ETFs and many cross-border holdings are issued and settled, in commercial bank money, with the bridge between the two.

Bridge: The link between Euroclear Bank and Clearstream Banking Luxembourg through which a participant of one settles with a participant of the other: the deliveries exchanged in several batches a day and overnight, against the cash on each ICSD’s books.

Standing instruction FX: The FX a custodian executes automatically for its clients to convert the income, the tax reclaims and the trades’ currency, under a standing instruction, in fixed windows at the market rate at the execution time plus a published spread, each trade time-stamped and reported.

Negotiated FX: The FX a manager’s trader deals directly with the custodian’s desk or another bank at a price agreed at the time, often in competition on a multi-dealer platform; the alternative to standing instruction FX for the larger trades and the hedges.

CLS: CLS Bank settles both sides of a currency trade at the same moment (payment versus payment) so neither party pays without receiving.

Restricted currency: A currency that cannot be freely delivered or held offshore (the Indian rupee, the Taiwan dollar, the Korean won, the Brazilian real, the onshore Chinese yuan): bought onshore through a local bank against the documents of an underlying investment, outside CLS, often a day early.

Operational deposits: The deposits a client keeps with its bank for the clearing, custody and cash management services it uses, given a 25% outflow assumption in the EU liquidity coverage ratio (Delegated Regulation (EU) 2015/61) against 100% for the excess balances of financial clients; the stable part of a custody bank’s funding.

UCITS deposit limit: The UCITS directive’s diversification rule that a fund may hold no more than 20% of its assets in deposits with the same body, its depositary included; with the 20% limit on ancillary liquid assets it caps the cash a UCITS keeps at one bank.

Asset Servicing

Record date: The date at whose close the holders on the CSD’s and the intermediaries’ books are entitled to a dividend, a coupon, a corporate action or a vote; for the income and the events, one business day after the ex-date under T+2 and the same day under T+1 from October 11, 2027; for a general meeting, set by each member state’s company law.

Ex-date: The first day a share trades without the right to the coming distribution; under the European market standards the record date less the settlement cycle plus one business day, so the business day before the record date under T+2.

Payment date: The date on which the issuer’s agent pays a dividend, a coupon or the proceeds of an event through the CSD, as close to the record date as possible, usually the next business day; on T2S the cash moves in central bank money as payments free of delivery to the participants’ dedicated cash accounts.

Contractual income: The custodian’s credit of a dividend or coupon on the payment date whether or not the cash has arrived, offered in the markets of its contractual list with a right to reverse the credit if the payment does not come; in the T2S markets the CSD’s early payment makes the credit on receipt nearly as early.

Market claim: The CSD’s automatic transfer of a dividend, a coupon or a distribution in securities from the seller’s side to the buyer’s when their trade had not settled at the record date; on T2S the CSDs detect the claims for 20 business days after the record date and settle them as payments free of delivery.

Transformation: The CSD’s replacement of a trade still pending at a mandatory reorganization (a conversion, a redemption, a merger) by new instructions in the outturn securities or cash, so the buyer receives what the event produced; part of the T2S corporate actions standards.

Paying agent: The bank that pays the dividends, the coupons and the redemptions of an issuer to the CSD or the ICSDs for the holders; for a Eurobond the principal paying agent receives the issuer’s funds and pays Euroclear Bank and Clearstream Banking Luxembourg.

Centralizing agent: The bank that centralizes a French issuer’s securities services (the établissement centralisateur): it pays the dividends to Euroclear France for the participants, centralizes the tenders and the subscriptions of the events, and counts the postal and proxy votes of the general meetings.

MT564: SWIFT corporate action notification from a custodian or depository: the event, the options and the deadline.

MT566: SWIFT corporate action confirmation: the cash or securities credited for an event.

Relief at source: The application of the treaty rate at the time of the payment, on the strength of the beneficial owner’s certificate of residence and forms passed through the chain before the payment; the alternative to a reclaim after the payment.

Tax reclaim: The claim for a refund of the tax withheld above the treaty rate, filed with the source country’s tax authority after the payment with the tax voucher, the certificate of residence and a power of attorney; paid in months or years, within a time limit set by each market (four years in Germany).

Certificate of residence: The tax authority’s certificate that a person is resident in its country for a treaty; each source market asks for its own form (France’s Form 5000, the German and Italian forms), stamped by the residence authority and valid for a calendar year, until FASTER’s digital certificate from 2030.

Form 5000: The French certificate of residence for the treaty reduction of the French withholding tax, certified by the beneficiary’s tax authority and given to the French paying institution before the payment for relief at source, or filed with the Form 5001 for a reclaim.

German withholding tax: The 25% tax on dividends plus the 5.5% solidarity surcharge on it, 26.375% in all, withheld by the last German custodian or, for the shares held through a foreign custodian, by Clearstream Banking Frankfurt; reduced to the treaty rate only by a refund from the Federal Central Tax Office.

Federal Central Tax Office: Germany’s Bundeszentralamt für Steuern (BZSt) in Bonn, which refunds the German withholding tax above the treaty rate to the foreign investors on claims filed within four years, and checks the beneficial ownership closely since the cum-ex and cum-cum cases.

EU-law claims: The reclaims of withholding tax a member state charged foreign funds or pension funds above its own residents, under the free movement of capital, following the Court of Justice’s judgments such as Santander (2012) on France, Fidelity Funds (2018) on Denmark and L Fund (2023) on Germany; filed through counsel on contingency fees.

Qualified Intermediary: A foreign financial institution with an agreement with the IRS (the current one for 2023 to 2028) to document its clients under its local know-your-customer rules and give the US payer a withholding statement by rate pool, so its clients pay the treaty rate on their US income without being named to the payer.

FASTER: The EU directive on Faster and Safer Relief of Excess Withholding Taxes, adopted on December 10, 2024, to be transposed by December 31, 2028 and applying from January 1, 2030: a digital tax residence certificate, national registers of certified financial intermediaries reporting the payment chain, and relief at source or a quick refund within 60 days on the dividends of listed shares.

eTRC: The digital tax residence certificate of FASTER: issued by the residence member state within 14 days of the request, covering up to one tax year and accepted by every member state for the relief at source and the quick refund, from January 1, 2030.

Certified financial intermediary: An intermediary registered under FASTER in the national register of a source member state (compulsory for the large institutions in the chain of the listed shares of a state applying the procedures), which reports the payment chain and the beneficial owners in a standard form and claims relief at source or a quick refund for its clients.

Golden record: The single validated version of a corporate action the custodian publishes after comparing the issuer CSD’s announcement, the vendors’ feeds, the sub-custodians’ notices and the issuer’s documents field by field.

Mandatory corporate action: An event that happens to every holder without a choice (a cash dividend, a split, a merger, a redemption, a squeeze-out); with options, a choice and a default (a scrip dividend in cash or shares); a rights issue distributes the rights to all and leaves their use to each holder.

Voluntary corporate action: An event that applies only to the holders who act before the deadline (a tender to an offer, an exchange offer, the subscription of rights, a conversion); the source of most corporate action risk for a custodian.

MT565: The SWIFT corporate action instruction: the holder’s election on a voluntary event (a tender, an exchange, a dividend reinvestment option), sent to the custodian and passed on by it to the sub-custodian or the depository.

Buyer protection: The buyer’s instruction to the seller, before the buyer protection deadline of an elective event, to elect a given option for the securities of a trade still pending, so the buyer receives the outcome it chose; set out in the European market standards for corporate actions and handled mostly between the custodians.

Preferential subscription right: The right of each existing shareholder to subscribe to the new shares of a capital increase in proportion to its holding, protected by the EU company law directive with a subscription period of at least 14 days; in a listed rights issue the rights have their own ISIN and trade on the exchange during the period.

Squeeze-out: The bidder’s right after an offer to acquire the remaining shares at a fair price once it holds 90% to 95% of the capital and the votes, by member state (90% in France since 2019); a mandatory event for the remaining holders.

ISO 20022 seev: The securities events messages of ISO 20022: seev.031 to seev.036 for the corporate actions (the notification, the instruction, the status, the preliminary advice and the confirmation, the successors of MT564 to MT567), seev.001 to seev.008 for the general meetings, seev.045 to seev.049 for the shareholder identification.

SRD II: The revised Shareholder Rights Directive (2017, applied from 2020): the identification of shareholders through the chain of intermediaries on the issuer’s request, the transmission of information and the facilitation of voting, the related party and remuneration rules; the standards the custodians and the CSDs follow for corporate actions.

SRD II Implementing Regulation: Commission Implementing Regulation (EU) 2018/1212, applying since September 3, 2020: the minimum content, the formats and the deadlines of the shareholder identification, the meeting notices, the corporate event notices and the vote confirmations passed along the chain of intermediaries, machine-readable and transmitted by the end of the business day received.

Shareholder identification: The issuer’s right under SRD II to ask the chain of intermediaries for the identity of its shareholders (the name, the unique identifier, the address and the holding); each intermediary passes the request on and answers the issuer directly by the business day after the request’s record date or its receipt.

Vote confirmation: The confirmation under SRD II, on the shareholder’s request after a general meeting, that its votes were validly recorded and counted by the company, sent within 15 days of the request or of the meeting, whichever is later; an electronic vote also receives an electronic confirmation of receipt.

Proxy adviser: A firm that researches the companies’ meetings and recommends votes under its own or its clients’ policies, and executes the votes on its platform for the managers (ISS and Glass Lewis are the two largest); under SRD II it reports on its code of conduct and its research methods.

Engagement policy: The policy SRD II requires the asset managers and the institutional investors to publish, or to explain why they do not, on how they monitor and engage with the companies they invest in, with a yearly report on its application, their voting behavior, their most significant votes and their use of proxy advisers.

Securities Lending and Collateral

Agent lender: A custodian or specialist that lends a fund’s securities on its behalf, takes the collateral and shares the fee.

Securities lending authorization agreement: The agreement by which a lender (for a fund, its management company) appoints its custodian or a specialist as agent to lend its securities: the securities and the accounts covered, the guidelines (the borrowers, the collateral and its haircuts, the reinvestment), the fee split, the indemnification and the termination.

GMSLA: The Global Master Securities Lending Agreement, the ISLA standard contract for securities loans in Europe, with the collateral, the marks, the recalls and the manufactured payments; the counterpart of the US MSLA.

Agency lending disclosure: The daily disclosure by a lending agent to its borrowers of the principal lenders behind its loans, so that each borrower can assess its credit exposure to the principals and hold capital against them.

ESMA UCITS guidelines: ESMA’s Guidelines on ETFs and other UCITS issues (2014): the conditions on a UCITS’ securities lending and repo (each loan recallable at any time; the collateral liquid, valued daily, of high quality and diversified, with no more than 20% of the NAV from one issuer; the cash reinvested only in deposits, high-quality government bonds, reverse repo and short-term money market funds; all the revenue net of the disclosed costs returned to the fund).

Depositary reuse rule: The UCITS directive’s ban, since UCITS V, on the depositary or its delegates reusing the assets in their custody for their own account, except for the fund’s account, on the management company’s instruction, for the fund’s benefit and against high quality liquid collateral received under title transfer; the AIFM directive requires the AIF’s prior consent.

Title transfer: A collateral arrangement in which the full ownership of the collateral passes to the receiver, who owes back equivalent securities, as in the 2010 GMSLA and the GMRA; the receiver may reuse the collateral, and in a default the obligations are netted at their close-out values.

Pledge: A security interest in which the collateral stays the provider’s property, held in a pledged account for the receiver, who enforces it on a default under the Financial Collateral Directive (the 2018 GMSLA pledge version, the IM accounts, the central banks’ collateral pools).

Financial Collateral Directive: The EU directive of 2002 that makes the title transfer and the pledge of cash and securities between professional parties enforceable without formalities, recognizes the close-out netting and the right of use, and protects them from the provider’s insolvency proceedings.

General collateral: A security in ample supply that borrowers can find from many lenders, lent at a low fee (a few basis points a year for a large European stock) or financed in repo at the general collateral rate; the opposite of a special.

Hard to borrow: A stock with scarce lendable supply: the borrow costs a fee above the general collateral rate, and the locate may be refused.

Fee split: The share of a lending program’s gross revenue kept by the lender and by the agent, from 80/20 to 90/10 by the size and the quality of the lender’s inventory; 85/15 in the worked example (illustrative); a UCITS discloses the agent’s fee and its links to the management company or the depositary.

Recall: The lender’s demand that a borrower return securities on loan, for a sale or a vote; the borrower returns within the standard settlement cycle (T+2 in the EU until October 11, 2027), and a late return is a settlement fail under CSDR and opens the lender’s buy-in rights.

Buy-in: The purchase of securities in the market by the party owed them when the other side fails to deliver or return them, at the defaulting side’s cost, under the GMSLA, the GMRA and the CCPs’ rules; CSDR’s mandatory buy-in is kept as a last resort the Commission has not activated.

Borrower default indemnification: The lending agent’s promise to its lenders that if a borrower fails to return the securities, it will buy them back with the collateral and pay any shortfall itself; it covers the borrower’s default and leaves any loss on reinvested cash collateral with the lender.

SFTR: The Securities Financing Transactions Regulation: loan-by-loan reporting of repo, securities lending, buy-sellbacks and margin lending to a trade repository, and the reuse and disclosure rules for collateral.

UTI: The unique transaction identifier generated for each reportable trade under EMIR and SFTR and shared by the two counterparties, so the trade repositories and the regulators pair their two reports.

GMRA: The Global Master Repurchase Agreement, the ICMA standard contract for repo outside the US (the 2011 version in use): the sale and the repurchase under title transfer, the margin, the substitution, the income, the events of default and the close-out netting; a triparty service agreement with the agent adds the third side.

Triparty agent: The settlement agent that holds the collateral of a repo, a loan or a margin relationship on its own books for both sides, checks it against the receiver’s eligibility set, allocates, values and substitutes it; in the euro market Euroclear Bank and Clearstream, with a few custody banks and national CSDs.

Euroclear triparty: Euroclear Bank’s and Clearstream’s triparty collateral management: valuation, allocation and substitution of collateral for repo, securities lending and margin, in the lender’s account at the ICSD.

Eligibility set: The list a collateral receiver gives the triparty agent of what it accepts from a given counterparty: the asset classes, the ratings, the haircuts and the concentration limits, applied by the agent’s engine at every allocation.

Collateral substitution: The replacement of collateral allocated to a repo, a loan or a margin account by other eligible collateral of the same value, so the provider can use the original security (to deliver it on a sale); run automatically by the triparty agent against the eligibility sets.

Money Market Funds Regulation: Regulation (EU) 2017/1131 on the EU money market funds, applied from 2019: the public debt constant NAV, the low volatility NAV and the variable NAV funds, with their liquidity, diversification and stress testing rules; where the funds and the custody clients place their surplus euros.

GC Pooling: Eurex Repo’s cleared triparty general collateral market: euro repo against standardized collateral baskets, cleared at Eurex Clearing and settled through Clearstream; the main euro cleared GC market.

€GCPlus: LCH SA’s triparty general collateral repo (2014) with the Banque de France and Euroclear: standardized baskets of ECB-eligible collateral, cleared at RepoClear SA, allocated in Euroclear’s triparty and reusable for the Banque de France’s refinancing; the French counterpart of Eurex’s GC Pooling.

UMR: The uncleared margin rules: daily variation margin and, above the thresholds, segregated initial margin on bilateral derivatives, applied to large funds since phases 5 and 6 (2021 and 2022).

Aggregate average notional amount: The test that brings a group into the EU initial margin requirements: the average of the month-end notional of its uncleared derivatives (FX forwards and swaps included) for March, April and May, above EUR 8,000,000,000 since phase 6 on September 1, 2022, applying from September 1 of the year.

IM threshold: The amount of initial margin, up to EUR 50,000,000 per pair of groups under the EU margin RTS, below which the two sides need not collect; a relationship in scope exchanges only the excess above it.

SIMM: ISDA’s Standard Initial Margin Model, the sensitivity-based calculation both sides of an uncleared derivative use for initial margin under the uncleared margin rules.

CRIF: The Common Risk Interchange Format, ISDA’s standard file of the trade sensitivities by risk factor that each side feeds to the SIMM calculation and exchanges for the comparison of the results.

Account control agreement: The agreement among a pledgor, a secured party and a custodian over the segregated account holding the pledgor’s initial margin: who instructs before and after a notice of exclusive control, the eligibility checks, the reporting, the response time and the custodian’s liability, with the pledge under the law of the account.

Notice of exclusive control: The secured party’s notice to the custodian, after the pledgor’s default, that from the end of the agreed period the custodian takes instructions on the segregated IM account from the secured party alone.

Third-party holder: The custodian or settlement agent, outside both counterparties’ groups, that holds the initial margin of an uncleared derivative in a segregated account under the EU margin RTS, may not reuse it, and releases it under the account control agreement.

Fund Administration

Central administration: The function a Luxembourg fund must have in Luxembourg: the books and the NAV, the register and the investor communication, performed by the fund itself or delegated to a UCI administrator, usually a bank or a specialist firm supervised by the CSSF; the Irish counterpart is the fund administrator authorized by the Central Bank.

UCI administrator: The entity that performs a Luxembourg fund’s central administration under CSSF Circular 22/811 of 2022, which splits the work into three functions: the registrar function (the register, the orders, the AML checks on the investors), the NAV calculation and accounting function, and the client communication function (the contract notes, the statements, the reports).

Management company: The firm that manages a UCITS (a UCITS management company under Chapter 15 of the Luxembourg law of 2010, a société de gestion in France, a Kapitalverwaltungsgesellschaft in Germany) or, as AIFM, an AIF: the portfolio management, the risk management, the valuation and the distribution, with the administration often delegated to a bank.

SICAV: The investment company with variable capital, the corporate form of most Luxembourg and French funds: the investors are shareholders, the capital moves with the subscriptions and the redemptions, and a board of directors governs the company, usually beside a management company; an umbrella SICAV has sub-funds whose assets and liabilities are segregated by law.

Forward pricing: The rule that a fund’s shares are bought and redeemed at the next NAV calculated after the order is received: an order before the cut-off of D gets the NAV of D, calculated in Luxembourg on the morning of D+1, and one after it the next NAV; the investor never knows the price when it orders.

Late trading and market timing: The two abuses CSSF Circular 04/146 bars: an order accepted after the cut-off at the price of the day (late trading), and frequent round trips exploiting the stale prices of a fund (market timing); the fund protects its cut-off, may refuse the orders of a market timer and uses fair value prices for the markets closed earlier.

Swing pricing: The adjustment of a fund’s NAV by an estimate of the dealing costs (the spreads, the commissions, the taxes) in the direction of the day’s net flows, every day (full swing) or when the flows pass a threshold (partial swing), so the investors who deal pay those costs; common in Luxembourg and one of the liquidity management tools of the UCITS and AIFM directives.

Subscription tax: The taxe d’abonnement, the Luxembourg tax on the net assets of the funds: 0.05% a year, 0.01% for the institutional classes, the money market funds and the RAIFs, reduced rates for the share invested in taxonomy-aligned activities since 2021, exemptions for the index ETFs, the ELTIFs and some others; accrued daily and paid each quarter to the AED.

Depositary oversight: The duties of a UCITS or AIF depositary beside the safekeeping: it ensures that the shares are issued and redeemed, the NAV calculated, the income applied and the manager’s instructions carried out as the law and the fund rules require, by testing the processes on a risk basis; set by the UCITS and AIFM directives and their delegated regulations, and in Luxembourg by CSSF Circulars 16/644 and 18/697.

CSSF Circular 24/856: The CSSF’s circular of March 29, 2024, applied since January 1, 2025 in place of Circular 02/77, on the NAV errors, the breaches of the investment rules and the other errors of the Luxembourg funds: the tolerance thresholds by fund type (0.20% for a money market fund, 0.50% for a bond or mixed fund, 1.00% for an equity fund, up to 5% set by a professional fund), the notification to the CSSF, the indemnification of the fund and of the investors, the final investors behind the intermediaries included, and the auditor’s checks.

Réviseur d’entreprises agréé: The approved statutory auditor of Luxembourg, member of a cabinet de révision agréé supervised by the CSSF, who audits the funds’ annual reports and writes the separate report to the CSSF under Circular 21/790 on the fund’s controls (the NAV errors, the investment breaches, the AML framework).

AIFM: The alternative investment fund manager authorized under the AIFM Directive by the authority of its home state (the CSSF, the Central Bank of Ireland, the AMF, BaFin): the portfolio and the risk management of the AIFs, their valuation, their depositary and their reporting; external, or the fund itself when it is internally managed.

ICAV: The Irish Collective Asset-management Vehicle, the corporate fund form created by the ICAV Act 2015 and registered with the Central Bank of Ireland: umbrella sub-funds segregated by law, a constitution changed without a general meeting for most matters, and the option of a US partnership classification; used for UCITS, ETFs and qualifying investor AIFs.

QIAIF: The qualifying investor alternative investment fund of Ireland, authorized by the Central Bank of Ireland within a day of a complete filing under its AIF Rulebook, with no investment limits beyond the prospectus, a minimum subscription of EUR 100,000 and investors who are professional clients or knowledgeable persons; it must have an Irish depositary and administrator.

Central Bank of Ireland: The Irish central bank and financial supervisor: it authorizes the Irish funds (the UCITS, the QIAIFs, the ICAVs), the management companies and AIFMs, the depositaries and the administrators, keeps the register of the ICAVs and of their beneficial owners, and receives the funds’ annual reports and the AIFMs’ Annex IV reports.

Valuation function: The function the AIFM Directive requires for the valuation of an AIF’s assets: an external valuer, or a function of the AIFM functionally independent of the portfolio management, with the remuneration and the conflicts managed; it applies the valuation policy, approves the fair values and reports to the AIFM’s senior management.

Ownership verification: The depositary’s duty for the assets it cannot hold in custody (the shares of a private company, a fund interest, a loan, an OTC derivative, cash collateral): it checks from the documents and the payments that the fund owns them, keeps an up-to-date record of them and follows each event that changes them.

Equalization: The method that keeps one NAV a share per class in a hedge fund with a performance fee: a subscriber pays an equalization credit above the high-water mark or receives a depreciation deposit below it, so each investor bears the performance fee on its own gains only; common in the Irish and the Luxembourg funds.

Crystallization: The moment a fund’s accrued performance fee becomes payable to the manager, usually at the year-end and on the shares redeemed; the high-water mark is reset to the NAV at which the fee crystallized.

Shadow NAV: The NAV a hedge fund manager computes from its own books and marks to check the administrator’s official NAV each month, the two reconciled line by line before the release; the manager’s own control, also called shadow accounting.

Annex IV report: The periodic report of an AIFM to its home authority for each AIF it manages, on the template of Annex IV of the AIFM Directive’s delegated regulation: the main exposures and markets, the leverage, the liquidity profile and the redemption terms, the risk measures, the counterparties; quarterly, half-yearly or yearly by size, and widened by the 2024 review.

SCSp: The Luxembourg special limited partnership (société en commandite spéciale), introduced in 2013: a partnership without legal personality, governed by its agreement, transparent for income tax, with a general partner of unlimited liability and limited partners; the usual vehicle of the private equity, private credit and infrastructure funds raised in Luxembourg, often with the RAIF status.

RAIF: The reserved alternative investment fund of the Luxembourg law of July 23, 2016: a fund for well-informed investors, managed by an authorized AIFM, with a depositary and a central administration in Luxembourg, set up without the CSSF’s approval since the AIFM is the supervised party; any legal form (an SCSp, a SICAV, an FCP), umbrella possible, the subscription tax at 0.01%.

Subscription line: A revolving credit facility to a private fund secured on the limited partners’ unfunded commitments and the general partner’s right to call them, used to fund the deals before the capital is called; it smooths the calls and raises the early IRR, so the ILPA templates show the IRR with and without it.

Distribution waterfall: The order in which a private fund’s distributions are split between the limited partners and the general partner: the return of the capital contributed, the preferred return, the catch-up, then the carried interest split; whole-of-fund (European) or deal-by-deal (American).

Preferred return: The return, usually 8% a year compounded on the capital contributed, that the limited partners receive before the general partner shares in the profits; the private equity hurdle.

Carried interest: The general partner’s or the team’s share of a private fund’s profits, usually 20%, paid through the waterfall after the limited partners have their capital and their preferred return, often to a carried interest vehicle held by the team.

Clawback: The general partner’s obligation to return the carried interest it received above its agreed share of the fund’s cumulative profits at the end of the fund’s life, usually net of the taxes paid on it, secured by an escrow of part of the carry and the principals’ guarantees.

IPEV guidelines: The International Private Equity and Venture Capital Valuation Guidelines: the industry’s practice for the fair value of private companies under IFRS 13 and the other GAAPs (the multiples, the discounted cash flows, the calibration to the entry price, the recent transactions), followed by the European private equity funds and their auditors.

ELTIF: The European long-term investment fund: the retail wrapper for private assets (private equity, infrastructure, private credit), relaunched by the 2024 ELTIF 2.0 reform.

Part II UCI: A Luxembourg fund under Part II of the law of December 17, 2010: an AIF authorized and supervised by the CSSF, which can be sold to retail investors, with more freedom than a UCITS in its assets and liquidity; the usual form of the Luxembourg ELTIFs and semi-liquid funds for retail clients.

ELTIF redemption policy: The rules on how an evergreen ELTIF pays its exiting investors under the ELTIF Regulation and Delegated Regulation 2024/2759: the redemption frequency and notice period, calibrated to the liquid assets on one of the two tables of the standards (a cap on the share of the liquid assets paid out on a dealing day, or a minimum share of liquid assets), the gates and the pro rata cut-backs, the optional minimum holding period.

Matching mechanism: The ELTIF Regulation’s option for an evergreen fund to match the units of the investors who want to leave with the money of the investors who want to come in, in full or in part, before the fund redeems out of its own liquid assets; the policy sets the price, the NAV in common practice.

Transfer Agency and Fund Services

Transfer agent: Keeps the register of a fund’s shareholders and processes subscriptions and redemptions; for ETFs, issues and cancels shares with authorized participants.

Fund platform: The order routing and settlement networks for fund units in Europe: Calastone, Clearstream’s Vestima, Euroclear’s FundSettle and Allfunds, between the distributors and the transfer agents; the European Fund/SERV, without one central utility.

Vestima: Clearstream’s fund processing platform (since 2000): the routing of the subscription and redemption orders of the banks and the distributors to the funds’ transfer agents, the settlement of the units against the cash and their custody as nominee at Clearstream Banking Luxembourg; one connection to the funds of Luxembourg, Ireland and the other domiciles.

FundSettle: Euroclear’s fund order routing, settlement and custody service at Euroclear Bank: the orders of the distributors passed to the transfer agents, the units settled against the cash and held as nominee; extended by the MFEX distribution platform Euroclear bought in 2021.

Allfunds: The fund distribution platform based in Madrid and listed in Amsterdam: the dealing, the custody of the units as nominee, the trailer fee collection and the data between thousands of fund houses and the distributors; Deutsche Börse agreed in January 2026 to acquire it, with the completion expected in the first half of 2027.

Calastone: The fund transaction network that carries the orders, the confirmations and the settlement data between the distributors and the transfer agents of many fund domiciles, as messages, without holding the units.

Nominee account: An account on a fund’s register in the name of an intermediary (a fund hub, a platform, a bank, an insurer) that holds the units for its own clients and keeps their records; the European counterpart of the US omnibus account, which makes the intermediary the fund’s customer for the AML checks.

Intermediary due diligence: The checks a fund’s registrar runs on an intermediary that holds a nominee account (its license and supervisor, its AML program, its country, its reputation), with lighter measures for a regulated EU intermediary and enhanced ones for a third-country one, in place of identifying the clients behind it.

Contract note: The confirmation the transfer agent sends after an order is dealt: the fund and the class, the NAV, the number of units, the amount, the fees and the settlement date; through the fund hubs as MT515 or ISO 20022 messages, or by mail or the portal to a registered investor.

Trailer fee: The commission a fund’s management company pays a distributor out of its management fee, in basis points of the distributor’s average holdings, for as long as the clients hold the units; allowed under the MiFID II inducement rules only where it enhances the service to the client and is disclosed, and passed on by the independent advisers and the portfolio managers.

CRF: The Cellule de renseignement financier, the Luxembourg financial intelligence unit attached to the public prosecutor’s office, which receives the suspicious transaction reports of the professionals through goAML.

FATCA and CRS: The two regimes under which the funds identify the tax residence of their investors and report the accounts of the reportable ones each year: FATCA for the US persons under the intergovernmental agreements, the OECD’s Common Reporting Standard for the residents of the participating countries, reported in Luxembourg to the ACD by June 30.

Fund tax data: The figures a fund publishes so that the investors of each country where it is sold are taxed on the usual terms: the German equity ratio for the partial exemption under the investment tax act of 2018, the Austrian OeKB reports, the UK reporting fund income, the Belgian taxable income per share; computed by the administrator or a tax agent.

AML Regulation: The EU Anti-Money Laundering Regulation 2024/1624, applying from July 10, 2027: one rulebook for the customer due diligence, the beneficial ownership and the reporting across the member states, in place of most of the national rules, with the AMLA in Frankfurt supervising the riskiest entities and coordinating the national supervisors.

UCITS ETF: An exchange-traded UCITS: an open-ended fund whose shares are listed and traded all day and created and redeemed in units by authorized participants, bearing the identifier UCITS ETF in its name under ESMA’s guidelines of 2014; mostly domiciled in Ireland and Luxembourg and listed on several exchanges.

Authorized participant: A bank or a dealer that has signed an agreement with an ETF’s issuer to create and redeem units directly with the fund against the basket or cash; it has no obligation to deal and acts when the gap between the ETF’s price and its basket pays, for itself or for the market makers it clears for.

Creation unit: The block of ETF shares (commonly 50,000 to several hundred thousand shares in Europe) the fund issues or redeems in one order against one basket or its cash value; the investors on the exchanges trade any number of shares.

PCF: The portfolio composition file: the securities, the quantities and the estimated cash component of one creation unit for the day, published by the ETF’s registrar or issuer to the authorized participants and the data vendors before the open.

iNAV: The indicative net asset value of an ETF, computed during the trading day from the live prices of the basket by a calculation agent and published on the exchanges every few seconds; a guide for the investors, the market makers price from their own models.

ICSD issuance model: The structure in which an ETF’s shares are represented by one global certificate held by a common depositary for Euroclear Bank and Clearstream Banking Luxembourg, the APs settling the primary market in the ICSDs and the exchange trades settling there or through the local CSDs’ links, so that one pool of shares serves all the listings.

Common depositary: The bank appointed jointly by Euroclear Bank and Clearstream Banking Luxembourg to hold the global certificate of an international security (a Eurobond, an ETF), record the increases and decreases of the issue and reconcile them with the registrar and the two ICSDs; its nominee is the registered holder.

Liquidity provider: A firm that an exchange designates to quote an ETF continuously within maximum spreads and minimum sizes, in return for lower fees; the source of the on-exchange liquidity of most European ETFs beside the RFQ platforms.

Cash creation: A creation or redemption of ETF units paid in cash: the AP pays or receives the NAV adjusted by a charge for the fund’s cost of buying or selling the basket (the spreads, the commissions, the transaction taxes); the usual form for the fixed income, the emerging market and the synthetic ETFs.

ESMA ETF guidelines: ESMA’s guidelines on ETFs and other UCITS issues of 2014: the UCITS ETF identifier, the disclosure of the transparency policy, of the iNAV and of the tracking error, the rules on the securities lending and the collateral, and the right of the secondary market investors to redeem directly with the fund when the exchange price departs significantly from the NAV.

Middle office outsourcing: The transfer of an asset manager’s post-trade work (the trade support, the IBOR, the reconciliations, the corporate actions, the collateral, the regulatory reports, the performance) to a bank or a specialist provider under a long-term agreement, often with a transfer of the staff; the manager keeps the investment decisions and the oversight.

Acquired Rights Directive: The EU directive of 2001 on the transfer of undertakings: when an activity that keeps its identity moves to another employer, the employees move with it on their existing terms, the transfer cannot by itself justify a dismissal and the employee representatives are informed and consulted; the basis of the staff transfers in the outsourcings in the EU (Article L.1224-1 of the French labor code, Section 613a of the German civil code, TUPE in the UK).

IBOR: Investment book of record: the manager’s own real-time view of positions and cash, including trades not yet settled, used for investment decisions.

ABOR: Accounting book of record: the fund administrator’s official positions and valuations, as opposed to the manager’s IBOR.

Reconciliation platform: The system that matches a firm’s records against its depositaries’, administrators’ and counterparties’ statements (the positions, the cash, the transactions), presents the breaks and tracks them to resolution (Duco, SmartStream TLM, illustrative).

EMIR report: The report of each derivative contract (its conclusion, its changes, its end, the daily valuation and the collateral) to a trade repository registered with ESMA under EMIR, in the ISO 20022 format required since April 29, 2024; for a UCITS or an AIF the management company is responsible for it.

DORA: The Digital Operational Resilience Act (applied from January 2025): the ICT risk management, incident reporting, resilience testing and third-party risk rules for financial entities, investment firms included, with the oversight of the critical ICT providers.

Register of information: The register DORA requires of every financial entity on all its contractual arrangements with ICT third-party service providers (the services, the functions they support, the subcontractors, the criticality), kept up to date and submitted to the national authority each year.

Issuer Services

Issuer services: The business of the banks that act as agents for the issuers of securities: the share register and the registered holders’ accounts, the dividend and coupon payments, the centralization of the corporate actions and the general meetings, the fiscal and paying agency of the bonds and the employee share plans; in France the banks’ securities services and their joint ventures provide it to most listed companies.

Issuer CSD: The central securities depository where an issue is initially recorded and centrally maintained (the notary and central maintenance services of CSDR): Euroclear France for the French shares and the French law bonds, Clearstream Banking Frankfurt for the German ones; it holds the issue in its participants’ accounts and checks every day that they add up to the securities issued.

Euroclear France: The French central securities depository of the Euroclear group, on the ESES platform with Euroclear Belgium and Euroclear Nederland and settling on T2S: the issuer CSD of the French shares, the OATs and the French law bonds, with the issuers’ registered shares held in their agents’ accounts and the identification and meeting services for the issuers.

Share registrar: The agent that keeps the register of a company’s registered shares: in France the issuer services of a bank keeping the pure registered accounts and recording the administered ones, in Germany a registrar keeping the share register of the registered shares under section 67 of the Stock Corporation Act.

Pure registered shares: The French registered form in which the shares are held in an account the issuer or its agent keeps (nominatif pur): no custody fee for the holder, the company’s documents and the convening notice sent directly, the double vote after two years and the loyalty premium where the bylaws provide them.

Administered registered shares: The French registered form in which the holder’s shares are entered in the issuer’s register but kept and administered by the holder’s own bank or broker (nominatif administré), which notifies the issuer’s agent of the holder and the movements; the double vote and the loyalty premium apply as for the pure registered.

Bearer shares: Shares held in an account at the holder’s bank or broker without an entry in the issuer’s register; in France the large majority of a listed company’s shares, reached through the shareholder identification requests and the chain of intermediaries.

Integrity of the issue: The CSDR rule (Article 37) that a CSD reconciles every day the number of securities in its participants’ accounts with the number issued, and that no securities are created or deleted except by the issuer’s action; the issuer’s agent reconciles its register to its own account at the CSD.

Double voting rights: The double vote a French listed company gives the fully paid shares held in registered form by the same holder for two years, automatic since the Florange law of 2014 unless the bylaws opt out; lost on a conversion to bearer or a sale and kept on an inheritance or a family gift.

Loyalty dividend: The premium of up to 10% on the dividend that the bylaws of a French company may grant the shares held in registered form for two years, limited to 0.5% of the capital per holder (the majoration de dividende of the Code de commerce).

Free share plan: A plan under which a French company grants its employees and officers shares delivered free after a vesting period of at least one year, often subject to performance conditions, with a total vesting and holding period of at least two years and a part the executive officers must keep in registered form until they leave office.

French dividend withholding: The tax a French paying institution withholds on a dividend: 12.8% as an income tax advance and 17.2% of social levies for the resident individuals (30% in all, the 12.8% waivable on request below an income threshold), 12.8% for the non-resident individuals, 25% for the non-resident companies, 75% for a payment to a non-cooperative state, reduced at source to the treaty rate on Form 5000 or reclaimed later.

Eckert law: The French law of June 13, 2014 (in force since 2016) on the inactive bank and securities accounts: the account keeper checks the national death register each year and contacts the holders; after ten years without contact, or three years after a death, the securities are sold and the proceeds paid to the Caisse des Dépôts, searchable on its Ciclade site, before they pass to the State.

Fiscal agent: The agent appointed by the issuer of a bond under the agency agreement to pay the coupons and the principal, keep the records of the issue, send the notices and process the redemptions and cancellations; it acts for the issuer and owes the holders no fiduciary duty.

Agency agreement: The contract between the issuer of a bond program and its fiscal agent, paying agents and calculation agent: the funding of the payments before each date, the notices, the redemptions and cancellations, the agents’ fees, indemnities and replacement.

Masse: The legal entity that groups the holders of the same issue of French law bonds under the Code de commerce, acting through its representative and deciding in a general meeting by two thirds of the votes cast (a quorum of a fifth on first call) or by a written decision.

Representative of the masse: The person or firm named in the terms of a French law bond or elected by the holders’ meeting to represent the masse: it acts for the holders in court, files their claims in a proceeding and informs them, paid a small yearly fee by the issuer.

German Bond Act: The Schuldverschreibungsgesetz of 2009 (SchVG): the holders of German law bonds act collectively through a bondholders’ meeting or a vote without a meeting, amend the material terms by 75% of the votes and may appoint a common representative; a German law bond needs no trustee.

Trust deed: The deed by which the issuer of an English law bond appoints a trustee to hold its covenant to pay on trust for the holders: the trustee enforces the terms on the instructions and the indemnity of a set share of the holders, and the no-action clause keeps a single holder from suing alone.

Non-cooperative state or territory: A jurisdiction on the French list of the states that do not exchange tax information: a French dividend or interest paid there bears a 75% withholding tax, the only French withholding on the interest of most bonds.

Accelerated safeguard: The French court procedure, opened after a conciliation, in which a plan prepared with the main creditors is adopted by the classes of affected parties within four months at most and approved by the court, binding the dissenters.

Classes of affected parties: The classes into which the administrator sorts the creditors and the shareholders affected by a French safeguard plan since the 2021 reform: each adopts the plan by two thirds of the votes cast, and the court can bind a dissenting class under the best interest test and the absolute priority rule.

Cross-class cram-down: The court’s approval of a restructuring plan over the objection of one or more classes, under the conditions of the EU restructuring directive as transposed (the best interest test, the absolute priority rule with its exceptions, the approval by a class in the money).

Ad hoc group: The group of large bondholders that organizes with its own counsel and financial adviser to negotiate a restructuring with the issuer, under confidentiality and usually a lock-up agreement once terms are agreed.

BALO: The Bulletin des annonces légales obligatoires: the French official bulletin in which a listed company publishes the notice of its general meeting 35 days before it, the convening notice 15 days before and its legal announcements.

Votaccess: The platform shared by the French account keepers and issuer agents through which a holder votes online, from its bank’s portal or the agent’s shareholder site, on a meeting of a French company that offers it, until 15:00 Paris time the day before.

Participation certificate: The certificate by which an account keeper confirms to the centralizing agent the shares a bearer holder holds at the record date, so that its vote or attendance counts at a French general meeting.

Registered intermediary: The intermediary that holds and votes the shares of a French company for owners not resident in France, in an account identified as such at the issuer (Article L.228-1 of the Code de commerce), usually a global custodian.

Say on pay: The shareholders’ vote on the executives’ pay; in France binding on the pay policy ex ante and, ex post, on the pay of each executive officer for the year, whose variable and exceptional parts are paid only after a favorable vote.

Data, Ratings and Indexes

CRA Regulation: The EU regulation on credit rating agencies (Regulation (EC) No 1060/2009, amended in 2011 and 2013): the registration with ESMA, the conflict, governance, methodology and disclosure rules, the use of the ratings for regulatory purposes only when issued or endorsed by a registered agency or issued by a certified one, the civil liability of Article 35a.

Credit rating agency: A firm that issues opinions on the creditworthiness of issuers and their debt on an established scale; in the EU it must be registered with ESMA, which supervises it directly, for its ratings to be used for regulatory purposes (about 25 are registered, illustrative).

Issuer-pays model: The business model in which the issuer or the originator of a rated security pays the agency for the rating, which is published free to all; the main conflict of the industry, managed under the CRA Regulation’s fee and organization rules; in the subscriber-pays model the investors pay.

Rating committee: The group of analysts that votes on every rating action on the lead analyst’s recommendation, with a chair, a quorum, a majority vote and a recorded rationale; no single analyst decides a rating.

Rating outlook: The agency’s view of the likely direction of a rating over the next 12 to 24 months (positive, stable, negative, developing); a watch or a review flags a change likely within about 90 days, usually on an event.

European Rating Platform: ESMA’s public website where the ratings issued by the registered and certified agencies and their outlooks are published from the data the agencies report to ESMA, beside the agencies’ performance statistics (CEREP).

Endorsement: Under the CRA Regulation, the act by which an EU registered agency takes responsibility for a rating issued by an affiliate outside the EU under rules as stringent as the EU’s, so the rating can be used for regulatory purposes in the EU; the certification of an agency from a country with an equivalence decision is the alternative.

Credit quality step: The six-step scale to which the EU prudential rules map each recognized agency’s ratings (step 1 for AAA to AA-, step 3 for BBB+ to BBB-), used for the risk weights of the CRR’s standardized approach and the spread risk capital of Solvency II.

Eurosystem credit assessment framework: The ECAF: the rules by which the Eurosystem decides whether an asset is good enough to be collateral for its credit operations, using the ratings of the accepted agencies (S&P, Moody’s, Fitch, Morningstar DBRS and Scope, approved in November 2023), the best one counting for most assets and BBB- the floor.

Overreliance on ratings: The principle of Article 5a of the CRA Regulation and of the 2013 amendments to the fund and banking directives: the investors, managers and institutions make their own credit assessment and do not rely solely or mechanically on the ratings.

Two-rating rule: The CRA Regulation’s requirement that the issuer or the originator of a structured finance instrument appoint at least two agencies (Article 8c) and consider one with no more than 10% of the EU market, explaining in writing if it does not (Article 8d).

Fallen angel: A bond downgraded from investment grade (BBB- or Baa3 and above) to high yield; it leaves the investment-grade indexes at the next month-end and the mandates limited to investment grade, so the downgrade brings forced sales.

Benchmarks Regulation: The EU regulation on the indexes used as benchmarks (Regulation (EU) 2016/1011, applied from 2018): the authorization of the administrators, the oversight function, the controls, the methodology and the consultations, the benchmark statement and the third-country regimes; narrowed from January 1, 2026 by Regulation (EU) 2025/914 to the critical and significant benchmarks, the EU climate benchmarks and some commodity benchmarks.

Benchmark administrator: The firm that controls the provision of a benchmark (the methodology, the data, the calculation and the publication), authorized or registered by its national authority under the Benchmarks Regulation and listed on ESMA’s register.

Significant benchmark: Under the amended Benchmarks Regulation, a benchmark used in the EU for EUR 50,000,000,000 or more on average over six months, or designated by its supervisor or by ESMA for a third-country benchmark; an administrator of a benchmark used above EUR 20,000,000,000 may opt in.

EU climate benchmarks: The EU Climate Transition Benchmarks and the EU Paris-aligned Benchmarks of the 2019 amendment to the Benchmarks Regulation, with minimum standards for the decarbonization path and the exclusions; since 2026 within the regulation whatever their size, their names carrying CTB or PAB.

Benchmark statement: The statement an administrator publishes for each benchmark or family under the Benchmarks Regulation: what it measures, its limits, the discretion in its methodology, the ESG factors, the procedures for a change or a cessation; reviewed at least every two years.

Index methodology: The published rules of an index: the universe, the eligibility (size, liquidity, float, country), the weighting and the caps, the review schedule, the treatment of the corporate actions and the market disruptions; changed only after a consultation.

Index review: The scheduled update of an index (quarterly for most European equity indexes, effective after the close of the third Friday of March, June, September and December): the share and float updates, the additions and deletions, the caps reapplied; announced in advance and effective after the close.

UCITS index rules: The conditions for a UCITS to track an index: diversification (up to 20% per issuer, 35% for one issuer in exceptional market conditions), an adequate benchmark, appropriate publication, and under ESMA’s guidelines on ETFs and other UCITS issues the full methodology, the constituents and the weights available and no index whose rebalancing a fund cannot follow.

Net return index: The version of an equity index that reinvests the dividends after the withholding tax a reference investor bears (often a Luxembourg fund under the applicable treaties); the version most European ETFs track, beside the price and the gross return versions.

Closing auction: The main venue’s single-price auction at the end of the trading day (from 17:30 CET on Euronext and Xetra) that sets the official closing price the indexes and the funds use; the orders entered during the call are matched at one price, with the indicative price and volume published.

Market data vendor: A firm that collects the venues’ and the other sources’ data, normalizes it in its ticker plant and distributes it to subscribers through terminals and feeds (illustrative of the market: Bloomberg, LSEG, FactSet, ICE), administering the venues’ entitlements and passing their fees through.

Reasonable commercial basis: MiFIR’s requirement that the trading venues, the APAs and the systematic internalizers sell their market data at prices based on the cost of producing it with a reasonable margin, on non-discriminatory and published terms, per user and unbundled, and make it free 15 minutes after publication (Delegated Regulation 2017/567 and ESMA’s 2021 guidelines).

Consolidated tape: The single feed of trades and quotes across European venues that MiFIR’s 2024 review sets up (bonds first, then equities and derivatives), with the tape providers selected by ESMA from 2025.

Consolidated tape provider: The firm selected by ESMA for five years to run the EU consolidated tape of an asset class, collecting the data the venues and the APAs must send it and publishing it as close to real time as possible, authorized and supervised by ESMA.

Direct feed: A venue’s own market data feed, delivered from its data center by multicast at colocation or through extranets, with more content than a vendor’s consolidated view (the depth of book, the auction data); sold under the venue’s fee schedule and policy.

Non-display use: The use of market data by an application without a person seeing it (algorithmic trading, order routing, risk, pricing, an index calculation), licensed by category (the firm’s own trading, trading for clients, the operation of a venue) with a fee per firm and a declaration to each venue.

Venue audit: The review of a vendor’s or a subscriber’s market data use by a venue under its agreements, every two to three years with a look-back of up to three years; the unreported users and uses are back-billed with interest.

Evaluated price: A pricing service’s estimate of the price at which a bond would trade at a given time (the bid at a 17:00 CET snapshot for many European funds), built by evaluators and models from the trades, the quotes and the comparable bonds when the bond itself has not traded.

Pricing service: A firm that provides evaluated prices for the securities without reliable quotes, mainly bonds and loans (illustrative of the market: ICE Data Services, Bloomberg BVAL, LSEG, S&P Global), to the funds, their administrators, the custodians and the insurers.

Valuation policy: The management company’s written policy for valuing the fund’s assets: the sources by asset type and their order, the price type and the valuation point, the tolerance checks, the overrides and their evidence, the valuation committee, the oversight of the pricing services.

Probable realization value: The value, estimated with prudence and in good faith, at which the valuation rules of most Luxembourg funds value an asset without a representative market price, under the board’s or the management company’s procedures.

Network, Controls and Billing

Network management: The depositary bank’s team that chooses, contracts, monitors and replaces its sub-custodians and assesses the depositories of each market: the agent RFPs, the due diligence before each delegation, the legal opinions, the risk ratings, the KPIs, the market advisories to the clients, the delegate lists for the funds.

Delegation of safekeeping: The depositary’s entrustment of the custody of a fund’s assets to a third party (a sub-custodian, an investor CSD) under Article 22a of the UCITS directive or Article 21(11) of the AIFM directive: for an objective reason, after due diligence, with continuing monitoring, to a delegate that is regulated, audited, segregates the assets and protects them in its insolvency.

Due diligence questionnaire: The standard questionnaire a custodian sends its sub-custodians and the candidates (the AFME questionnaire for the agent banks): the ownership and the financials, the regulation, the segregation and the reconciliations, the business continuity, the financial crime controls; the basis of the yearly review and the onsite visit.

Asset segregation: The separation of the funds’ assets along the custody chain: in the delegate’s books, in accounts for the depositary’s clients apart from the delegate’s own assets and from the depositary’s proprietary assets, with records that identify them at any time (the 2018 amendments to the delegated regulations, applied from April 1, 2020).

Insolvency protection: The condition that a delegate of a depositary takes the steps for the funds’ assets it holds to be unavailable to its own creditors if it fails; for a UCITS delegate outside the EU, confirmed by an independent legal opinion on the local insolvency law.

Legal opinion: Local counsel’s written opinion on a market’s custody law: whether the clients’ securities held by the sub-custodian and at the depository stay outside the agent’s estate in its insolvency, how the segregation is recognized and how a claim is enforced; required from an independent adviser for a UCITS delegate outside the EU.

Discharge of liability: The transfer of an AIF depositary’s liability for a lost instrument to its delegate by a written contract with an objective reason, or under the local entity rule of a third country that requires local custody, with the investors informed; not available to a UCITS depositary.

Investor CSD: A CSD that holds securities recorded at another CSD, the issuer CSD, through a link, for its own participants; when it holds a depositary’s assets it is a delegate of the safekeeping, without the ex ante due diligence since the 2024 review of the AIFM directive.

Market advisory: The custodian’s notice to its clients of a change in a market: a new rule or settlement cycle, a holiday, a tax or registration change, a sanction or a capital control; with the effective date, the impact and the action asked of the client.

Agent conversion: The move of a market’s client assets from one sub-custodian to another: the notice to the clients, the delegate lists updated, the new settlement instructions to the brokers, the realignment free of payment at the depository over a weekend, the reconciliation, and the cutover of the pending trades, the corporate actions and the tax reclaims.

ISAE 3402: The IAASB’s International Standard on Assurance Engagements 3402 for the assurance reports on the controls at a service organization relevant to its clients’ financial reporting, applied to the periods ending on or after June 15, 2011; the European counterpart of the US SSAE 18 and SOC 1 report, often issued as one report with it.

Type II report: An ISAE 3402 report that gives an opinion on the description of the system, the suitability of the design and the operating effectiveness of the controls over a period, usually twelve months, with the tests and the results; a Type I report covers the description and the design at one date.

Control objective: The statement in an assurance report of what a group of controls achieves for the clients’ financial reporting (for example, that the trades are settled as instructed and recorded completely and accurately); the auditor’s opinion is given objective by objective.

Service auditor: The independent audit firm that tests a service organization’s controls and issues the ISAE 3402 or SOC 1 report; its opinion is addressed to the service organization for the use of its clients and their auditors.

Carve-out method: The presentation of a subservice organization in an assurance report that leaves its controls out of the description and the testing and lists the complementary subservice organization controls; the inclusive method brings them in, with the subservice organization’s own assertion.

Complementary user entity controls: The controls an assurance report assumes the clients run themselves for the control objectives to be achieved (authorized instructions, the review of the statements, the reconciliation of the holdings, the timely elections, the declaration of every cash account); listed in the report and tested by the clients and their auditors.

Complementary subservice organization controls: The controls an assurance report assumes the carved-out subservice organizations run (the sub-custodians, the CSDs, the ICSDs, the pricing vendors), listed in the report; the service organization monitors them through their own reports.

Bridge letter: A letter from a service organization’s management covering the months between the end of the assurance report’s period and the clients’ year-end, stating that no material change to the controls and no known significant deficiency occurred; management’s own statement, untested by the service auditor.

ISA 402: The International Standard on Auditing on the audit considerations relating to an entity using a service organization: how the auditor of a fund or a company understands the service organization’s controls and uses a Type II report as evidence; applied in the EU directly or through the national standards.

CSSF Circular 18/698: The CSSF circular on the authorization and the organization of the Luxembourg investment fund managers (the UCITS management companies and the AIFMs): the substance, the conducting officers, the delegation and the oversight of the delegates such as the central administration and the transfer agent.

ISAE 3000: The IAASB’s general standard for the assurance engagements other than the audits of financial information, used for the reports on a service organization’s security, availability and other controls outside the financial reporting; the European counterpart of the US SOC 2 report.

Basis point: One hundredth of one percent (0.01%), written bp: the unit of the depositary and custody fees; a fee of 1bp a year on EUR 1,000,000,000 of assets is EUR 100,000.

Depositary fee: The fee a fund pays its depositary for the oversight, the cash monitoring and the liability, in basis points a year of the net assets with a minimum per fund, beside the safekeeping fee by market tier and the transaction fees; set in the depositary agreement and capped in the prospectus.

Market tier: The grouping of the markets in a custody fee schedule by cost and risk: the T2S markets, the ICSDs and the main developed markets in the lowest tiers, the emerging and frontier markets in the highest, where the agents’ fees and the operations cost most.

Fee schedule: The schedule attached to the depositary and custody agreements: the depositary fee, the safekeeping fees by market tier, the transaction fees by type and place of settlement, the cash and FX terms, the out-of-pocket expenses, the minimums, the term and the conditions of a change.

Out-of-pocket expenses: The third-party costs a custodian passes to its clients under the fee schedule (the CSD and ICSD fees, the financial transaction taxes, the stamp duties, the registration fees, the proxy and tax agents’ fees, the messaging charges), billed at cost under most agreements and tested first in the clients’ fee reviews.

Net interest income: The interest a bank earns on its assets (the deposits at the central bank, the securities, the loans) less the interest it pays on its deposits and borrowings; for a custody bank, mostly the spread on its clients’ cash balances.

Relationship pricing: The pricing of a client on the whole revenue it brings (the depositary, custody, administration and transfer agency fees, the net interest income on its deposits, the FX, the securities lending) against the cost to serve and the capital, so one service can be priced below its own floor.

Undue costs: The costs a management company may not charge to a UCITS or an AIF or its investors under the directives’ duty to act in their best interest; ESMA’s supervisory briefing of June 2020 set the convergence on what is undue and its 2021 common supervisory action reviewed the cost structures of the funds.

Ongoing charges: The costs taken from a fund over a year (the management fee, the depositary, custody, administration and transfer agency fees, the audit and the other expenses), shown in the PRIIPs KID of each share class and in the annual report.

Custody search: A client’s selection of a depositary or custodian run by a consultant: the request for proposal to the incumbent and the rivals, the fee quotes on the same assets and volumes, the visits, the scoring; the event at which most fee schedules are repriced.

SWIFT message types used in the diagrams

MT300: SWIFT confirmation of an FX trade.

MT305: SWIFT confirmation of an FX option.

MT320: SWIFT confirmation of a fixed-term loan or deposit.

MT950: SWIFT account statement from a correspondent bank.

camt.053: ISO 20022 end-of-day bank account statement, the successor to MT950.

MT535: SWIFT statement of securities holdings from a custodian.

MT541: SWIFT instruction to receive securities against payment.

MT543: SWIFT instruction to deliver securities against payment.

camt.057: ISO 20022 notice to the account holding bank or custodian to expect an incoming payment, the successor of the MT210.

MT900: SWIFT debit confirmation from a bank.

MT304: SWIFT advice of an FX trade from a manager to its custodian, so the custodian can settle it.

MT545: SWIFT confirmation from the custodian that securities were received against payment.

MT547: SWIFT confirmation from the custodian that securities were delivered against payment.

MT548: SWIFT settlement status from the custodian: pending, matched, failed, with the reason.

MT566: SWIFT corporate action confirmation: the cash or securities credited for an event.

MT540-543: SWIFT instructions to receive or deliver securities, with or without payment; used to move collateral.

MT515: SWIFT client confirmation of a securities trade.

MT527: SWIFT triparty collateral instruction.

MT600: SWIFT confirmation of a precious metals trade.

MT604: SWIFT precious metals transfer or allocation instruction.

MT670: SWIFT standing settlement instruction update: how a counterparty notifies its SSIs by authenticated message.

MT340: SWIFT confirmation of a forward rate agreement.

MT564: SWIFT corporate action notification from a custodian or depository: the event, the options and the deadline.

MT502: SWIFT order to buy or sell securities, sent by a client to its broker or manager.

MT509: SWIFT trade status message from a broker or custodian.

MT101: The SWIFT request for transfer a corporate sends its bank, or a bank sends another, to move funds from the customer’s account.

MT700: The SWIFT message by which a bank issues a documentary credit to the advising bank.

MT710: The SWIFT advice of a documentary credit issued by a third bank, sent by the advising bank onward.

MT742: The SWIFT reimbursement claim a paying or negotiating bank sends the reimbursing bank under a documentary credit.

MT754: The SWIFT advice of payment, acceptance or negotiation sent by the paying bank to the issuing bank under a documentary credit.

MT799: The SWIFT free-format message between banks, used for trade finance correspondence and bank-to-bank undertakings.

MT940: The SWIFT customer statement message a bank sends an account holder (or its other bank) with the day’s entries and balances.

MT540: The SWIFT instruction to receive securities free of payment, used for the stock loans and the collateral deliveries.

MT306: The Swift confirmation of the FX options the MT305 cannot describe: average rate (Asian) options and forwards, barriers, digitals and other exotic structures, with their averaging or observation dates.

MT380: The Swift FX order: an investment manager instructs its custodian to buy or sell a currency for a fund; the custodian confirms the execution with an MT381.

MT606: The Swift precious metal debit advice: the account keeper tells the account owner its metal account was debited, with the bar list when the metal moves into allocated bars.

MT607: The Swift precious metal credit advice: the account keeper tells the account owner its metal account was credited, in fine troy ounces.

MT608: The Swift statement of a metal account: the opening and closing balances in ounces and the movements of the period, or the bars held in an allocated account.

MT537: The SWIFT statement of pending transactions, used with the function PENA for the CSDR penalty reports the CSDs and the custodians send down the chain: each penalty with its instruction, its days, its amount and its party.

MT567: The SWIFT corporate action status and processing advice: the acceptance or the rejection of an MT565 election, or the status of an event; seev.034 in ISO 20022.

MT569: The SWIFT triparty collateral and exposure statement: the triparty agent’s report to each side of the exposures, the collateral allocated against them, the values and the haircuts.

MT536: The SWIFT statement of transactions: the settled movements of an account over a period, sent by the custodian to the client or by the sub-custodian to the custodian.

MT542: The SWIFT instruction to deliver securities free of payment: a transfer between accounts, a delivery to a lender’s collateral account, a re-registration.

Custody and Settlement›Onboarding

Onboarding as UCITS and AIF Depositary: the RFP, the Depositary Agreement, the CSSF’s Approval, the Accounts and the Transfer of the Assets

Depositary onboarding is the appointment of a bank as depositary and custodian of a fund range and the move of its assets onto the new books. The request for proposal to four banks, the depositary agreement that sets the safekeeping, the cash monitoring and the oversight duties with the fees, the SICAV board’s resolution and the CSSF’s approval of the depositary of a UCITS, the KYC on 135 funds, one account per sub-fund and market with the segregation choice of CSDR, every cash account declared to the depositary, the T2S accounts and the SSIs, the market openings abroad, the free deliveries on T2S and the realignments abroad, the opening positions reconciled before the first NAV, and the strict liability for the instruments held in custody.

Worked example, illustrative:client a French asset manager’s Luxembourg range: a UCITS SICAV with 120 sub-funds and 15 AIFs, EUR 120,000,000,000 in 60 markets (illustrative)selection an RFP to four banks with a consultant; four months to the choice, nine to the first transferagreement one depositary agreement per fund: safekeeping, cash monitoring, oversight, delegation, strict liabilityfees a depositary fee of 1bp; safekeeping from 0.5bp in the T2S markets to 20bp; EUR 4 to EUR 40 a transactionaccounts 2,800 securities accounts, one per sub-fund and market; 1,900 cash accounts in 25 currencies; every third-party account declaredtransfer two waves; free deliveries on T2S and at the ICSDs, realignments abroad; the positions reconciled before the first NAV

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A depositary is chosen by the management company, approved through the fund’s authorization and liable for the instruments it holds whoever holds them for it. The work is in the setup and the transfer: thousands of accounts, every cash account of every fund, and positions that must reconcile before the first NAV on the new books.

The depositary under the directives: every UCITS and every EU AIF has one depositary, appointed by a written contract, under Articles 22 to 26 of the UCITS directive as amended by UCITS V (applied from March 18, 2016) with Delegated Regulation (EU) 2016/438, and under Article 21 of the AIFM directive with Articles 83 to 102 of Delegated Regulation (EU) No 231/2013. A UCITS depositary is a central bank, a credit institution or another entity authorized for the role, established in the fund’s home member state (in Luxembourg, a registered office or a branch there); an AIF depositary may also be an investment firm, and the 2024 review of the AIFM directive (Directive (EU) 2024/927, applied from April 16, 2026) lets a member state whose depositary market does not exceed EUR 50,000,000,000 allow a depositary from another member state. The depositary and the management company act independently: the delegated regulation limits the common directors and the group links between them. In Luxembourg the CSSF’s circulars set the depositary’s organization, and the depositary is usually also the central administration and transfer agent of the range.
The three duties: the safekeeping covers the financial instruments that can be held in custody (registered in a securities account or physically delivered), kept in segregated accounts in the name of the fund, and the other assets (the OTC derivatives, the deposits, the interests in private companies and funds), whose ownership the depositary verifies and records in a register; the cash monitoring covers every cash flow of the fund on every account, at the depositary or at a third party, with the subscriptions received and booked; the oversight checks that the dealing in units, the valuation, the investment restrictions, the income distribution and the management company’s instructions follow the law and the fund documents, and that the consideration of each transaction is remitted within the usual time limits. The assets held in custody cannot be reused by the depositary or its delegates for their own account. A breach found is escalated to the management company and, if not remedied, to the CSSF.
The liability: the depositary is liable to the fund and its investors for the loss of a financial instrument held in custody, by itself or by a delegate, and must return an instrument of the same type or the corresponding amount without undue delay, unless it proves that the loss arose from an external event beyond its reasonable control whose consequences were unavoidable despite all reasonable efforts (Article 24 of the UCITS directive, Article 21(12) of the AIFM directive). A UCITS depositary cannot discharge that liability by contract; an AIF depositary can transfer it to a delegate by written contract with an objective reason, or where the law of a third country requires local custody and no local entity meets the delegation requirements, and the investors are told before they invest. The regime was built after the Madoff feeder funds and the failure of Lehman Brothers in 2008, when investors in European funds found the assets lost at a delegate or a prime broker; it makes the depositary’s network and its due diligence a matter of its own capital (see Network).
The transfer and the economics: a fund range changes depositary rarely (every eight to twelve years, illustrative), after an RFP run with a consultant on the depositary model, the network, the fund administration and the price, since the change needs the CSSF’s approval, the prospectus updates and the investors’ notification. The assets move in waves under a transition agreement: the trades pending on the transfer date settle at the previous depositary, the open corporate actions and the tax reclaims stay with it until paid, the securities on loan are recalled or moved to the new lending agent, and the brokers receive the new SSIs; on T2S a free delivery across two CSDs settles in one movement, so the euro area positions move in a weekend, and the markets abroad take two to three weeks. The depositary fee in basis points of the net assets pays for the oversight and the liability, the safekeeping fee by market tier for the custody, and the bank’s return on the mandate depends on the central administration, the transfer agency, the cash and the FX sold with it (see Billing).

Custody and Settlement›SettlementInstrument card: Government Bond

Settlement on T2S: From the Manager’s Trade to Settled in Central Bank Money, With the Cash Penalties, the Buy-In After CSDR Refit and the Move to T+1

Settlement on T2S is the bank’s work between a manager’s trade in a euro area security and the settled position in the fund’s account. The confirmations and the allocations matched in CTM under CSDR’s allocation rules, the MT541 instruction, the bank as a directly connected participant sending it to T2S for matching, the pre-settlement checks, the dedicated cash account funded from T2 with the auto-collateralization behind it, the delivery versus payment in the night-time cycle, a Bund settled across two CSDs in one movement, the posting on contractual settlement, a partial delivery and a fail, the CSDR cash penalties and the buy-in regime after CSDR Refit, and the overdraft within the UCITS borrowing limit.

Worked example, illustrative:trade three sub-funds buy 500,000 shares at EUR 80.00 on Euronext Paris (EUR 40,020,000 with the commission) and EUR 100,000,000 of the 10-year Bund (illustrative)matching CTM for the confirmations and the allocations; the written allocation by the close of T under CSDRinstructions MT541 or sese.023 per allocation; sent to T2S by the bank as a directly connected participant; statused by MT548settlement T+2 on T2S, DVP in central bank money in the night-time cycle from 20:00 CET; the Bund across two CSDs in one movementcash the dedicated cash account funded from T2; auto-collateralization through ECMS; contractual settlement for the fundsfails EUR 8,000,000 failing two days; EUR 1,600 of cash penalties credited; no mandatory buy-in; T+1 from October 11, 2027

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On T2S the bank’s instructions match on the platform and settle overnight against its own cash in central bank money, so its work is done before the settlement date begins. The fails cost a daily penalty, and the move to T+1 in October 2027 shortens every step before the night-time cycle.

T2S and the directly connected participant: since the migration waves of 2015 to 2017 the euro area CSDs (and the Danish one for the krone) settle on T2S, the Eurosystem’s platform: 24 CSDs share one settlement engine, the instructions match on the platform, the night-time cycles from 20:00 CET on the day before the settlement date settle most of the value, and the real-time window runs from 05:00 to the 16:00 cutoff for the DVP and 18:00 for the free deliveries, with the partial settlement windows, the recycling and the hold and release functions. A participant reaches T2S through its CSD’s interface or connects directly as a directly connected participant, the choice of the large custodians, which send and receive the ISO 20022 messages themselves while staying contractually a participant of each CSD. A trade between participants of two CSDs settles as a cross-CSD settlement in one movement, the CSDs’ accounts at the issuer CSD realigned at the same time, so a custodian can hold the euro area securities through one or a few CSDs.
The cash in central bank money: the cash legs settle on the dedicated cash accounts the payment banks hold at their national central banks on T2S, funded from their main cash accounts in T2 (open 02:30 to 18:00 CET) and swept back at the end of the day; a participant short of cash gets the central bank’s auto-collateralization, intraday credit against the securities it receives or holds, and the payment banks offer client collateralization to their clients on the same model; the collateral is managed in the Eurosystem’s ECMS since June 16, 2025. A custodian that is its own payment bank manages the liquidity of all its clients’ settlements on its own accounts, and the funds’ cash accounts in its books carry each fund’s part.
Settlement discipline and the buy-in: CSDR (Regulation (EU) No 909/2014) brought the cash penalties on February 1, 2022, computed daily by the CSD on every failing instruction at the rates of Delegated Regulation 2017/389 (1 basis point a day for a liquid share, 0.5 for an illiquid one, 0.25 for an SME growth market share, 0.20 for a corporate bond, 0.10 for a sovereign bond, the central bank’s overnight lending rate for a lack of cash) and collected and redistributed monthly; ESMA delivered its advice on the mechanism on November 19, 2024, and the 2017 rates stay until a new delegated act applies. CSDR Refit (Regulation (EU) 2023/2845, in force January 16, 2024) removed the mandatory buy-in as a default: the Commission may impose it by implementing act for the instruments or transactions whose fails the penalties do not reduce, an act it has listed for adoption no earlier than October 1, 2027. The allocation and confirmation rules of Delegated Regulation 2018/1229 sit before the settlement, and the CCPs keep their own buy-in rules.
T+1 and the credit to the funds: Regulation (EU) 2025/2075, in force since November 3, 2025, moves the EU settlement cycle from T+2 to T+1 on October 11, 2027, the same day as the UK and Switzerland, with the amendments to the settlement discipline rules the Commission adopted on July 6, 2026, under the scrutiny of the Parliament and the Council, bringing the allocations and confirmations into the trade date; for the custodian it means the instructions matched on T before the night-time cycle, the recalls of the loaned shares a day earlier and the FX for the non-euro investors done on the trade date. Contractual settlement, crediting and debiting on the settlement date whatever the counterparty does, is a credit facility the bank offers in the T2S and developed markets and can withdraw; a UCITS may borrow only up to 10% of its net assets on a temporary basis, an AIF within the leverage set in its documents and reported under the AIFM directive, and the depositary’s oversight checks both.

Custody and Settlement›Settlement AbroadInstrument card: Sovereign and SSA Bond

Settlement Outside T2S: a Eurobond at the ICSDs and a US Purchase Through the Sub-Custodian, With the FX on the Trade Date and the CSDR Penalties

Settlement outside T2S is the bank’s settlement of its clients’ trades at the international CSDs and, through its sub-custodians, in the markets abroad. A global bond fund’s Eurobond bought from a dealer and a global equity fund’s US shares on the same day: the Eurobond instruction to the bank’s account at Clearstream Banking Luxembourg, matched with the dealer at Euroclear Bank over the Bridge, the US trade affirmed in CTM and relayed to the sub-custodian, the dollars bought on the trade date and settled in CLS, the euros at the ICSD in commercial bank money, the delivery versus payment at DTC on T+1 and across the Bridge on T+2, a fail at the ICSD with the CSDR cash penalties passed through to the fund, and the reporting back.

Worked example, illustrative:trades a corporate Eurobond, EUR 50,000,000 nominal at 99.50; 200,000 US shares at USD 150.00, USD 30,000,000 (illustrative)ICSDs the bank’s account at Clearstream Banking Luxembourg; the dealer at Euroclear Bank; the Bridge; T+2 in commercial bank moneyNew York the US sub-custodian at DTC; affirmed in CTM by 21:00 ET on T; DVP on T+1FX USD 30,000,000 bought on T at 1.1500 (EUR 26,086,957) and settled in CLS; instructed before 00:00 CET on the value datefails the Eurobond failing two days across the Bridge; EUR 1,990 of CSDR penalties credited to the fundreporting MT545 and MT548; MT535 and MT536 daily; the monthly MT537 penalty report; the market advisories

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Outside T2S the bank settles at the ICSDs, which are banks as well as depositories, and through an agent at a foreign depository, under that market’s cycle. Two purchases on the same day meet two settlement cycles, two kinds of money and an FX trade that cannot wait.

The ICSDs: Euroclear Bank in Brussels and Clearstream Banking Luxembourg are the international CSDs, authorized under CSDR and licensed as banks to provide the banking services ancillary to the settlement; the Eurobonds are issued in global form, held by a common depositary or a common safekeeper for both and recorded in their books, and settle in commercial bank money on the participants’ cash accounts in the ICSDs, in many currencies, with credit lines against the securities held. A trade between a participant of each settles across the Bridge, the link through which the two exchange the deliveries in several batches a day and overnight. Neither ICSD settles on T2S; they reach the euro area markets through their links, and the investment funds and the other international securities settle there too.
The US trade under T+1: the US moved to T+1 on May 28, 2024, so a European fund buying US shares settles one day after the trade while its own market settles in two until October 11, 2027. The affirmation in CTM by 21:00 ET on the trade date falls in the European night, and the dollars must be bought on the trade date: CLS takes the instructions until 00:00 CET on the value date, so a trade executed late in the New York afternoon leaves a few hours for the FX; the managers deal the FX earlier, hold dollar balances or accept settlement outside CLS, and the custodians extended their FX windows and their operating hours. The same squeeze will apply to the non-euro investors in European securities from October 2027.
The depositary rules in the chain: the US sub-custodian is a delegate of the depositary for the safekeeping, chosen and monitored under the delegation rules (the due diligence, the segregation of the funds’ assets, the insolvency protection with an independent legal opinion for a market outside the EU; see Network), and the bank answers for a loss there as for its own. A CSD that records an issue or keeps the top-tier accounts, as the ICSDs do for the Eurobonds, is outside the delegation rules, while a CSD holding the bank’s assets through its links acts as a custodian in the chain, a case the 2024 review of the AIFM directive treats as a delegation without the ex ante due diligence.
The penalties and the fees: the CSDR cash penalties apply to every EU CSD, so the ICSDs compute them on the fails in their systems and across the Bridge, report them daily by MT537 and collect and pay them monthly; the US, the UK and the other markets outside the EU have no such penalties, and the cost of a fail there is the financing and the market’s own close-out rules. The fees outside T2S are the ICSD’s or the sub-custodian’s cost plus the bank’s margin: 0.5bp of the assets at the ICSDs, 1.5bp to 4bp in the developed markets, 12bp to 20bp in the frontier ones, and EUR 8 to EUR 50 a transaction (illustrative).

Custody and Settlement›Cash and FXInstrument card: FX Spot

Cash and FX: the Accounts in 25 Currencies, the Bank’s Liquidity in T2, the Overdrafts, the Standing Instruction and Negotiated FX, CLS and the Cash Monitoring

Custody cash and FX is the bank’s banking service around the securities: the accounts that hold the funds’ cash in every currency and the foreign exchange that moves it between them, under the depositary’s cash monitoring. The cash accounts in 25 currencies and the daily projection, the bank’s own liquidity in T2 with the intraday credit against collateral in ECMS, the intraday credit to the funds and the overnight overdraft within the UCITS limit, the standing instruction FX executed in windows at a published spread, the negotiated FX dealt in competition with other banks, the settlement in CLS and the restricted currencies onshore, the euros overnight at the deposit facility, the surplus placed in money market funds, and the depositary’s daily reconciliation of every cash flow of every fund.

Worked example, illustrative:accounts 1,900 cash accounts in 25 currencies for the range; EUR 6,000,000,000 of balances (illustrative)credit intraday credit within limits per sub-fund; the overnight overdraft at €STR plus 2%; a UCITS borrows 10% at mostSI FX three windows a day at a published spread; 3bp to 10bp in the majors; 500 trades a monthnegotiated FX the managers’ trades in competition on 360T or FXall; third-party trades by MT304; CLS for 18 currenciesthe euros the bank’s accounts at the Banque de France; the deposit facility at 2.00%; the funds credited €STR less a spreadmonitoring every cash flow of every fund reconciled daily by the depositary; the 20% deposit limit per bank

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The cash is the part of the depositary bank’s service that sits on its balance sheet, settled in central bank money in T2 and CLS. The depositary’s cash monitoring watches every flow of every fund, and the FX windows, the limits and the deposit facility frame the day.

The cash is a deposit: the securities the bank holds stay the fund’s property, segregated and outside the bank’s estate in a failure, while the cash in the accounts is a deposit, an unsecured claim on the bank; the deposit guarantee schemes exclude the funds and the other financial institutions, so a fund’s balance at its depositary carries the bank’s credit risk in full. A UCITS may hold at most 20% of its assets in deposits with one body, the depositary included, and its ancillary liquid assets are limited to 20% of its net assets, so the larger balances are spread across banks or invested in money market funds under the Money Market Funds Regulation (Regulation (EU) 2017/1131: the public debt constant NAV, low volatility NAV and variable NAV funds). The interest credited on the balances follows €STR with a spread the client negotiates; with the deposit facility rate below zero from June 2014 to July 2022 the custodians charged their clients for the euro balances above a threshold.
The bank’s own liquidity: T2, the Eurosystem’s RTGS since March 2023, holds the bank’s main cash account and its dedicated cash accounts for T2S and TIPS, open from 02:30 to 18:00 CET with the customer payments to 17:00; the intraday credit is free of interest against the collateral pooled in ECMS (live since June 16, 2025) and must be repaid by the close, or it becomes an overnight marginal lending; the minimum reserves are remunerated at 0% since September 20, 2023 and an excess balance on the account earns nothing, so the surplus goes to the deposit facility at 2.00%. The funds’ deposits count as operational deposits under the EU LCR (Delegated Regulation (EU) 2015/61: a 25% outflow assumption against 100% for the non-operational deposits of financial clients), the stable funding a custody bank is built on.
Standing instruction and negotiated FX: the standing instruction service converts the many small flows of a custody account (the income, the reclaims, the small purchases) without a trader, at the market rate at the execution time plus a published spread; the US custody FX settlements of 2015 and 2016 and the FX Global Code, published in May 2017 and updated since, made the methodology, the execution windows, the spreads and the time stamps a disclosed part of the service in Europe as well. The managers who want price competition deal the larger trades and the hedges themselves on the multi-dealer platforms (360T, owned by Deutsche Börse, and FXall) or at the WM/Reuters 16:00 London fix, and the bank settles them as third-party FX; the management company’s best execution duty under the UCITS rules covers the FX it deals for the funds, the share class hedges included, and the costs reach the funds’ transaction costs in the PRIIPs KIDs.
CLS and the settlement risk: CLS Bank settles FX payment versus payment for its settlement members and their third-party clients in 18 currencies, each member paying in only its net short position per currency through the central bank systems (T2 for the euro) in the window from 07:00 to 12:00 CET, with the instructions due by 00:00 CET on the value date; the T+1 settlement of the US securities since May 2024 pushed the European funds’ dollar purchases into the trade date and some of them outside CLS. The currencies outside CLS (the Indian rupee, the Taiwan dollar, the Korean won, the Brazilian real, the onshore Chinese yuan) settle gross through the correspondents, so the Herstatt risk the FX Global Code asks the market to reduce sits in the restricted and emerging currencies.

Asset Servicing›Income

Income Collection: Dividends Through the CSDs on T2S, Eurobond Coupons Through the ICSDs, the Market Claims and the Reconciliation

Income collection is the custodian’s service of receiving the dividends and the coupons on its clients’ securities and crediting them to the right accounts on the right day. In the euro area the issuer’s centralizing or paying agent funds the CSD, which pays the participants on T2S in central bank money on the payment date, the business day after the record date; the bank projects the income from the CSD’s seev.031 notification, fixes the entitlements at the record date, credits its 1,200 accounts net of the tax it applies as the French paying institution, collects the Eurobond coupons through Euroclear Bank and Clearstream Banking Luxembourg and the income of the other markets through its sub-custodians, receives the market claims the CSD generates on the trades pending at the record date, and reconciles the expected and the received.

Worked example, illustrative:client the bank’s 3,000 clients; 1,200 accounts holding the worked dividend (illustrative)volume 1,500 income events a business day; EUR 150,000,000,000 of dividends and coupons collected a year (illustrative)worked event a French company’s dividend of EUR 2.50 a share on 40,000,000 shares: EUR 100,000,000; a Eurobond coupon of EUR 65,000,000 (illustrative)dates the record date one business day after the ex-date under T+2, the same day under T+1 from October 11, 2027; payment the next business daycredit on T2S in central bank money on the payment date; contractual income in 30 markets outside T2S, reversal after 15 business days (illustrative)reporting MT564 or seev.031 notices; MT566 or seev.036 confirmations; the market claims on T2S; the tax vouchers

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In the euro area the dividend reaches the custodian through the CSD on T2S on the payment date, in central bank money, and the custodian’s work is to put it on the right accounts at the right rate of tax. Around that core sit the Eurobond coupons through the ICSDs, the income of the markets outside through the sub-custodians, and the market claims on the trades that failed over the record date.

The dates: the European market standards for corporate actions processing, written by the industry’s Corporate Actions Joint Working Group in 2009 and adopted across the T2S markets, fix the sequence of a distribution: the ex-date, then the record date at the distance of the settlement cycle less one business day, then the payment date as close to the record date as possible, usually the next business day; under T+2 the record date is the business day after the ex-date, and from October 11, 2027, when the EU moves to T+1, it becomes the ex-date itself. The SRD II Implementing Regulation (EU) 2018/1212, applying since September 3, 2020, adds the content and the deadlines of the notices of the events on the shares of EU companies along the chain of intermediaries, in machine-readable formats (the ISO 20022 seev messages, or ISO 15022 by agreement).
The payment: on T2S the CSDs settle the cash distributions as payments free of delivery from the issuer agent’s dedicated cash account to the participants’ accounts, in central bank money, early on the payment date; the issuer’s agent is the centralizing bank in France, the paying agent elsewhere, and the bank’s own cash comes from its main account in T2. The Eurobonds pay through the ICSDs on their own books in commercial bank money: the issuer pays the principal paying agent named in the agency agreement, which pays Euroclear Bank and Clearstream Banking Luxembourg for the global note held by the common safekeeper, and the two ICSDs credit their participants. The withholding is applied by the paying institution of each market: in France by the account keeper that pays the beneficial owner or the foreign intermediary, in Germany by the last German custodian or, for a foreign custodian, by Clearstream Banking Frankfurt.
Contractual and actual income: because the CSDs on T2S pay early on the payment date, the credit on receipt in the euro area comes almost as early as a contractual credit, and the custodians offer contractual income mainly for the markets outside T2S where the payments are reliable (the contractual income list, revised yearly, 30 markets in the worked example), keeping the right to reverse a credit not received. The central administration accrues the dividend in the NAV on the ex-date whatever the credit date, and the reconciliation between the custody and the fund accounting records is a daily control on both sides. Foreign income arrives through the sub-custodian in the local currency, net of the local tax, and the conversion under a standing instruction now shows the rate and the time of each deal.
Market claims and transformations: before T2S each market had its own claims practice; the T2S corporate actions standards made the CSDs detect the trades pending at the record date for 20 business days and generate the claims automatically, as payments free of delivery for the cash and free deliveries for the securities, and transform the trades pending at a mandatory reorganization into the outturn. The claims are the trace of the settlement fails left over a record date, which CSDR’s settlement discipline has penalized since February 1, 2022 with daily cash penalties on the failing side; the custodian’s claims desk follows them like any other receivable.

Asset Servicing›Tax

Withholding Tax: the Certificates of Residence, Relief at Source as the French Paying Institution, the German Reclaim, the EU-Law Claims and FASTER

Tax services are the custodian’s work to make each client pay the right rate of withholding tax on its income across the member states and beyond: the certificates of residence and the market forms of the beneficial owners and the tax profile of each fund as a resident, a transparent entity or an exempt pension fund; relief at source on Form 5000 as the French paying institution and through the paying agents of the other markets that grant it; the US income through the bank’s Qualified Intermediary entities; the German dividend withheld at 26.375% by Clearstream Banking Frankfurt and reclaimed from the BZSt; the EU-law claims through counsel; the IFU, the CRS and FATCA reports at home; and the FASTER directive’s digital certificate and certified financial intermediaries from 2030.

Worked example, illustrative:documentation 9,000 tax files: the certificates of residence renewed each year, the market forms, the powers of attorney, the W-8BEN-E for the US (illustrative)at home the French paying institution: 25% on a non-resident company, the treaty rate on Form 5000; the French funds paid grossworked reclaim a French insurer’s German dividend of EUR 6,000,000: 26.375% withheld, 15% under the treaty, EUR 682,500 reclaimed from the BZSt (illustrative)abroad relief at source where the markets grant it; the US through the QI entities; reclaims elsewhere; EU-law claims through counselreports the IFU by February 15; the CRS and FATCA reports; the QI returns to the IRS; the tax vouchers to the clientsreform FASTER from January 1, 2030: the eTRC within 14 days, certified intermediaries, relief at source or a refund within 60 days

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The tax a fund pays on its European dividends is the rate its certificates and forms prove before the payment, market by market; the rest is reclaimed over months or years. The custodian runs both, as the paying institution of its home market and as the documentation and reclaim agent for the others, until FASTER gives the EU one procedure in 2030.

The source rules: each member state sets its own rate, relief and deadline. France withholds 25% on the dividends paid to a non-resident company (the corporate tax rate) and exempts the comparable EU funds since the Santander judgment, with relief at source on Form 5000 and a reclaim on Form 5001; Germany withholds 26.375% and refunds only after the payment through the BZSt; Italy withholds 26%, Spain 19%, Belgium 30% and the Netherlands 15%, each with its own forms, and Switzerland, outside the EU, 35% with the refund to the treaty rate. A refund takes from a few months to several years and the time limits run from two to five years (illustrative), so the custodian’s reclaim inventory is a book of receivables by market and by age that the funds’ auditors and the depositary’s oversight test.
The funds and the treaties: a fund’s access to a treaty depends on its legal form and on the source country’s reading of it. A French SICAV or FCP is resident in France for the treaties that cover it; a Luxembourg SICAV, taxed only by the subscription tax, is treated as a treaty resident by some source countries and refused by others; an FCP is transparent for some and opaque for others; the pension funds are exempt under some treaties and national laws. The custodian keeps the profile by account and by market and asks for the rate it can prove; the dividend-stripping cases in Germany and Denmark (cum-ex and cum-cum) made the authorities stricter on the beneficial ownership and slower to pay.
The US income and the reports at home: a European custodian holding US securities for its clients signs the Qualified Intermediary agreement with the IRS for its booking entities (the current agreement under Rev. Proc. 2022-43 runs from 2023 to 2028), documents its clients on Forms W-8 under its local know-your-customer rules, gives the US payer a withholding statement by rate pool and files its US returns each March. At home it reports the income of its resident clients (the IFU in France) and, under the EU’s DAC2 and the common reporting standard, the accounts of the non-residents, with the FATCA reports to the same authorities under the intergovernmental agreements.
FASTER and the EU-law claims: the FASTER directive, adopted on December 10, 2024 and to be transposed by December 31, 2028, applies from January 1, 2030 to the dividends of listed shares (and, at each member state’s choice, to the interest on listed bonds) with a common digital tax residence certificate issued within 14 days, national registers of certified financial intermediaries reporting the payment chain in a standard form, compulsory for the large institutions, and relief at source or a quick refund within 60 days; a member state with a comprehensive relief at source system and less than 1.5% of the EU’s market capitalization may keep it. Beside the treaty claims, the EU-law claims recover the tax a member state charged foreign funds or pension funds above its own residents, under the free movement of capital (the Court of Justice’s Aberdeen Property of 2009, Santander of 2012, Fidelity Funds of 2018 and L Fund of 2023); they are slow, uncertain and contingent, and a fund recognizes them in its NAV when the refund is reasonably certain.

Asset Servicing›Corporate ActionsInstrument card: High Yield Bond

Corporate Actions: a Rights Issue and a Takeover Bid, From the Golden Record to the Election, the Instruction and the Entitlements

Corporate actions processing is the custodian’s service of telling its clients about every event on the securities they hold, taking their decisions and carrying out the result: a rights issue that distributes a preferential subscription right on every share and leaves its use to each holder, and a cash takeover bid under the AMF’s rules, announced by the issuer CSD in seev.031, by the data vendors and, for the events abroad, by the sub-custodians; the golden record the bank scrubs from those sources, the notification within the business day the SRD II Implementing Regulation allows, the rights credited on T2S, the client’s election in MT565 or seev.033 before the bank’s deadline, the instructions to Euroclear France and to the offer’s centralizing agent, buyer protection for a purchase pending at the deadline, the new shares and the proceeds confirmed in MT566 or seev.036, and the missed election and who pays for it.

Worked example, illustrative:volume 120,000 events a year across 90 markets, about a fifth elective; 1,500,000 notifications to the clients (illustrative)rights issue one new share for five rights at EUR 20.00; 30,000,000 shares in 700 accounts; 25,000,000 rights subscribed by the clients (illustrative)offer a cash offer at EUR 52.00 for all the shares, open 25 trading days; 25,000,000 shares in 600 accounts; 18,000,000 tendered (illustrative)deadlines the notification by the end of the business day; the bank’s deadline two business days before the market’s, three to five abroad (illustrative)sources Euroclear France’s seev.031, two vendors’ feeds, the sub-custodians’ MT564; one golden record per eventliability the bank pays for its own missed instruction; a late client election is taken on best efforts at the client’s risk

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Every event reaches the custodian from several sources and leaves it as one notice to each entitled account, within the business day for the shares of EU companies, with a deadline set ahead of the market’s. The mandatory events are processed for the clients; the elective ones wait for their answers, and an answer lost on the way is the custodian’s to pay for.

Mandatory and elective: a mandatory event happens to every holder (a cash dividend, a split, a merger, a redemption, a squeeze-out), a mandatory event with options gives a choice and a default (a scrip dividend in cash or shares), and a voluntary event happens only to the holders who act (a tender to an offer, an exchange offer, a conversion); a rights issue is a distribution to all followed by a choice for each. The ISO 15022 and ISO 20022 event codes and the European market standards for corporate actions processing classify each event, and the classification decides whether the custodian must take an answer from its clients or only inform them; the SCoRE standards of the ECB’s securities and collateral advisory group harmonized the corporate actions on debt instruments for the collateral that went live with ECMS in June 2025.
SRD II and the chain: the Shareholder Rights Directive as revised in 2017 and its Implementing Regulation (EU) 2018/1212, applying since September 3, 2020, oblige every intermediary in the chain of the shares of an EU company admitted to an EU regulated market, including the intermediaries outside the EU, to pass the information on the corporate events without delay, by the end of the business day received (or by 10:00 the next day for what arrives after 16:00), in machine-readable formats and with a minimum content set in its tables, and to pass the holders’ instructions back the same way; the charges for these services must be disclosed for each service, be non-discriminatory and proportionate to the costs, with any difference between domestic and cross-border use justified by the costs.
Deadlines and liability: the custodian sets its own deadline ahead of the market’s so it can aggregate the answers and instruct the CSD or the sub-custodian in time, typically one to two business days ahead in its own markets and three to five abroad (illustrative); the custody agreement makes the custodian liable for its negligence (a notice not sent, an election not passed on), the client for its own lateness, and lets the default apply to the silent. For the trades pending at the deadline, the market standards give the buyer protection for the elective events and the CSDs’ transformations for the mandatory reorganizations, and CSDR’s cash penalties fall on the failing side; missed and wrong elections remain a recurring source of operational losses in custody, so each elective instruction is checked by a second person, reconciled to the CSD’s status message and watched on a deadline dashboard.
The offer and the rights: the Takeover Bids Directive of 2004 sets the frame (an acceptance period of two to ten weeks, the equal treatment of the holders, the mandatory bid above the national threshold, 30% in France and Germany, the squeeze-out above 90% to 95% by member state) and the national authorities its application: in France the AMF declares the offer compliant, the offer runs 25 trading days in the normal procedure, the tenders can be revoked until the close and the result is published before the settlement, with a reopening when the offer succeeds. The rights issue rests on the shareholders’ preferential subscription right in the EU company law directive, exercisable over 14 days at least, with the prospectus approved by the national authority and the rights listed so the holders who do not subscribe can sell them.

Asset Servicing›Proxy Voting

Proxy Voting: the Meeting Notice and the Record Date, the Shareholder Identification, the Votes Through the Chain and the Vote Confirmation Under SRD II

Proxy voting support is the custodian’s service of carrying the rights attached to its clients’ shares from the company’s meeting notice to the managers and back, as an intermediary under the Shareholder Rights Directive: the voting authority recorded on each account, the convening notice passed down the chain by the end of the business day, the record-date positions sent to the vote agent, the shareholder identification requests answered directly to the company, the ballots on the managers’ platforms with the proxy adviser’s research, the votes passed through the chain to the company’s centralizing bank, the meetings in the markets outside with their earlier cut-offs and registration rules, the vote confirmation within 15 days, and the managers’ yearly voting disclosure.

Worked example, illustrative:volume 25,000 shareholder meetings a year across the clients’ holdings, 70% of them in the EU (illustrative)worked meeting a French company’s annual general meeting with 20 resolutions; 200,000,000 shares in 2,000 accounts voted by 180 managers (illustrative)chain Euroclear France as first intermediary; the bank; the vote agent; the managers’ platforms; the company’s centralizing bankSRD II each notice and vote passed on by the end of the business day; the identification answered by the next business day; the vote confirmation within 15 daysabroad the sub-custodians and the registers; cut-offs five to ten days before; registration in the owner’s name; powers of attorneyreporting the vote confirmation; the managers’ yearly voting disclosure under SRD II; the shares on loan not voted

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The managers decide the votes and the custodian supplies what makes them count: the position on the record date, the authority behind each ballot and, since SRD II, the identity of the shareholders when the company asks. Every link of the chain passes each notice and vote on within a business day, and the shares lent or held in markets outside the directive are the votes that are lost.

The directive and the chain: the Shareholder Rights Directive of 2007 set a record date no more than 30 days before the meeting, a notice of at least 21 days and the end of share blocking for the companies registered in the EU; its 2017 revision (SRD II) added the chapter on the intermediaries, applying with the Implementing Regulation (EU) 2018/1212 since September 3, 2020: the identification of the shareholders, the transmission of the information without delay along the chain and the facilitation of the exercise of the rights, including the confirmations of receipt and of the votes recorded and counted. It covers the shares of the companies registered in a member state and admitted to an EU regulated market, and every intermediary in their chain, including those outside the EU.
The holding models: France’s bearer shares are held through the account keepers at Euroclear France, and the issuers have long been able to identify their holders through the CSD; Germany’s listed shares are bearer shares in collective safe custody at Clearstream Banking Frankfurt or registered shares in the company’s share register, where a custodian may be entered for its clients; the Nordic markets register the owners at the CSD and ask a nominee holder’s client to register in its own name to vote. SRD II laid the same identification and transmission duties over these models, so the chain is transparent to the company on request whatever the holding structure, within the limits of the GDPR for the data.
The institutional vote: the asset managers and the institutional investors publish an engagement policy and a yearly report on its application, their voting behavior and their significant votes, or explain why they do not; the proxy advisers report on their code of conduct and their research methods; the shareholders vote on the remuneration policy at each material change and at least every four years, and on the remuneration report each year, and the material related party transactions are approved under the national rules. The large managers vote through their own stewardship teams, the others mostly follow an adviser’s policy, and the national stewardship codes add their own expectations.
The custodian’s part and its price: the custodian keeps the positions and the authority, answers the identification requests, passes the notices and the votes, and usually outsources the distribution and the platforms to a vote agent (Broadridge is the largest, illustrative) while remaining the intermediary answerable under the directive; SRD II requires the charges for each service to be disclosed, non-discriminatory and proportionate to the costs. The securities lending link is visible in the votes: a share lent over the record date is a vote the fund did not cast, so the lending agents recall before the meetings that the managers flag and the managers report the unvoted shares.

Securities Lending and Collateral›Agency Lending

Agency Securities Lending: the Custodian Lends Its Clients’ Securities Against Collateral in Triparty, Marks the Loans and Shares the Fee

Agency securities lending is the custodian lending the securities it holds for its clients, as their agent, to the banks and dealers that need them, against collateral and for a share of the revenue. The management company signs the authorization agreement and sets the guidelines within ESMA’s rules for the UCITS; the agent negotiates each loan with the prime brokerage desks on EquiLend or by phone under the GMSLA, allocates it across the lenders that hold the stock, delivers the shares free of payment on T2S against non-cash collateral allocated by Euroclear Bank or Clearstream in triparty, marks every loan daily, recalls for a sale or a vote under CSDR’s settlement discipline, stands behind the borrower’s default with its indemnity, splits the revenue 85/15 (illustrative) and reports each loan under SFTR, while the same bank, as the funds’ depositary, checks the program against the directive’s reuse rule.

Worked example, illustrative:program EUR 800,000,000,000 of lendable assets from 600 lenders; EUR 80,000,000,000 on loan (illustrative)borrowers 30 approved banks and dealers under the GMSLA; their prime brokerage and securities finance desks; the agency lending disclosurecollateral mostly non-cash in triparty: euro government bonds at 105%, main index equities at 110% (illustrative)example 1,000,000 French shares at EUR 50.00 lent at 0.25% a year against EUR 52,500,000 of collateral (illustrative)economics EUR 160,000,000 a year gross, 0.20% on loan; the fee split 85/15; the borrower default indemnity (illustrative)rules the authorization agreement; the ESMA guidelines for the UCITS; the GMSLA; SFTR since 2020; CSDR’s penalties on late returns

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The lending agent puts the securities its clients hold for the long term to work with the borrowers that need them, against collateral the triparty agents allocate and value each day. The lender keeps the borrower’s risk, covered by the agent’s indemnity, and the regulator sees every loan through SFTR.

The legal chain: the lender, or for a fund its management company, and the agent sign the securities lending authorization agreement, which carries the guidelines and the indemnity; the agent and each borrower sign the GMSLA, the ISLA standard, the agent acting for disclosed principals under its agency annex, in the 2010 title transfer version or the 2018 pledge version that lets a borrower keep the collateral in its own account; the Financial Collateral Directive of 2002 makes both enforceable in an insolvency. A UCITS lends under ESMA’s guidelines of 2014 (the recall at any time, the collateral quality, liquidity, valuation and diversification, the haircut policy, the cash reinvested only in deposits, high-quality government bonds, reverse repo and short-term money market funds, all the revenue net of the disclosed costs to the fund) and its depositary under the UCITS directive’s reuse rule; an AIF lends under its manager’s rules with the depositary’s oversight.
The collateral and the revenue: the European loans are mostly collateralized with securities (the government bonds, the equities of the main indexes) allocated in triparty by Euroclear Bank or Clearstream against the lender’s eligibility set, and cash collateral is the exception; a loan earns a fee, a few basis points for a general collateral stock and many times more for a hard-to-borrow one; the fee split runs from 80/20 to 90/10 by the size and the quality of the lender’s inventory, and a UCITS discloses the agent’s fee and whether the agent is linked to its management company or its depositary. The bank’s capital requirements under the CRR shape the borrowers’ demand for collateral they can give cheaply, the reason the pledge version and the equity collateral have grown.
The market: the borrowers are the prime brokers covering their hedge fund clients’ shorts under the Short Selling Regulation’s locate rule, the dealers covering their fails and their market making, the ETF and the derivatives desks; the trading runs on EquiLend and by phone for the specials, the matching, the marks and the returns on Pirum and EquiLend, the deliveries on T2S and through the sub-custodians, the collateral in the ICSDs’ triparty; CSDR’s cash penalties since February 2022 fall on a late delivery or return as on any trade. The custody banks, a few specialist agents and the lenders’ own desks compete for the programs, and the lender’s utilization and return are benchmarked by the data vendors.
Transparency and stewardship: SFTR, adopted in 2015, required the funds to disclose their securities financing in their prospectuses and periodic reports and the reuse of collateral to be agreed in writing, and since 2020 requires both counterparties to report each loan, its collateral and its reuse to an EU trade repository by the next business day (the banks and the investment firms from July 13, 2020, the funds, the pension funds and the insurers from October 11, 2020, the other companies from January 11, 2021), the management company answering for its funds; the agents report for most lenders by delegation. SRD II’s engagement policies and the stewardship codes have made the recall for votes a standing policy question, so many lenders restrict their lending around the meetings of their largest holdings.

Securities Lending and Collateral›Tri-PartyInstrument card: Repo

Tri-Party Collateral: the Custodian Between Its Clients and the ICSDs’ Triparty, the Cleared Repo and Its Own Collateral in ECMS

Tri-party collateral management in the euro market is run by the two ICSDs, Euroclear Bank and Clearstream, which hold the collateral of a repo on their own books, check it against the receiver’s eligibility set, allocate, value and substitute it, and move the cash and the securities between the accounts while the credit risk stays with the two sides; the custodian is its clients’ connection to them. It codes the eligibility sets of a money market fund under the GMRA and the Money Market Funds Regulation, sends the fund’s instructions for matching, reconciles the allocations and reports them; the banks also trade the cleared triparty of GC Pooling and €GCPlus; and the custodian, a bank itself, mobilizes its own collateral through the same agents to the Banque de France in ECMS, live since June 16, 2025, for the intraday credit its clients’ settlement on T2S needs.

Worked example, illustrative:book EUR 150,000,000,000 of the clients’ triparty repo and lending collateral across Euroclear Bank and Clearstream (illustrative)example a money market fund lends EUR 2,000,000,000 overnight at 1.90% against EUR 2,040,000,000 of euro government bonds (illustrative)eligibility per client and dealer: government bonds at 102%, covered bonds at 104%, corporates at 105%; concentration limits (illustrative)cleared GC Pooling at Eurex Clearing in Clearstream’s triparty; €GCPlus at LCH SA in Euroclear’s; no clearing obligation for repoEurosystem EUR 20,000,000,000 of the bank’s collateral to the Banque de France through triparty and ECMS, live since June 16, 2025 (illustrative)reporting the MT569 statements daily; SFTR by the next business day, the collateral the day after the value date; the agents’ fees

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The euro market’s triparty agents are the two ICSDs, where the cash of the funds meets the banks’ bond inventory and the Eurosystem takes its collateral. The custodian connects its clients to them, codes their eligibility sets and controls the allocations, and uses the same agents for its own pool in ECMS.

The agents: in the euro market the triparty agents are Euroclear Bank and Clearstream, with the custody banks of two US groups and a few national CSDs beside them, and each serves the repo, the securities lending, the CCPs’ margin, the uncleared initial margin and the central banks’ collateral with one engine; the settlement is on the ICSD’s books in commercial bank money, and the collateral held at the national CSDs on T2S is reached through the links (Euroclear’s Collateral Highway, Clearstream’s Global Liquidity Hub). The US market, where one clearing bank is the triparty agent of the whole repo market, is the comparison; in Europe a cash investor or a custodian typically holds accounts with both ICSDs and chooses the agent with each counterparty.
The documents and the funds’ rules: the GMRA, the ICMA standard in its 2011 version, governs the repo under title transfer, with the margin, the substitution and the close-out netting; the triparty service agreement with the agent adds the eligibility set and the agent’s duties; the Financial Collateral Directive protects both in an insolvency. A money market fund may lend cash in reverse repo under the Money Market Funds Regulation, with no more than 15% of its assets with one counterparty and the collateral of high quality; a UCITS under ESMA’s guidelines; SFTR requires the reuse of collateral to be agreed in writing and every repo and its collateral to be reported, the triparty collateral the day after the value date.
The Eurosystem: ECMS, the fourth TARGET service, replaced the national central banks’ collateral systems on June 16, 2025 with one system in which each bank’s pool is held, valued and haircut against its credit, the triparty mobilization being harmonized through the SCoRE standards of the ECB’s securities and collateral advisory group; a bank gives its triparty agent a basket and the agent allocates and reports the collateral to ECMS. The pool sets the intraday credit line in T2 and secures the monetary policy operations, and the auto-collateralization on T2S provides intraday credit against the eligible securities on the dedicated cash accounts; for a custody bank that pays for its clients’ purchases on T2S, the pool is the liquidity behind its settlement service.
The cleared repo and the economics: there is no clearing obligation for repo in the EU, but the banks’ leverage ratio and net stable funding ratio reward the netting of the CCPs, so a large part of the interbank euro repo is cleared at Eurex Clearing (GC Pooling, the repo market) and LCH SA (RepoClear SA, €GCPlus), the cleared triparty baskets being reusable at the Eurosystem; the buy side reaches them through the CCPs’ sponsored and direct access models. The triparty agents charge in basis points of the collateral, mostly to the collateral givers, and the custodian prices its connection, its control and its reporting within the custody fee or as a collateral management fee.

Securities Lending and Collateral›Initial MarginInstrument card: Inflation Swap

Segregated Initial Margin: the Third-Party Holder for Uncleared Derivatives Under EMIR, From the Account Agreements to the Default

Third-party custody of initial margin is the custodian holding the collateral that a dealer and its counterparty post to each other under EMIR’s margin rules for the OTC derivatives not cleared by a CCP, in segregated accounts that neither side can use. The fund in phase 6 and the dealer sign the ISDA credit support document for initial margin and one account control agreement per direction; the eligible collateral and the haircuts of the RTS are coded at the custodian; each day both sides compute ISDA SIMM, a model EMIR 3 places under the EBA’s central validation and the national authorities’ authorization, and call each other through Acadia; the collateral is delivered free of payment on T2S into the pledgor’s segregated account and reported daily to the secured party; the excess is released with the secured party’s consent, and in a default the notice of exclusive control turns the account over to the secured party under the Financial Collateral Directive, while the defaulter’s counterparty recovers its own posted margin.

Worked example, illustrative:client a large manager’s AIF in phase 6; EUR 20,000,000,000 of aggregate average notional; 6 dealers (illustrative)rules EMIR’s margin RTS (2016/2251); phase 6 since September 1, 2022; the EUR 50,000,000 threshold; the EUR 500,000 minimum transferdocuments an ISDA IM credit support deed or a pledge under the account’s law; an account control agreement per direction; the legal reviewexample SIMM of EUR 230,000,000 less the threshold: EUR 180,000,000 each way; EUR 184,000,000 of German federal bonds at a 2% haircut (illustrative)collateral cash, government bonds at 0.5% to 4%, covered and corporate bonds at 1% to 8%, main index equities at 15%; plus 8% for a currency mismatch; no reusefees a custody fee of 1bp to 3bp a year on the collateral held and a fee per account (illustrative)

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Initial margin is posted by both sides of an uncleared derivative and held where neither can use it, so the custodian’s service is the segregation and the control of who may instruct the account. Its work is daily (the eligibility, the haircuts, the reports to both sides) and its moment of truth is the default, when a notice turns the account over to the secured party.

The rules and the phases: the BCBS-IOSCO framework of 2013 (revised 2015 and 2020) is applied in the EU by EMIR’s risk mitigation article and the joint technical standards of the European Supervisory Authorities adopted as Delegated Regulation (EU) 2016/2251, in force since January 4, 2017; variation margin applied to all the financial counterparties and the large non-financial ones from March 1, 2017, and initial margin came in by phases of aggregate average notional amount, from the largest groups on February 4, 2017 down to EUR 8,000,000,000 in phase 6 on September 1, 2022, after the one-year delay of 2020; the physically settled FX forwards and swaps count toward the threshold test and carry no IM, and the intragroup trades can be exempted by the national authorities.
The custodial models: in the third-party model each pledgor keeps its posted IM in a segregated account at a custodian it chooses and selects the collateral itself, the model of the worked example; in the triparty model Euroclear Bank or Clearstream also acts as collateral agent, allocating the eligible collateral from the pledgor’s holdings against the agreed requirement with the same engine it runs for repo and lending, under a Belgian or Luxembourg law pledge. The account control agreement sets who instructs before and after a notice, the custodian’s response time, its standard of care and its fees; a fund’s depositary records the pledged assets as held with a third party, and the BCBS-IOSCO statement of March 2019 that the documents are needed only once a relationship nears the threshold spared many phase 5 and 6 pairs the work.
SIMM and EMIR 3: ISDA’s Standard Initial Margin Model (in use since 2016) is computed from the sensitivities of each trade in the CRIF format, with the risk weights and the correlations ISDA recalibrates regularly; the alternative, the RTS’s standardized schedule of 1% to 15% of the notional by asset class and maturity, is rarely used because it ignores the netting. EMIR 3 (Regulation (EU) 2024/2987) made the use of an initial margin model subject to the competent authority’s authorization and gave the EBA a central validation function for the pro forma models such as SIMM, in operation since March 1, 2026, with its reporting framework for the SIMM users under consultation in 2026; the calls, the comparisons and the disputes run on Acadia.
The economics: for the buy side the cost of posting IM is the funding of the collateral (the government bonds and the cash taken out of the portfolio, or transformed through repo), and the cost of the documents and the operations, a reason to clear the trades that can be cleared; for the custodian the IM accounts are a fee business in basis points of the balances, built on the custody books and the collateral engine it already runs for the funds’ depositary and lending business, with balances that rise in volatile markets when the SIMM numbers go up.

Fund Administration›Daily NAV

The Daily NAV of a Luxembourg UCITS: the Central Administration, the Prices, the Swing, the Depositary’s Oversight and Circular 24/856

The bank, as central administration of a Luxembourg UCITS, calculates the daily net asset value of a multi-asset sub-fund of a SICAV: the trades and the cash from the depositary’s custody books, the orders its registrar agent takes to the 12:00 CET cut-off, the accruals and the subscription tax, the closing prices of the day before from the vendors under the management company’s valuation policy, the checks and the fair values, the NAV struck and swung on the morning of D+1, the depositary’s oversight of the calculation and the dealing, the publication to the data vendors and the fund platforms, a NAV error indemnified under CSSF Circular 24/856, and the annual report and its audit.

Worked example, illustrative:fund a multi-asset sub-fund of a Luxembourg UCITS SICAV of a large European manager: EUR 8,000,000,000, six share classes, 1,800 holdings in 35 markets (illustrative)NAV dated D, calculated on D+1 from the closing prices of D; EUR 150.00 a share for the institutional class; released at 10:00 CET, published by 12:00 CET (illustrative)dealing daily; the cut-off at 12:00 CET on D, settlement on D+2; the swing above net flows of 3% of net assets, the factor 0.12% (illustrative)accruals the expenses at 0.73% a year with the subscription tax, EUR 160,000 a day; the trades of D booked on the trade dateerrors CSSF Circular 24/856: the 0.50% tolerance threshold of a mixed fund; the fund and the investors indemnified above itfees 2bp a year of net assets for the central administration, EUR 1,600,000; the depositary and the registrar billed apart (illustrative)

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A Luxembourg UCITS price is the close of the day before, calculated the next morning: the positions from the depositary’s books, the flows from the registrar agent, the prices from the vendors and the fair values from the management company, checked and struck by 10:00 CET. The depositary verifies the process, the swing makes the investors who deal pay their own dealing costs, and Circular 24/856 sets who is paid when the NAV was wrong.

The roles: a Luxembourg fund splits the work among the management company (a UCITS management company under Chapter 15 of the law of December 17, 2010, or an AIFM), the depositary (a credit institution in Luxembourg, in charge of the safekeeping, the cash monitoring and the oversight of the fund, and liable for the loss of a financial instrument held in custody) and the central administration, which the law requires in Luxembourg; CSSF Circular 22/811 of 2022 splits the UCI administrator’s work into three functions (the registrar, the NAV calculation and accounting, the client communication), each of which may be delegated under the CSSF’s conditions; the management company stays responsible for the valuation and the SICAV’s board for the fund; the custody banks run the three roles in separate units of the same group, so the depositary checks a calculation its own group performed, under the conflict of interest rules of the UCITS Directive and CSSF Circular 16/644.
The calendar and the swing: most Luxembourg funds deal daily with a cut-off around noon on D, value the portfolio at the close of D and calculate the NAV on the morning of D+1, so the investor never knows the price when it orders; the late trading and market timing cases of 2003 led to CSSF Circular 04/146, which bars both and asks the fund to protect its cut-off and to monitor the frequent traders; swing pricing, common in Luxembourg, moves the NAV by an estimate of the dealing costs when the net flows of the day pass a threshold (partial swing) or every day (full swing), so the investors who stay do not pay for the trading of those who come and go; the 2024 review of the UCITS Directive, to be transposed by April 16, 2026, requires every UCITS to select at least two liquidity management tools from the list (the gates, the extended notice, the redemption fees, swing pricing, dual pricing, the anti-dilution levy, the redemptions in kind) beside the suspension, with ESMA’s guidelines on their calibration.
The NAV error: CSSF Circular 24/856 of March 29, 2024, applied since January 1, 2025, replaced Circular 02/77 of 2002 for the UCITS, the Part II funds, the SIFs and the SICARs (the RAIFs only for some provisions, where they are an ELTIF, a money market fund, a EuVECA or a EuSEF); its tolerance thresholds are 0.20% of NAV for a money market fund, 0.50% for a bond or a mixed fund and 1.00% for an equity fund or a fund in other assets, while the professional funds set their own, up to 5%; an error below the threshold is corrected without indemnification, one above it is notified to the CSSF on the standard form, and the fund and the investors are indemnified, the final investors behind the intermediaries included, or the prospectus says that their rights may be affected; an active breach of the investment rules is notified and indemnified whatever its size, a passive one corrected in the investors’ interest; the réviseur checks the indemnification where it passes EUR 50,000 in all or EUR 5,000 for one investor; the cost falls on the party responsible under its agreement.
The reports and the economics: the administrator produces the annual report within four months of the year-end and the semiannual one within two, the statistical reports to the CSSF and the Banque centrale du Luxembourg, the quarterly subscription tax returns to the AED (0.05% a year of net assets, 0.01% for the institutional classes and the money market funds, reduced rates for the share invested in taxonomy-aligned activities since 2021), the data of the PRIIPs key information document required for the UCITS since January 1, 2023, and the tax figures of the countries where the fund is sold under its passport (the German equity ratio, the Austrian OeKB data, the UK reporting fund income); the fee is a few basis points of the assets, falling by tier with a minimum per sub-fund, usually bought with the depositary and the registrar services of the same bank; Luxembourg is the largest fund domicile in Europe, with Ireland second, and a few custody banks and specialist administrators service most of its assets.

Fund Administration›Hedge Funds

Hedge Fund Administration in an Irish ICAV: the Primes’ Statements, the Depositary’s Checks, the Independent Prices, Equalization and the Shadow NAV

The bank administers a European hedge fund set up as an Irish ICAV authorized as a qualifying investor AIF: the subscriptions with the anti-money laundering checks the ICAV delegates to its Dublin administrator, the manager’s trades and the primes’ and counterparties’ statements reconciled daily, the depositary’s cash monitoring and ownership record with the primes as its delegates, the month-end prices taken from sources independent of the manager with an external valuer for the hard-to-value positions, the NAV by share class with equalization, the reconciliation with the manager’s shadow NAV, the statements and the AIFM’s disclosures, the redemptions under the gate and the notice, the year-end crystallization, the audit and the filings with the Central Bank of Ireland and Revenue.

Worked example, illustrative:fund an Irish ICAV authorized as a QIAIF, one sub-fund of European long/short equity and credit: EUR 4,000,000,000; 250 investors (illustrative)manager an external Irish AIFM that delegates the portfolio management to a London manager; two prime brokers, ten ISDA counterparties, one clearing brokerNAV monthly: the estimate on business day 2, the final on day 7; four classes, the USD, GBP and CHF ones hedged; the shadow NAV within 5bpdealing monthly; redemptions on 30 days’ notice with a 20% fund-level gate; 5% of a full redemption held back until the auditfees 1.5% management fee; 20% performance fee above the high-water mark with equalization, crystallized on December 31services the bank’s Dublin administrator at 3bp a year, EUR 1,200,000; its Irish depositary billed apart (illustrative)

The administrator is the hedge fund’s independent control: it prices the book without the manager, keeps the register and the AML files and computes a fair performance fee per investor, while the depositary monitors the cash and records the ownership of what the primes hold. The manager’s shadow NAV checks the administrator every month, and the auditor and the investors rely on both.

Why an independent administrator: the frauds of the 2000s (Bayou in 2005, Madoff in 2008) were run where the manager kept the books, the custody and the statements, and the institutional investors’ due diligence has asked since then for an independent administrator, a recognized auditor and the assets with the primes and a depositary; the AIFM Directive (2011, applied from July 2013) wrote much of that practice into law for the EU funds: a depositary for every AIF, with the cash monitoring, the safekeeping or the ownership record and the oversight, liable for the loss of a financial instrument held in custody, and a valuation done impartially, by an external valuer or by a function of the AIFM independent of the portfolio management; a prime broker may hold the assets only as the depositary’s delegate, or act as depositary itself only with the two functions separated.
The ICAV: the Irish Collective Asset-management Vehicle Act 2015 created a corporate fund vehicle built for funds, with umbrella sub-funds segregated by law, its own register at the Central Bank and the choice of a US partnership classification under the check-the-box rules, which spares the US investors the passive foreign investment company rules; the qualifying investor AIF (QIAIF) is authorized by the Central Bank within a day of a complete filing, takes investors with EUR 100,000 at least, and must have an Irish depositary and, under the Central Bank’s rules, an Irish administrator; the fund pays no Irish tax on its income and gains as an investment undertaking and deducts none from investors who have declared their non-residence; a Luxembourg RAIF under the 2016 law, managed by an authorized AIFM and set up without the CSSF’s approval, is the alternative for a manager that prefers Luxembourg, and the Cayman master-feeder remains the structure of many global managers.
The fee per investor: the management fee (1.5% here) and the performance fee (20%, above a high-water mark and sometimes a hurdle) are charged on each investor’s own gains although the investors enter at different NAVs; the Irish funds use equalization, which keeps one NAV a share per class, or series accounting, which multiplies the series of shares; the fee crystallizes at the year-end and on the redemptions; the ESMA guidelines on performance fees of 2020 apply to the UCITS and to some retail AIFs, and a QIAIF follows its prospectus; the hedged share classes carry their own FX forwards, and the administrator allocates their result to the class alone; the fee engine and the register are the most audited parts of the work.
The investors, the liquidity and the AML: the administrator runs the investor onboarding and the customer due diligence as the ICAV’s delegate under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, with the ICAV’s money laundering reporting officer reporting to the Financial Intelligence Unit; the EU AML Regulation applies from July 10, 2027, under the AMLA in Frankfurt; the FATCA and CRS classifications and reports come from the same files; the 2024 review of the AIFM Directive, to be transposed by April 16, 2026, requires the AIFM of an open-ended AIF to select at least two liquidity management tools from the list (the gates, the notice periods, the redemption fees, swing pricing, dual pricing, the anti-dilution levy, the redemptions in kind, the side pockets) and widens the Annex IV reporting; the manager’s shadow NAV, kept in-house or by a second provider, is the check on the administrator, and the reconciliation of the two NAVs is a standard monthly control.

Fund Administration›Private Markets

Private Equity Fund Administration in a Luxembourg SCSp: the Calls, the Subscription Line, the Ownership Record, the Valuations and the Waterfall

The bank administers a European buyout fund set up as a Luxembourg special limited partnership (SCSp) with the RAIF status, as central administration, domiciliation agent and depositary: the commitments of 90 limited partners and their KYC, the deals funded first on the subscription line and then by capital calls, the funding matched and the capital accounts kept, the depositary’s cash monitoring and its record of the ownership of the companies, the quarterly valuations at fair value by the AIFM’s valuation function, the reports on the ILPA templates and the annual report, the exits and the distribution waterfall with the preferred return, the catch-up and the carried interest, the audit and the tax packs.

Worked example, illustrative:fund a European buyout fund, a Luxembourg SCSp with the RAIF status: EUR 3,000,000,000 of commitments from 90 LPs; a 10-year term, a 5-year investment period (illustrative)terms 2% management fee on commitments, then on invested capital; 8% preferred return, 100% catch-up, 20% carried interest; a whole-of-fund waterfallportfolio 12 companies; the first bought for EUR 300,000,000 of equity and sold in year 5 for EUR 900,000,000 (illustrative)financing a EUR 500,000,000 subscription line at EURIBOR plus 165bp on the uncalled commitments; each draw repaid by a call within 180 days (illustrative)reporting quarterly within 45 days on the ILPA and Invest Europe formats; the audited annual report within six monthsservices the bank as central administration, domiciliation agent and depositary; 6bp a year of commitments for the administration, EUR 1,800,000 (illustrative)

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A buyout fund is administered as a ledger of obligations: the LPs’ commitments called and returned, the preferred return owed to them and the carry earned by the general partner. The depositary adds the record of what the fund owns, the waterfall sets the general partner’s pay, and the quarterly marks are what the LPs see in between.

The vehicle: the special limited partnership (SCSp), introduced in 2013 with the transposition of the AIFM Directive, is a partnership without legal personality, governed by its agreement with few mandatory rules, transparent for income tax and modeled on the Anglo-Saxon limited partnership; a Luxembourg private S.à r.l. is its general partner with unlimited liability, and the AIFM, external or the general partner itself, manages it; the reserved alternative investment fund (RAIF) status of the law of July 23, 2016 adds the fund regime (the well-informed investors, the umbrella, the depositary, the central administration in Luxembourg) without the CSSF’s approval, since the authorized AIFM is the supervised party; the RAIF SCSp has become the usual vehicle of the private equity, private credit and infrastructure funds raised in Europe, beside the unregulated SCSp and the Part II fund or the SIF where a regulated product is needed; the law of July 2023 lowered the well-informed investor’s minimum to EUR 100,000 and gave the funds 24 months to reach their minimum capital.
The depositary of a private fund: every AIF managed by an authorized AIFM needs a depositary; the companies’ shares are other assets in the Directive’s terms, so the depositary verifies the fund’s ownership and keeps a record of them, monitors the cash and oversees the fund’s compliance with its rules; for a closed-ended fund with no redemption rights for five years Luxembourg also allows a professional depositary of assets other than financial instruments, a specialized firm in place of a bank; the central administration in Luxembourg keeps the books, the register and the capital accounts, and the domiciliation agent provides the registered office; the valuation is the AIFM’s duty under Article 19, done by a valuation function independent of the deal team or by an external valuer, following the IPEV guidelines.
The waterfall and the carry: the whole-of-fund (European) waterfall the institutional LPs favor pays the carried interest only after the LPs have all their contributions back with the preferred return, then lets the general partner catch up to its 20%; the deal-by-deal (American) waterfall of some sponsors pays the carry earlier, on each realized deal, and leans on the clawback; the clawback returns any carry received above the agreed share of the final profits, usually net of the taxes paid on it, and an escrow of part of the carry and the principals’ guarantees secure it; the carry is paid to a carried interest vehicle, often another SCSp, held by the team; the GP commitment, 1% to 2% of the fund, pays no carry.
The financing, the reporting and the tax: the subscription line lets the general partner fund the deals at closing and call the capital later and less often, which raises the early IRR, so the ILPA templates of January 2025 show the IRR with and without it, beside the Invest Europe reporting guidelines; the AIFMD review of 2024, to be transposed by April 16, 2026, adds the disclosure of the fees and charges to the investors and the rules for the funds that originate loans; the SCSp pays no income tax and no net wealth tax, the RAIF pays the 0.01% subscription tax, the management services are exempt from VAT, and the LPs are taxed at home on their share, so the yearly tax packs and the CRS and FATCA reports are part of the administration; the insurers among the LPs need the Solvency II look-through data each quarter, on the industry’s tripartite template.

Fund Administration›ELTIF

An Evergreen ELTIF 2.0: the Monthly NAV of Private Assets, the Platforms, the Liquid Assets, the Matching and the Quarterly Redemptions

The bank administers an evergreen European long-term investment fund under the 2023 ELTIF Regulation, a Luxembourg SICAV sold to retail and private banking clients across Europe: the authorization and the redemption policy under the technical standards, the monthly subscriptions through the distributors and the platforms with no minimum investment, the money invested beside the manager’s flagship funds, the depositary’s custody, ownership record and cash monitoring, the lagged valuations rolled forward to a monthly NAV, the data for the distributors, the redemption requests on notice, the matching of exits with new subscribers and the redemptions paid within the limit on the liquid assets, the annual report and the tax.

Worked example, illustrative:fund an evergreen ELTIF, a Luxembourg Part II SICAV authorized by the CSSF: EUR 1,500,000,000 of net assets, invested beside the manager’s buyout and private credit funds (illustrative)dealing subscriptions monthly; redemptions quarterly on three months’ notice, up to 33.3% of the liquid assets on a dealing day under the RTSliquidity 15% of the net assets in money market funds and listed bonds; the matching of exits with new subscribers first (illustrative)NAV monthly, on business day 15; the underlying funds’ quarterly NAVs rolled forward; the co-investments and loans by an external valuerinvestors 12,000 retail and private banking clients through 20 distributors; no minimum since ELTIF 2.0, the suitability test by the distributor (illustrative)fees 1.75% management fee on the retail class, 12.5% performance fee above a 6% hurdle; 8bp a year for the administration, EUR 1,200,000 (illustrative)

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An evergreen ELTIF prices private assets every month for investors who buy through their bank: the administrator rolls the lagged values forward, keeps a register fed by the platforms and pays the redemptions from the liquid part and the new money. The technical standards cap what can leave each quarter, and the matching of exits with new subscribers comes first.

The regulation: the ELTIF Regulation of 2015 created a European label for the funds investing in long-term private assets (unlisted companies, real assets, infrastructure, loans) with a marketing passport to retail investors; few were launched, and the review of 2023 (Regulation 2023/606, applied since January 10, 2024) widened the eligible assets (the fund interests, the smaller listed companies, the real assets without a minimum value), lowered the eligible share to 55%, raised the borrowing to 50% of the NAV for the retail funds, removed the EUR 10,000 minimum and the 10% cap for the smaller retail investors, aligned the suitability test with MiFID II and opened the evergreen form with redemptions and a matching mechanism; the Commission’s technical standards of 2024 (Delegated Regulation 2024/2759, in force since October 2024) set the redemption policy and the liquidity calibration; Luxembourg, France, Ireland and Italy domicile most ELTIFs.
The redemption policy: an evergreen ELTIF chooses its redemption frequency and notice period and calibrates them to its liquid assets under one of the two tables of the standards: the baseline table caps the share of the liquid assets (with the cash flows expected with a high degree of certainty over twelve months) that can be paid out on a redemption day, 33.3% for quarterly dealing on three months’ notice; the alternative sets a minimum share of liquid assets (20% for quarterly dealing) and lets up to 50% of it be paid; a notice shorter than three months must be explained to the authority; the manager may set a minimum holding period during the ramp-up; the gates, the anti-dilution measures and the pro rata cut-backs are written in the rules, and the matching mechanism lets exiting investors sell to incoming ones before the fund redeems.
The administrator’s work: the NAV of an evergreen ELTIF is monthly while most of its assets are valued quarterly and late, so the administrator rolls the last reported NAVs forward with the cash flows and an approved proxy, books the external valuer’s monthly values for the direct holdings, values the liquid part daily, and keeps the AIFM’s liquidity data current (the liquid assets, the expected calls and distributions, the pending redemptions); the register is fed by the distributors and the platforms in the same way as a UCITS register, with monthly dealing; the depositary’s cash monitoring and ownership record follow the AIFM Directive; the CSSF’s Circular 24/856 applies to a Luxembourg ELTIF that is a Part II fund, with a higher tolerance threshold possible where it invests mainly in unlisted assets.
The distribution and the economics: the private banks, the insurers (with private assets now inside many unit-linked contracts in France) and the online platforms sell the units, paid by commissions out of the management fee under the MiFID II inducement rules; the Italian PIR wrappers give an ELTIF a tax advantage for individual investors, and the Luxembourg ELTIFs are exempt from the subscription tax since the July 2023 law; the fees are higher than those of a UCITS (1.5% to 2% and a performance fee in many funds), and the administration fee, a few basis points of the NAV with a minimum, pays for a monthly NAV with lagged inputs, a register of thousands of retail holders behind the platforms and the liquidity reporting; the semi-liquid funds have grown in Europe since 2024 beside the closed-ended funds for the institutional investors.

Transfer Agency and Fund Services›Transfer Agency

Transfer Agency in Luxembourg: the Orders Through Vestima, FundSettle and Allfunds, the Cut-Off, the Nominees, AML and the Trailer Fees

Transfer agency is the keeping of a fund range’s register and the processing of every subscription and redemption, here by the bank as registrar of two Luxembourg UCITS SICAVs sold in 25 countries: the appointment under CSSF Circular 22/811, the investors identified under the Luxembourg AML law, the due diligence on the intermediaries that hold nominee accounts, the orders from the distributors through the fund hubs and SWIFT by the 12:00 CET cut-off, the NAV of D on D+1 and the contract notes, the settlement of the units against the cash on D+2, the register, the trailer fees, the statements and the tax data, FATCA and CRS and the reports to the CRF.

Worked example, illustrative:client two Luxembourg UCITS SICAVs of a large European manager: 150 sub-funds, 1,200 share classes, EUR 200,000,000,000, sold in 25 countries (illustrative)register 25,000 accounts; 1,500 nominee accounts of the hubs, the platforms, the banks and the insurers hold 92% of the assetsorders 30,000 a day, 85% through the hubs; the cut-off at 12:00 CET on D; EUR 1,500,000,000 in and EUR 1,300,000,000 out on the daysettlement D+2, in the hubs’ books at the ICSDs and by SEPA or T2 for the registered investors; the NAV of D on D+1rules CSSF Circulars 22/811 and 04/146; the AML law of 2004 and CSSF Regulation 12-02; FATCA and CRS to the ACD by June 30fees EUR 30 a year per account and EUR 8 per transaction, paid by the funds; the trailer fees paid by the management company (illustrative)

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A Luxembourg fund’s register is mostly held by nominees: the hubs, the banks and the platforms hold 92% of the assets and send their orders through Vestima, FundSettle, Allfunds or SWIFT, so the transfer agent’s day is the cut-off, the next NAV and the settlement on D+2. The investors it holds directly, the intermediaries’ due diligence, the trailer fees and the tax data of 25 countries are the rest of the work.

The calendar and the hubs: a Luxembourg fund deals at the next NAV after the order, with a cut-off set in its prospectus (noon on D for most daily funds, earlier for the funds of funds or the funds dealing in Asian markets), a NAV calculated on D+1 and a settlement two or three days after D by currency; the late trading and market timing cases of 2003 led to CSSF Circular 04/146, so the registrar time-stamps every order and the distributors undertake to pass on only the orders received before the cut-off; Europe has no central utility like the US Fund/SERV: Clearstream’s Vestima (since 2000) and Euroclear’s FundSettle (with the MFEX platform Euroclear bought in 2021) route the orders, settle the units against the cash at the ICSDs and hold them as nominees, Allfunds holds the units of the distributors it serves as nominee and collects their trailer fees, and Calastone carries the orders as a messaging network; Deutsche Börse agreed in January 2026 to acquire Allfunds, with the completion expected in the first half of 2027.
Nominees and the final investors: most of a cross-border fund’s register is in the names of the hubs, the platforms, the banks and the insurers, each holding for its own clients, so the fund knows its final investors only through them; the fund treats the intermediary as its customer for the AML checks, with simplified or specific measures for a regulated intermediary in the EU and enhanced due diligence for one outside it, and relies on the distribution agreements for the market timing undertaking, the target market data and the information an indemnification needs; the cross-border distribution rules of 2019 let a UCITS serve the investors of a host state through facilities without a local paying agent, and the marketing notifications go through the CSSF to the host authorities.
AML, tax and supervision: a Luxembourg fund is a professional under the AML law of November 12, 2004 and CSSF Regulation 12-02 and appoints the persons responsible for its AML framework, usually at its management company, while the registrar performs the checks as its delegate; the beneficial owners are checked against the RBE, the suspicious transactions reported to the CRF through goAML, and the CSSF collects a yearly AML questionnaire from the funds and their managers; the EU AML Regulation, applying from July 10, 2027, and the AMLA in Frankfurt will set one rulebook in place of the national laws; the tax side is the FATCA and CRS reporting to the ACD by June 30 and the tax data of each distribution country (the German partial exemption under the investment tax act of 2018, the Austrian OeKB reporting, the UK reporting fund status, the Belgian taxable income per share), without which the fund cannot be sold there on the usual terms.
The agents and the business: the registrar is the bank or a specialist firm authorized as a professional of the financial sector and supervised by the CSSF under Circular 22/811, which also governs the delegation of the function to another country; the fees are per account and per transaction, with the trailer fee calculation, the tax data and the intermediary due diligence priced beside them; the dealing in fund units with the registrar is outside the trading venues, so the move of the EU markets to T+1 on October 11, 2027 leaves its D+2 and D+3 cycles to the funds’ own decision; the Luxembourg laws on the distributed ledger, from 2019, allow a fund’s register to be kept on a blockchain, and a few funds issue a tokenized class beside the classes held through the hubs.

Transfer Agency and Fund Services›ETF ServicesInstrument card: ETF

UCITS ETF Servicing: the Basket Each Morning, the ICSD Issuance, the Authorized Participants, Five Listings and the ESMA Guidelines

ETF servicing is the bank acting as depositary, administrator and registrar of a UCITS exchange-traded fund, here a Luxembourg ETF on a European large-cap index of EUR 12,000,000,000 listed on five exchanges: the issuance in the ICSD model with one global certificate at the common depositary, the basket turned into the portfolio composition file each morning, the trading and the arbitrage on the exchanges and the RFQ platforms, the authorized participants’ creations in kind and redemptions in cash by the cut-off, the NAV at the close, the shares issued and canceled at the ICSD and the basket settled on T2S on D+2, the costs of the cash orders, and the UCITS rules and ESMA’s ETF guidelines.

Worked example, illustrative:fund a Luxembourg UCITS ETF on a European large-cap index: EUR 12,000,000,000, 400 holdings; listed on Xetra, Euronext Paris, Borsa Italiana, SIX and the LSE (illustrative)units 100,000 shares a creation unit, EUR 8,000,000 at a NAV of EUR 80; 10 units created in kind and 4 redeemed in cash on the dayparticipants 25 authorized participants signed, 8 active; the cut-off at 16:30 CET in kind, 15:30 CET in cash (illustrative)settlement one global certificate at the common depositary; the shares at Euroclear Bank and Clearstream; the basket on T2S; D+2rules the UCITS Directive; ESMA’s ETF guidelines of 2014; the exchanges’ listing rules; no Luxembourg subscription tax for an index ETFfees EUR 1,500 per in-kind order and up to 1% on the cash orders, paid by the APs; 1.5bp a year to the bank, paid by the fund (illustrative)

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A European ETF trades on five exchanges and over the counter from one pool of shares at the ICSDs, and once a day the authorized participants create or redeem whole units against the basket the bank published that morning. The bank settles the basket on T2S and the shares at the ICSD on D+2, charges the cost of the cash orders to the APs and strikes the NAV the arbitrage holds the price to.

The European ETF: a UCITS ETF is an open-ended UCITS whose shares are listed and traded all day, created and redeemed in units by the authorized participants; Ireland domiciles most of the European ETF assets and Luxembourg comes second, the Irish fund suffering 15% withholding on its US dividends under the treaty between Ireland and the United States where a Luxembourg SICAV suffers 30%, so the US equity ETFs sit mostly in Ireland; the ESMA guidelines on ETFs and other UCITS issues of 2014 require the identifier, the disclosure of the transparency policy, of the iNAV and of the tracking error, and the direct redemption right of the secondary market investors in a disruption; the physical funds hold the basket, and the synthetic ones hold other assets and a total return swap on the index, within the UCITS limit of 10% of the NAV on a credit institution counterparty, with collateral; the active ETFs have grown since 2023 under the same rules.
The ICSD issuance model: the early European ETFs were issued in each listing country’s CSD, the register showing each CSD’s nominee and a share moved between two listings by a transfer at the registrar, slow and a source of fails; in the ICSD model one global certificate held by a common depositary for Euroclear Bank and Clearstream Banking Luxembourg carries all the shares, the APs settle the primary market in the ICSDs, and the exchange trades settle there or through the local CSDs’ links to them, so a share bought on Xetra can be sold in Paris; Clearstream also offers a variant through its fund issuance account (ICSDplus); the exchange trades are cleared by the venues’ CCPs (Eurex Clearing, Euronext Clearing, SIX x-clear, LCH Ltd) and settle on T+2 until the move to T+1 on October 11, 2027, with the ETFs among the instruments with the most fails under CSDR’s penalties.
The primary market: the APs have no duty to create or redeem and act when the gap between the price and the basket pays, for themselves or for the market makers they clear for; the European primary market uses the basket in kind for the liquid equity indices and cash for many fixed income, emerging market and synthetic funds, and the cash orders carry a charge for the trading costs and the transaction taxes of the basket (the French and Italian financial transaction taxes and the UK stamp duty on the purchases of their stocks among them), so the remaining investors are protected; the bank as depositary takes the basket into custody through its own CSD accounts on T2S and its sub-custodians elsewhere, as registrar issues and cancels the shares through the common depositary, and as administrator strikes the NAV and keeps the creation and redemption records.
The secondary market and the economics: the exchanges list the same share line in several currencies with their own liquidity providers, and the institutions trade most of their volume over the counter on the RFQ platforms (Tradeweb, Bloomberg, illustrative), reported under MiFIR’s post-trade transparency; the retail investors buy through their online brokers, many through monthly savings plans; the servicing fee is a fraction of a basis point to a few basis points of the assets, bundled across the depositary, the administration and the registrar, and concentrated in a few banks with the scale of the large index funds; the transaction fee of the in-kind orders covers the cost of the transfers and the variable charge of the cash orders the cost of the trading; the primary market is a small share of the trading: EUR 80,000,000 created against EUR 400,000,000 traded on the day in the worked example.

Transfer Agency and Fund Services›Middle Office

Middle Office Outsourcing in Paris: the Transfer of Staff, the Trade Capture, the CSDR Allocations, the IBOR, the Reconciliations and the EMIR Reports

Middle office outsourcing is the bank running an asset manager’s post-trade work on its own platform, here for a Paris manager of EUR 400,000,000,000 whose 150 operations staff move to the bank under the Acquired Rights Directive (illustrative): the trades captured from the manager’s order management system, allocated and matched in CTM on trade date under CSDR’s settlement discipline, instructed to the depositaries and settled on T2S, the investment book of record and the cash forecast by 07:30 CET, the reconciliations with the depositaries, the administrators and the counterparties, the corporate actions consolidated, the margin calls and the EMIR and SFTR reports, the performance and the product data, and the service levels, the ISAE 3402 report and DORA that frame the service.

Worked example, illustrative:client an asset manager in Paris with EUR 400,000,000,000 under management, 2,500 portfolios, four depositaries (illustrative)transfer 150 staff moved with their contracts under the Acquired Rights Directive, 20 kept for oversight; three waves over 18 months; a ten-year agreementtrades 5,000 a day from the OMS; matched in CTM; 96% on trade date ahead of T+1 on October 11, 2027books the IBOR and the cash forecast by 07:30 CET; 2,000,000 records reconciled a day, 99.5% automaticallyevents and collateral 250 voluntary corporate actions a month; 35 CSAs margined daily through Acadia; the EMIR and SFTR reportsfees 1.0bp of the assets a year (EUR 40,000,000); service credits up to 10% of the month’s fee (illustrative)

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A manager that outsources its middle office keeps the investment decisions and the accountability, and the bank runs the work between the trade and the books with the manager’s former staff, who moved with their contracts. The service is measured by the time of the morning IBOR, the matching rate on trade date and the age of the breaks.

What moves and what stays: a middle office outsourcing moves the work between the trade and the books (the trade support and the matching, the IBOR and the cash forecast, the reconciliations, the corporate actions, the collateral and the margin, the regulatory reports, the performance, often the security master and the pricing data) to the bank’s platform, and leaves the manager the investment decisions, the trading, the order management system and an oversight team; the variants run from a full transfer with the staff to a component deal (the performance alone, the reconciliations alone) and to the front-to-back platform where the bank also provides the order management system; the large deals in Europe were struck between the custody banks and the large managers of Paris, Frankfurt and London, often beside a depositary and fund administration mandate, and each one is a multi-year program on both sides.
The transfer of the staff: in the EU, the transfer of an activity that keeps its identity (a team, its work, its tools) carries the employment contracts with it under the Acquired Rights Directive of 2001, in France under Article L.1224-1 of the labor code and in Germany under Section 613a of the civil code: the staff move to the bank automatically on their existing terms, the transfer itself cannot be a reason for dismissal, and the employee representatives (the works council, the CSE in France, the Betriebsrat in Germany) are informed and consulted before the decision; the transition converts the data, runs the old and the new books in parallel and cuts over by asset class; the agreement runs seven to ten years, priced in basis points of the assets or per trade and per portfolio, with the service levels and the credits, a benchmarking clause, a change process, the bank’s liability for its errors and an exit plan that returns the people, the data and the processes to the manager or to the next provider.
The rules: the manager stays responsible for the outsourced work and may not become a letter-box entity: the AMF’s rules on the management companies, the UCITS and AIFM directives and ESMA’s supervisory work on delegation require it to keep the expertise and the resources to supervise the provider and to take the work back; the middle office is a support service, outside the delegation of the portfolio or the risk management that the 2024 review of the AIFM Directive makes the managers report; DORA, applied since January 17, 2025 to the management companies and the AIFMs as well as to the banks, sets the ICT third-party rules (the register of information, the contract clauses, the incident reporting, the exit strategy) and puts the critical ICT providers under the oversight of the European supervisory authorities; the bank applies the EBA’s outsourcing guidelines to its own suppliers and is supervised by the ECB and the ACPR, and its ISAE 3402 Type II report is the common evidence for the manager’s and the funds’ auditors.
The day and the measures: the EU settles on T+2 until October 11, 2027 and then on T+1, so the allocation, the confirmation and the matching move into the evening of trade date and the CSDR cash penalties, charged since February 1, 2022, price every late instruction; the IBOR is the manager’s view of the positions and the cash with the trades not yet settled, the ABOR the administrators’ official books for the NAV, and the reconciliation between them and the depositaries every morning is the measure of the service; the collateral work grew with EMIR’s margin rules for the uncleared swaps (the last phase in September 2022) and with EMIR 3’s active account at an EU CCP for the largest users of the euro swaps (since June 25, 2025); the regulatory data (the EMIR and SFTR reports, the Annex IV inputs, the PRIIPs, MiFID and SFDR data) has become a large share of the service; the monthly service report (the matching rate, the time of the IBOR, the breaks by age) is what the oversight team manages by.

Issuer Services›Registrar

The Share Register of a French Listed Company: Euroclear France as Issuer CSD, the Registered Shares, the Dividend, the Identification and the Dormant Accounts

The share registrar of a listed company keeps the register of its registered shares and acts as its agent at the issuer CSD. The provider here is the issuer services arm of the custody bank in Paris, the French market standard, where the banks’ issuer services keep the registers of most listed companies. The diagram follows a CAC 40 company: the mandate and the migration, Euroclear France recording the issue and the agent’s account in it, the orders and transfers of the pure registered holders, the conversions between bearer and registered form that carry the double vote, the free shares vested into the register, the dividend with its loyalty premium paid through Euroclear France and directly to the registered holders with the French withholding, the identification of the bearer holders under SRD II, the dormant accounts under the Eckert law, the tax and the supervisors, and the monthly count of the voting rights.

Worked example, illustrative:the client a CAC 40 company: 500,000,000 shares; 4% registered (12,500,000 pure, 7,500,000 administered), 96% bearer (illustrative)the agent the custody bank’s issuer services in Paris: registrar of the pure registered shares, paying and centralizing agentthe issuer CSD Euroclear France: 487,500,000 shares in the participants’ accounts and 12,500,000 in the agent’s; settlement on T2Sthe dividend EUR 3.00 a share and a 10% loyalty premium: EUR 1,464,000,000 through Euroclear France, EUR 40,500,000 by SEPAthe rules the Code de commerce; CSDR Article 37; SRD II identification; the Florange law; the Eckert law; the ACPR and the AMFthe fees EUR 25 a pure registered account a year, paid by the company, with the event fees: about EUR 2,000,000 a year

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The company sees 4% of its shares on its own register and the rest as one number at Euroclear France, reached only through the identification requests. The agent keeps the register that carries the double vote and the loyalty premium, pays the registered holders directly and reconciles the whole to the issuer CSD every day.

The French holding chain: listed securities issued under French law have existed only as book entries since 1984, in one of three forms: bearer, held in an account at the holder’s bank or broker, the account keeper; administered registered, entered in the issuer’s register but administered by the holder’s intermediary; and pure registered, held in an account the issuer or its agent keeps. Euroclear France is the issuer CSD: it provides the initial recording and the central maintenance of the issue that CSDR defines, holds the bearer and administered shares in its participants’ accounts and the pure registered ones in the agent’s, and checks every day that the accounts add up to the shares issued (Article 37). The bearer holders were long identifiable only through Euroclear France’s identification service under the Code de commerce; SRD II, applied since September 3, 2020, extended the right to every listed company in the EU through every intermediary in the chain, including those outside the EU.
Why registered form matters: the Florange law of 2014 gave the shares of a listed French company held in registered form for two years a double vote unless the bylaws opt out, and the Code de commerce allows a loyalty premium of up to 10% on the dividend for the same holders, within 0.5% of the capital per holder; both are lost on a conversion to bearer or a sale and kept on an inheritance or a family gift. The pure registered holders pay no custody fees, receive the company’s documents directly and are convened to the meeting by the company, so many companies invite their retail holders and employees to register; the double votes change the count of the voting rights the company publishes each month and the thresholds in voting rights that the holders’ major holdings notifications refer to, and they can give a long-term holder control with less than half of the capital.
Elsewhere in the EU: most DAX companies issue registered shares (Namensaktien), with a share register under section 67 of the Stock Corporation Act kept by a registrar (illustrative of the market: Computershare, Link Market Services, ADEUS) and updated each day from Clearstream Banking Frankfurt’s CASCADE-RS feed of the custodians’ movements, while the companies with bearer shares see their owners only through the SRD II requests; the Italian shares are held at Euronext Securities Milan with a record date on the seventh trading day before a meeting, and the Dutch ones through the giro system at Euroclear Nederland. The issuer CSD is the common point: a share issued in one member state may settle in another CSD through the T2S links, and CSDR lets an issuer choose a CSD in another member state for its securities, subject to its own company law.
Lost holders and the economics: under the Eckert law (2014, in force since 2016) an account keeper, the issuer’s agent included, checks its holders against the national death register each year and contacts the inactive ones; after ten years without contact, or three years after a death, the securities are sold and the proceeds go to the Caisse des Dépôts, searchable on its Ciclade site until they pass to the State, and the dividends not claimed within five years go to the State. The French registers are kept by a few banks’ issuer services (illustrative of the market: Uptevia, the joint venture of BNP Paribas and CIC, CACEIS Corporate Trust, Société Générale Securities Services), paid by the issuers per account and per event, with the interest on the cash held between the company’s funding and the payment; the risks are a wrong count of the voting rights, a misapplied withholding, a transfer on forged documents and a break with the CSD, and the issuers and their auditors read the agent’s ISAE 3402 report.

Issuer Services›Fiscal AgentInstrument card: Corporate Bond

The Fiscal Agent and the Representative of the Masse of a French Law Bond: the Program, Euroclear France, the Coupon, the Masse and the Safeguard

The fiscal agent of a bond is the issuer’s agent for the payments, the notices and the records of the issue, and under French law the holders are represented by the representative of their masse in place of a trustee. The provider here is the issuer services arm of the custody bank in Paris. The diagram follows a EUR 1,000,000,000 issue from a French group’s EMTN program: the agency agreement and the masse clause, the notes inscribed in book entry at Euroclear France with the ICSDs as participants, the coupon funded the day before and paid through Euroclear France on T2S, the notices, calls and buybacks, a decision of the masse in a general meeting, then a missed coupon years later, the representative and the ad hoc group, the accelerated safeguard with its classes of affected parties, the class vote collected through the chain and the exchange of the notes at Euroclear France.

Worked example, illustrative:the issue EUR 1,000,000,000 of 3.25% notes due 2034 under French law from a EUR 15,000,000,000 EMTN program (illustrative)the agent the custody bank’s issuer services: fiscal agent, principal paying agent, calculation and centralizing agentthe holding book entry at Euroclear France as issuer CSD; Euroclear Bank and Clearstream as participants; settlement on T2Sthe payments EUR 32,500,000 each March 12, funded the day before through T2 and paid through Euroclear France on the datethe holders the masse and its representative; a meeting at a fifth and two thirds; the safeguard classes at two thirdsthe fees EUR 3,000 at issue and EUR 4,000 a year for the agent; EUR 450 a year for the representative (illustrative)

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The fiscal agent runs the mechanics for the issuer: the notes in book entry at Euroclear France, the coupon funded the day before and paid the same day to the ICSDs and the custodians, the notices and the calls. The holders act together through the masse and its representative, and in distress through the classes of a court-supervised plan.

Three ways to represent the holders: a Eurobond under English law is issued either with a fiscal agent alone, the issuer’s agent, where each holder enforces its own rights and the meeting provisions of the agency agreement bind the minority, or with a trustee under a trust deed, a professional trust company that holds the issuer’s covenant to pay for the holders, acts on the instructions and the indemnity of a set share of them and keeps a single holder from suing alone; such notes are held through a global note with a common safekeeper at the ICSDs. French law gives the holders of an issue a masse, a legal entity with a representative, and German law the bondholders’ meeting of the German Bond Act of 2009 (SchVG), which amends the terms by 75% of the votes for the material changes, may vote without a meeting under a scrutineer and may appoint a common representative; the fiscal and paying agents work the same way in all of them.
The French masse: the Code de commerce (Articles L.228-46 and following) groups the holders of an issue in a masse represented by one or more representatives named in the terms or elected by the meeting; the representative acts for the masse in court, files the claims in a proceeding and informs the holders; the general meeting decides on the amendments by two thirds of the votes cast, with a quorum of a fifth on first call and none on the second, the holders proving their positions at 00:00 Paris time two business days before; a 2017 reform allowed written decisions and electronic consents and lets the terms of the notes of EUR 100,000 denominations adapt the rules. The notes themselves are dematerialized, in bearer form at Euroclear France, the ICSDs holding them for their participants, and the fiscal agent is also the issuer’s agent at the CSD and the centralizing agent of the votes.
Distress and restructuring: French law offers the confidential procedures first (the mandat ad hoc and the conciliation), then the safeguard, the accelerated safeguard that follows a conciliation and lasts four months at most, and the receivership; the 2021 reform, which transposed the EU directive on preventive restructuring frameworks, replaced the creditors’ committees and the bondholders’ single assembly with classes of affected parties, each adopting the plan by two thirds of the votes cast, and allowed the court to bind a dissenting class, the shareholders included, under the best interest test and the absolute priority rule; the plans of Orpea (2023) and Atos (2024) converted most of their unsecured debt, the bonds included, into equity this way. Germany’s StaRUG (2021) gives a similar restructuring plan with classes adopting it by 75%, beside the SchVG’s own majority decisions.
The economics: the fiscal and paying agency of the Eurobonds is a volume business for the banks’ securities services and the ICSD agents in London and Luxembourg (illustrative of the market: BNP Paribas, CACEIS, Société Générale, Citi, BNY), with a small fee at issue and a yearly fee per series and the interest on the cash held overnight before a payment; the representatives of the masse are small specialist firms paid a few hundred euros a year per issue and more in a restructuring. The agent’s risks are operational: a payment misdirected or made before the funds arrive, a wrong redemption amount, a missed notice; it acts as the issuer’s agent and owes the holders no fiduciary duty, a difference with the trustee that the holders’ counsel weigh in a default.

Issuer Services›General Meeting

The General Meeting of a French Listed Company: the BALO, the Chain Under SRD II, Votaccess and the Platforms, the Record Date, the Bureau and the Results

The general meeting of a listed company is run for it by a centralizing agent and a chain of intermediaries that carry the notices out to the owners and the votes back. The provider here is the issuer services arm of the custody bank in Paris, which keeps the company’s register and centralizes the meeting, with Broadridge and Votaccess carrying the institutional and the French retail votes. The diagram follows a CAC 40 company: the timetable and the agenda, the identification of the owners under SRD II, the notice in the BALO and the documents online, the meeting notice through the chain, the convening of the registered holders with the single voting form, the votes on the platforms, the votes and the participation certificates to the agent, the record date two business days before, a shareholder resolution and its campaign, the bureau and the count at the meeting, and the results on the website within 15 days.

Worked example, illustrative:the meeting the annual general meeting of April 29, 2026 in Paris; the record date April 27 at 00:00; 500,000,000 shares (illustrative)the holders 64,000 registered accounts with 4% of the capital; 150,000 owners identified through the chain; two thirds of the votes from abroadthe notices the BALO by March 25; the website by April 8; the convening notice by April 14; seev.001 through the chainthe votes online through Votaccess until 15:00 the day before; Broadridge for the institutions; the participation certificatesthe count 78% of the capital voting; a fifth and a quarter for the quorum; a majority and two thirds of the votes castthe results on the website by May 14, 2026; the agent’s fee about EUR 180,000, the solicitor’s about EUR 150,000

The company convenes its registered holders itself and reaches the rest through the chain of intermediaries SRD II standardized, down to the owners abroad. The votes come back the same way with the participation certificates, and the centralizing agent and the bureau turn them into one count published within 15 days.

SRD II and the chain: the revised Shareholder Rights Directive (2017) and its implementing regulation of 2018, applied since September 3, 2020, made every intermediary in the chain, those outside the EU included when they hold shares of an EU listed company, pass the meeting notices and the corporate event information down to the owners and the votes up to the issuer in standard formats (the ISO 20022 seev messages) and within set deadlines, answer the issuer’s identification requests, confirm the receipt of an electronic vote and, on request, that it was recorded and counted; their charges for these services must be non-discriminatory, proportionate and disclosed separately. The directive also asks the institutional investors and the asset managers to publish an engagement policy and how they voted, and the proxy advisers to report on their code of conduct and their methods.
The French meeting: the notice in the BALO 35 days before a listed company’s meeting, the documents on its website 21 days before, the convening notice 15 days before, the record date at 00:00 Paris time on the second business day before, the votes online until 15:00 the day before through Votaccess, the platform the French account keepers and agents share, and the registered intermediary voting for the non-resident owners; at the meeting a bureau of the chair and two scrutineers, a quorum of a fifth for the ordinary and a quarter for the extraordinary resolutions on first call, a majority or two thirds of the votes cast, the abstentions excluded from the votes cast since 2019. The say on pay is binding in both directions: the pay policy ex ante and, ex post, the pay of each executive officer, whose variable part is paid only after the vote; since the attractiveness law of June 2024 the bylaws may also allow a fully virtual meeting.
Elsewhere in the EU: a German company convenes its meeting at least 30 days ahead, the record date for the bearer shares is the close of the 22nd day before the meeting, the registered shares vote as entered in the share register, a notary records the resolutions, and the virtual meeting has been a permanent option since 2022; the Dutch record date is the 28th day before the meeting and the Italian one the seventh trading day, where the company may also require all votes to go through its designated representative. The custody chain is the same everywhere: the issuer CSD, the custodians, the global custodians and the institutional platforms, with Broadridge distributing most of the institutional notices and collecting the votes for the custodians (illustrative of the market).
The economics and the risks: the company pays its agent for the register, the mailing, the centralization and the count (about EUR 180,000 for a routine meeting here), its proxy solicitor and its printer and webcast, while the intermediaries charge their clients or the issuers for the SRD II services under the directive’s disclosure rules. The risks lie in the chain: a notice that does not reach the owner, a vote lost between custodians, a position certified late, an over-vote, the shares lent over the record date; the shareholder campaigns on climate and governance of 2023 to 2025 and the closer votes on pay have made the count and its confirmation matter more.

Data, Ratings and Indexes›Credit RatingInstrument card: Asset-Backed Security

A Credit Rating for a New Euro Corporate Bond Issue: the Issuer-Paid Engagement, the Committee, the Publication to All and ESMA’s Supervision

Credit rating is the service through which a credit rating agency registered with ESMA publishes its opinion on an issuer’s ability to pay a debt on time, here the senior notes of a French industrial group launching a EUR 1,500,000,000 issue from its EMTN program: the engagement paid by the issuer under the CRA Regulation’s fee rules, the two agencies and the securitisation repository of a structured finance deal, the management meeting and the confidential data, the analysis under the published methodology, the committee with its rotation rules, the notice to the issuer a full working day ahead, the press release to all and the European Rating Platform, the ratings in the CRR, Solvency II and the Eurosystem’s collateral framework, the surveillance with the outlook and the watch, the conflict rules, and ESMA’s direct supervision with the civil liability of Article 35a.

Worked example, illustrative:issuer a French industrial group rated BBB+ stable; EUR 1,500,000,000 of senior unsecured notes in 6 and 10-year tranches (illustrative)agency a credit rating agency registered with ESMA under the CRA Regulation; ratings paid by the issuer and published free to allfee EUR 400,000 for the issue and EUR 120,000 a year for surveillance (illustrative); non-discriminatory and cost-basedprocess the data room and the management meeting; the methodology; a committee of five; the notice a full working day aheadpublication the press release to all at 08:00 CET on the launch day; ESMA’s European Rating Platform; the rating feedoversight ESMA’s direct supervision since 2011; the conflict, rotation and disclosure rules; civil liability under Article 35a

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A credit rating is paid for by the issuer and published to everyone at the same moment, and the CRA Regulation exists to keep the payment from shaping the opinion: the fee rules, the committee, the rotation of the analysts and the notice to the issuer only to check the facts. In the EU the rating still drives the bank and insurer capital and the Eurosystem’s collateral, so a downgrade across BBB- moves money by itself.

The EU regime: the CRA Regulation of 2009, written after the structured finance ratings of 2005 to 2007 failed, requires every credit rating agency established in the EU to be registered, sets its conflict, governance and transparency rules and lets the banks, insurers, investment firms and funds use for regulatory purposes only the ratings issued or endorsed by a registered agency, or issued by a certified one from an equivalent country. The 2011 amendment made ESMA the sole supervisor of the agencies from July 2011; the 2013 amendment, after the sovereign downgrades of the euro crisis, added the calendar and the Friday publication of the sovereign ratings, the civil liability of Article 35a, the two agencies for structured finance and the consideration of a small agency, the rotation, the fee rules, the reduction of the reliance on ratings in the EU rules and in the investors’ processes, and the European Rating Platform. About 25 agencies are registered (illustrative), and the Securitisation Regulation’s repositories have carried the structured finance data since 2021.
The issuer-pays model and the market: the agencies sold their manuals to investors until the 1970s, when the issuers began to pay and the ratings became free to read; the conflict is disclosed and managed under the regulation’s annex (the fees set apart from the analysts, the 5% revenue disclosure, the shareholder and analyst holdings, the ban on advisory services to a rated issuer). The three largest groups hold about nine tenths of the EU market by revenue in ESMA’s yearly market share calculation (illustrative), with a group of smaller EU agencies (illustrative of the market: Scope, Morningstar DBRS’s European arm, Creditreform) beside them; the comply or explain rule of Article 8d has done little to change the shares, and the Eurosystem’s acceptance of Scope in November 2023 was the main recent opening.
The ratings in the rules: the EU kept the ratings in its prudential rules where the US took them out of its own after 2010. A bank’s standardized approach under the CRR weights an exposure by the credit quality step its rating maps to (the ESAs map each agency’s scale), Solvency II sets an insurer’s spread and concentration risk capital the same way, and the Eurosystem accepts a bond as collateral on the best rating of its accepted agencies at BBB- or above (the second best for the ABS); the money market fund rules require an internal credit assessment, and Article 5a of the CRA Regulation asks every investor to make its own assessment. A fall below BBB- by enough agencies (a fallen angel) moves a bond out of the investment-grade indexes and many mandates at the next month-end, a forced selling the euro market saw in 2020.
The economics, the liability and the new rules: an agency’s revenue comes from the new issue fees (with frequent issuer programs for the large borrowers), the yearly surveillance fees, the structured finance fees per deal and the subscriptions to the ratings data and research, with operating margins typically above 50% for the largest. ESMA has fined the large agencies several times since 2014 for breaches of the conflict, disclosure and control rules, and Article 35a opened the national courts to the investors and the issuers. The ESG Ratings Regulation, applying from July 2, 2026, adds ESMA’s authorization and supervision of the ESG rating providers, with rules on their methods, conflicts and the separation of activities, beside the credit ratings.

Data, Ratings and Indexes›Index

A Eurozone Equity Index and Its Quarterly Review: the Methodology, the Licenses, the Closing Auctions and the Benchmarks Regulation

An equity index is the service through which a benchmark administrator publishes a set of rules and a calculation that funds and contracts track, here a eurozone index of 300 large and mid-cap stocks run by an administrator authorized in Germany: the methodology and the index committee, a consultation on a methodology change, the licenses to the UCITS ETFs and the index funds under ESMA’s index rules and to Eurex and the issuers of certificates, the prices, shares, float and corporate actions that feed the calculation in real time, the net return version the ETFs track, the quarterly review decided by the committee and announced to all with the pro forma files, the brokers and the market makers who facilitate it, the orders for the closing auctions of Euronext and Xetra, the official close and the new divisor, and the Benchmarks Regulation as amended from January 1, 2026.

Worked example, illustrative:index a eurozone equity index of 300 large and mid caps weighted by free float, capped at 10%; price, net and gross return (illustrative)tracking EUR 300,000,000,000 in index funds and mandates, EUR 120,000,000,000 of it in UCITS ETFs in Ireland and Luxembourg (illustrative)review quarterly, effective after the close of the third Friday of March, June, September and December; announced two weeks beforedata the main venues’ trades in real time; the shares and the float from the filings and the holdings notifications; two vendorslicenses 2.5bp a year on the ETF assets; EUR 0.10 to EUR 0.25 per futures or options contract; data subscriptions (illustrative)governance BaFin’s authorization under the Benchmarks Regulation; a significant benchmark; the oversight function; the benchmark statement

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An index is published rules plus a calculation, and the funds and contracts that track it make it a business: every decision is announced to all at once and in advance, so the funds can trade it in the closing auctions at the prices the index records. The licenses on those assets pay for the committee, the data and the calculation, and the Benchmarks Regulation supervises the administrator of an index this widely used.

The index business in Europe: the large providers (illustrative of the market: STOXX, MSCI, FTSE Russell, S&P Dow Jones Indices, Euronext for its national indexes, Solactive) earn on the assets that track their indexes, on the derivatives that settle on them and on the data the active managers buy to benchmark against them. Most European index funds are UCITS ETFs domiciled in Ireland and Luxembourg and listed on several exchanges, tracking the net return versions of the indexes; the banks’ certificates and structured notes, sold to retail investors in Germany, Italy and Switzerland, use the indexes and the strategy indexes built for them.
The UCITS frame: an index fund may hold up to 20% in one issuer, and 35% for one issuer in exceptional market conditions, if its index is sufficiently diversified, an adequate benchmark for its market and published appropriately (Article 53 of the UCITS Directive and the 2007 eligible assets directive). ESMA’s guidelines on ETFs and other UCITS issues require the full methodology, the constituents and their weights to be available to the investors, exclude the indexes whose rebalancing frequency stops a fund from replicating them and the indexes whose constituents pay to be included, and ask the fund to disclose its tracking error. The Benchmarks Regulation adds the user’s side: a fund may use only a benchmark whose administrator is on ESMA’s register and keeps a plan for its cessation.
The Benchmarks Regulation: adopted in 2016 after the LIBOR and EURIBOR cases and applied from January 2018, it requires the authorization or registration of the administrators, an oversight function, a control framework, a published methodology with consultations on the material changes, a benchmark statement reviewed every two years, and the third-country regimes of equivalence, recognition and endorsement; the EU climate transition and Paris-aligned labels and the ESG disclosures followed in 2019. Regulation (EU) 2025/914, applying from January 1, 2026, narrowed it to the critical benchmarks, the significant ones (EUR 50,000,000,000 of average use in the EU over six months, or designated), the EU climate benchmarks and some commodity benchmarks, with an opt-in for the administrators of benchmarks used above EUR 20,000,000,000; the EU users may now use the other benchmarks of non-EU administrators without equivalence, recognition or endorsement, and ESMA designates the significant third-country benchmarks and supervises the endorsing administrators. The administrators on the register at the end of 2025 kept their status until September 30, 2026 under the transitional rules.
The review day as a market event: the quarterly third Friday is also the expiry of the equity index futures and options, the closing auctions of the main venues carry several times their usual volume, and the funds take the closing price as their execution benchmark; the stocks added tend to rise between the announcement and the effective day (the index effect), a cost the index funds bear and the arbitrageurs earn. A calculation error or a late corporate action can move billions, so the administrators keep an error policy (the threshold above which a level is restated) and the funds check the pro forma files against their own; the IOSCO principles of 2013 remain the global standard the large administrators report against.

Data, Ratings and Indexes›Market Data

Market Data Distribution in the EU: the Venues’ Feeds, the Ticker Plant, the Entitlements per User and the Consolidated Tapes

Market data distribution is the service through which a vendor takes in the venues’ quotes and trades, normalizes them and delivers them to the users the venues license, here a global vendor serving a bank in Frankfurt: the vendor and subscriber agreements under the venues’ policies and MiFIR’s reasonable commercial basis, the consolidated tapes of the 2024 MiFIR review for the bonds, the shares and the derivatives, the venues’ direct feeds with their depth of book at the colocation sites, the APAs’ reports of the OTC trades, the ticker plant, the terminal and the real-time feed, the entitlements checked per user, the non-display and derived data uses declared to the venues, the monthly usage reports and the fees passed through, the venue audits with their back-billing, and ESMA and the NCAs.

Worked example, illustrative:vendor a global market data vendor: 90,000 terminal users in Europe, 1,200 feed clients, 400 sources (illustrative)client a bank in Frankfurt with 1,500 professional terminal users and 30 feed applications (illustrative)feeds the venues’ direct feeds at Bergamo and Frankfurt; the APAs’ trade reports; the consolidated tapes from their go-livefees EUR 2,300 a terminal a month; the venues’ fees passed through; non-display by category billed direct (illustrative)reporting the users by entitlement each month to each venue; audits every two to three yearsrules MiFIR’s reasonable commercial basis and free data after 15 minutes; the 2024 review and the tapes; ESMA and the NCAs

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A market data vendor carries data the venues own and price: the venues write the policies and the fees within MiFIR’s reasonable commercial basis, and the vendor’s work is the ticker plant that turns a fragmented market into one feed and the entitlements that count every user. The consolidated tapes now being authorized give the EU its first official view of the whole market.

A fragmented market without a tape: MiFID opened the competition between the regulated markets and the MTFs in 2007, and MiFID II added the systematic internalizers, the OTFs and the APAs in 2018, so the trades in one share or one bond are spread across a dozen venues and publication arrangements. The consolidated tape MiFID planned from commercial providers never appeared, and for nearly two decades the vendors’ own composites (a European best bid and offer, a consolidated volume) filled the gap, each built a little differently; the brokers’ best execution and the managers’ transaction cost analysis relied on them.
The rules on the price of data: MiFIR requires the venues, the APAs and the systematic internalizers to make their data available on a reasonable commercial basis and free of charge 15 minutes after publication; Delegated Regulation 2017/567 asks for prices based on the cost of producing the data with a reasonable margin, non-discriminatory terms, a fee per user and the data sold unbundled, and ESMA’s guidelines of 2021 standardized the disclosure of the fee schedules and the cost methods. The users’ associations have argued since 2018 that the prices kept rising; the policies (display and non-display, derived data, the professional status) and the audits work much as they do in the US.
The consolidated tapes: the MiFIR review of 2024 provides one tape per asset class, each run by a single provider selected by ESMA for five years and authorized and supervised by it, with the venues and the APAs required to send their data as close to real time as possible from the tape’s go-live; the share tape carries the trades of every venue and the pre-trade best bid and offer, with part of its revenue redistributed to the contributing venues. ESMA selected fairCT (Ediphy) for the bonds in July 2025, EuroCTP, a joint venture of the exchanges, for the shares and ETFs in December 2025 and Etrading Software for the OTC derivatives in July 2026, and the tapes go live after their authorizations; the UK’s bond tape, run by Etrading Software, has operated since June 2026.
The vendor’s economics: the terminals are priced per user per month under multi-year contracts and the real-time feeds by application and site, with the reference data, the evaluated prices and the analytics sold beside them; the venues’ fees pass through at their rates and the vendor earns on its own service, so the client sees two bills in one. The large users keep a market data team and an inventory system (illustrative: MDSL, TRG Screen) to manage a cost that grows with every new product and user, and the tapes, priced under their own reasonable commercial basis, will reset part of it.

Data, Ratings and Indexes›Evaluated PricingInstrument card: Corporate Bond

Evaluated Pricing of a UCITS’s Bonds: the Venues and the APAs, the Evaluators, the 17:00 CET File, the Challenges and the NAV Error Rules

Evaluated pricing is the service through which a pricing service gives the funds a price for each bond that did not trade at the valuation point, here the euro corporate, covered and government bonds of a Luxembourg UCITS umbrella’s bond sub-funds: the appointment by the management company under its valuation policy, the trades published by the venues and the APAs under MiFIR with the bond tape to come, the dealers’ runs and the platforms’ composites, the evaluators’ models and the comparable bonds, the file at the 17:00 CET snapshot to the central administration, the tolerance checks and the NAV struck the next morning, the price challenges, the back-testing and the due diligence on the vendor, the reports to the SICAV’s board, and the depositary’s checks, the NAV error rules of CSSF Circular 24/856 and the audit.

Worked example, illustrative:service evaluates 2,700,000 fixed income securities daily, 50,000 euro corporate and covered bonds among them (illustrative)client a Luxembourg SICAV of 40 bond sub-funds: EUR 120,000,000,000 in 15,000 positions; the management company (illustrative)inputs the trades from the venues and the APAs, deferred when large; the dealers’ runs and the platforms’ composites; the modelsdelivery the bid at the 17:00 CET snapshot; the file by 18:30 CET; the NAVs of day D at about 11:00 CET on D+1challenges 120 a day across the European clients, a third leading to a change; one price for all clients (illustrative)oversight the valuation policy and the board; the depositary; CSSF Circular 24/856 on NAV errors; the year-end audit

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Most bonds do not trade on a given day, and a UCITS strikes its NAV every dealing day: the pricing service fills the gap with one evaluation per bond built from the venues’ and the APAs’ trades, the quotes and the comparables. The management company keeps the responsibility for the value, and the depositary checks it, so the challenges, the back-testing and the NAV error rules are part of the service.

Why a UCITS’s bonds need evaluations: a Luxembourg or Irish UCITS deals at an unknown price, the orders received before the cut-off on day D being executed at the NAV of D, usually calculated on the morning of D+1 from the prices at D’s valuation point; the prospectus and the articles set the valuation rules (the last available price, the bid or the mid, and for an asset without a representative price its probable realization value estimated with prudence and in good faith). Only a fraction of the euro corporate bonds trade on a given day, so the pricing services fill the gap; the swing pricing most bond funds apply passes the trading costs of large subscriptions and redemptions to the dealing investors, one of the liquidity management tools the 2024 reviews of the UCITS and AIFM directives made every open-ended fund choose from, applying since April 16, 2026.
Who answers for the price: the UCITS Directive makes the valuation part of the management company’s administration of the fund, whether it calculates the NAV itself or delegates it to a central administration, and the depositary must ensure that the NAV is calculated under the law and the fund’s rules (Article 22); the CSSF’s Circular 18/698 sets the Luxembourg management companies’ organization, the valuation included, and an AIF needs the independent valuation function or the external valuer of Article 19 of the AIFM Directive. ESMA’s common supervisory action of 2021, reported in 2022, found the policies of many managers too thin for the less liquid assets and asked for independent price verification, back-testing and the oversight of the vendors.
NAV errors and the accounts: CSSF Circular 24/856, which replaced Circular 02/77 on January 1, 2025, sets the tolerance thresholds by fund type (0.5% of the NAV for a bond fund), the correction, the compensation of the investors and the fund and the notification to the CSSF, and covers the breaches of the investment rules too. Most Luxembourg UCITS report under Luxembourg GAAP, the Irish ones often under IFRS with the fair value hierarchy of IFRS 13 (level 1 for the quoted prices of the identical asset, level 2 for the other observable inputs, as for most evaluated bonds, level 3 for the unobservable ones); the réviseur d’entreprises agréé tests the prices against a second source and the subsequent trades.
The market and its risks: a few services price most of the European fixed income the funds hold (illustrative of the market: ICE Data Services, Bloomberg BVAL, LSEG, S&P Global), and the funds take a primary and a secondary service per asset type; the European inputs are thinner than the US ones, where TRACE has published the corporate bond trades since 2002, and the bond tape is expected to help. The risks are the stale price in a fast market (in March 2020 the bond funds’ evaluations lagged the platforms’ trades and many funds raised their swing factors), the dependence on a single vendor and the conflict of a service paid by the clients whose holdings it prices.

Network, Controls and Billing›Network

Network Management: the Sub-Custodians of 90 Markets Under the Depositary Delegation Rules, From the Agent RFP and the Legal Opinion to the Switch of an Agent

Network management is the depositary bank’s selection and supervision of the agent banks and depositories that hold its clients’ assets where it is not itself a participant of the depository. The diagram follows a market from the request for proposal to three banks and the due diligence the directives require before a delegation, through the sub-custody agreement with its segregation terms and the legal opinion on the insolvency protection, to the delegates disclosed to the funds, the treatment of the CSDs in the chain, the monthly KPIs and the risk ratings, the market advisories to the clients, a market closed by sanctions, and the switch of an agent with the assets realigned at the depository over a weekend.

Worked example, illustrative:network 90 markets: 20 reached directly (T2S, the ICSDs, own branches), 70 through 50 agent banks (illustrative)selection an RFP to three banks per market; the AFME questionnaire; the delegate’s regulation, supervision and audit checkedagreement segregation from the agent’s and the bank’s own assets; no reuse; the agent paid 2bp a year plus EUR 10 a tradeprotection an independent legal opinion on the insolvency regime outside the EU; the depository ratingsthe funds the delegates listed for the prospectuses; no discharge of liability for a UCITS; a written transfer possible for an AIFchange 1,000 advisories a year; the EU sanctions; an agent switch with 90 days’ notice and one weekend

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A depositary present in 90 markets settles directly in a few of them and delegates the safekeeping to agent banks in the rest, under conditions the directives set and with a liability it keeps. The funds see that work through the delegate lists, the advisories and the switches.

The delegation rules: a UCITS or AIF depositary may delegate the safekeeping, and only the safekeeping, under Article 22a of the UCITS directive and Article 21(11) of the AIFM directive: not to avoid the directive’s requirements, for an objective reason, after a selection with all due skill, care and diligence and with a continuing monitoring of the delegate. The delegate must have the structures and the expertise for the assets, be subject to effective prudential regulation and supervision and to an external periodic audit in the custody of financial instruments, segregate the depositary’s clients’ assets from its own and from the depositary’s, not reuse them without the fund’s consent, and protect them in its insolvency; Delegated Regulation (EU) 2016/438 details these duties for the UCITS, with an independent legal opinion for a delegate in a third country, and Delegated Regulation (EU) No 231/2013 for the AIFs, both amended in 2018 on the segregation (Delegated Regulations 2018/1618 and 2018/1619, applied from April 1, 2020). The delegate may delegate further under the same conditions.
The liability and its discharge: the depositary’s liability for the loss of a financial instrument held in custody is unaffected by the delegation. A UCITS depositary cannot discharge it; an AIF depositary can transfer it to the delegate by a written contract that gives the AIF or the AIFM a claim against the delegate, with an objective reason, and in the third countries whose law requires local custody where no local entity meets the delegation requirements, with the investors informed and the AIF’s documents allowing it. The prospectus of a UCITS lists the delegates and sub-delegates (often on the depositary’s website) and the conflicts of interest the delegation may raise; the management company’s due diligence on the depositary covers its network, and the CSSF looks at the depositary’s delegation framework in its inspections.
The CSDs and the ICSDs: the services of a securities settlement system are not a delegation under the UCITS directive, and the 2024 review of the AIFM directive (Directive (EU) 2024/927) states that a CSD recording the issue or keeping the top-tier accounts is not a delegate, while an investor CSD holding the assets through its links is, without the ex ante due diligence. The depository risk is assessed all the same: the EU CSDs are authorized under CSDR and the third-country CSDs recognized under its Article 25, and the depositories’ answers to the industry questionnaires (the Association of Global Custodians’ project, the rating firms’ assessments) feed the bank’s market ratings. On T2S the bank holds the euro area securities in its own accounts at the CSDs, so most of its assets need no agent at all.
The market changes, the sanctions and the switches: the advisories carry the market structure changes to the clients (the EU, the UK and Switzerland at T+1 on October 11, 2027; the US at T+1 since May 28, 2024; FASTER, the EU withholding tax relief procedure, applied from 2030; the CSDR cash penalties since February 1, 2022), the holidays, the tax and registration rules and the sanctions. The EU listed the Russian central depository in June 2022, immobilizing the European investors’ Russian securities and their income, and the Russian central bank’s assets held at Euroclear Bank have been immobilized since 2022; the frozen assets are reported to the national competent authorities under the Council’s regulations. A switch of agent is a project of six to nine months: the accounts opened, the powers of attorney and the registrations moved, the new SSIs sent, the realignment free of payment on a weekend, the parallel running of the reclaims and the income, the delegate lists updated; the bank bears the cost, since its margin by market (what it bills by tier less what it pays the agent, see Billing) is its own.

Network, Controls and Billing›ISAE 3402 Report

The ISAE 3402 Report: the Yearly Test of the Depositary Bank’s Controls, the Type II Report, the Bridge Letter and the Reliance of the Clients and the Supervisors

The ISAE 3402 report is the independent service auditor’s yearly report on the bank’s controls over the processes that affect its clients’ financial statements, the European counterpart of the US SOC 1 report. The diagram follows the custody and depositary report through a year: the 13 control objectives and the 190 controls, the engagement under ISAE 3402 with SSAE 18 for the US clients, twelve months of testing by samples, the subservice organizations carved out and monitored, the exceptions and the management responses, the Type II report issued in November, the distribution to the clients under the use restrictions, the auditors’ reliance under ISA 402 and the year-end confirmations, the controls the clients run themselves, the bridge letter for the last quarter of the year, and the use the CSSF, the ECB and the management companies make of it.

Worked example, illustrative:reports five ISAE 3402 Type II reports a year: custody and depositary, central administration, transfer agency, lending, middle office (illustrative)custody report 13 control objectives and 190 controls: settlement, income, reconciliation, cash monitoring, oversight checks, accessperiod October 1, 2025 to September 30, 2026; issued November 13, 2026; the bridge letter to December 31 in January 2027standards IAASB ISAE 3402 with AICPA SSAE 18 in one report; IDW PS 951 on request; the sub-custodians, T2S, the CSDs and the ICSDs carved outresult an unqualified opinion; deviations on 4 of the 190 controls, with the management responsesusers 3,000 clients and their auditors under ISA 402; the management companies under CSSF Circular 18/698; the CSSF, the ECB, the AMF

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One independent test of the bank’s controls stands in for the audits its 3,000 clients would otherwise run, and the funds’ auditors plan their own work on it. The coverage has edges: the period ends on September 30, the subservice organizations are carved out, and the controls on the clients’ side are theirs to run.

The standards: ISAE 3402, the IAASB’s International Standard on Assurance Engagements on the assurance reports on the controls at a service organization, applies to the reports covering the periods ending on or after June 15, 2011, and the member states’ audit professions apply it directly or through their national texts (the Dutch Standard 3402, the German IDW PS 951). A Type I report covers the description and the design at one date, a Type II report adds the operating effectiveness over a period, usually twelve months, and the clients ask for the Type II. A European custody bank with US clients issues one report meeting ISAE 3402 and the AICPA’s SSAE 18, and its UK clients may ask for the ICAEW’s AAF 01/20 on top; the controls over security and availability outside the financial reporting are reported under ISAE 3000, the counterpart of the US SOC 2.
The users: the auditor of a fund applies ISA 402 on the audit considerations relating to an entity using a service organization, directly or as adopted in its country: it identifies the services that affect the fund’s financial statements, checks that the report covers them, the right period and the relevant assertions, weighs the exceptions, tests the complementary user entity controls at the client, and uses the Type II as evidence of the operating effectiveness; for a calendar-year fund the months after September 30 are covered by the bridge letter, inquiries and the year-end confirmation of the holdings and the cash. The management company of a Luxembourg fund oversees its delegates (the central administration, the transfer agent) under CSSF Circular 18/698 and reads the report in that oversight, as the boards of the SICAVs do in their yearly review of the service providers.
The exceptions and the opinion: every deviation found in the samples is described in the tests and results section with the auditor’s conclusion; a few deviations with the control objective still achieved leave the opinion unqualified, while a control objective not achieved (an access control on the settlement system failing for months, a reconciliation or a cash monitoring check not performed) brings an opinion qualified for that objective, which the clients’ auditors must then address with their own work. The management responses sit in the other information, outside the opinion. Behind the report stand hundreds of control owners, a program office, the second line’s testing and internal audit; the program costs several million euros a year in fees and staff, and saves the bank the separate audits and questionnaires of thousands of clients.
The supervisors: the bank is a significant institution supervised by the ECB’s joint supervisory team with the national authority, the AMF supervises its French custody and depositary business, and the CSSF its Luxembourg branch as depositary, central administration and transfer agent of the funds (the UCI administrator rules of CSSF Circular 22/811 among them), with on-site inspections of the depositary function; they read the ISAE 3402 reports and their exceptions among the evidence of the controls. Since January 17, 2025 DORA has put the ICT risk of the bank and of its clients’ ICT third-party providers under one regime, and the banks and the insurers among the clients record the custody and administration services in their own outsourcing and third-party registers, with the ISAE 3402 and ISAE 3000 reports as the main evidence.

Network, Controls and Billing›Billing

Billing: How the Depositary Bank Is Paid, From the Depositary and Safekeeping Fees in Basis Points to the Monthly Invoice, the Deposits and the Repricing at Renewal

Depositary and custody billing is how the bank is paid for overseeing, holding and servicing its clients’ assets: a depositary fee in basis points of the net assets, a safekeeping fee in basis points by market tier, transaction fees per settlement, the revenue on the clients’ cash and FX, the out-of-pocket expenses at cost and the minimums, all set in a fee schedule negotiated for five years. The diagram follows a French asset manager’s 300 sub-funds through the schedule and the relationship pricing behind it, the clients’ cash held as deposits and placed at the ECB and in government bonds, the monthly calculation from the books of record, the invoice and the payment from each sub-fund, the fee review and the disputes, the revenue mix of the bank, the consultant’s search and the repricing at renewal, and the yearly review of the costs.

Worked example, illustrative:client a French asset manager: EUR 150,000,000,000 in 300 sub-funds, 70% in the T2S markets and the ICSDs, 30% in 50 markets (illustrative)schedule a depositary fee of 1bp; safekeeping 0.5bp to 12bp by tier; EUR 4 per T2S settlement, EUR 8 at the ICSDs, EUR 15 to EUR 50 abroadthe month EUR 1,250,000 depositary, EUR 1,750,000 safekeeping, EUR 560,000 transactions, EUR 90,000 out-of-pocket: EUR 3,650,000payment the invoices by the 10th business day; approved by the management company and paid from each sub-fund 30 days laterthe bank EUR 5,000,000,000 of revenue: 80% fees, 20% net interest income on EUR 80,000,000,000 of client deposits (illustrative)renewal five-year terms; the consultant’s search; a 12% repricing with the fund administration bundled; the yearly review of the costs

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The depositary’s fees are set once every five years, capped in the prospectus and computed every month from the same books of record that hold the assets, so the market values drive the invoice. Beside the fees, the clients’ cash funds the bank’s balance sheet, and the net interest income on it is a fifth of the revenue in the example.

The fee schedule: the depositary fee in basis points of the net assets pays for the oversight, the cash monitoring and the liability, often on a sliding scale with a minimum per fund; the safekeeping fee by market tier is the custody (the tiers group the markets by cost and risk, the T2S markets and the ICSDs lowest, the frontier markets highest, where the agents’ fees and the operations cost most); the transaction fees by type and place of settlement; the cash and the FX terms; the out-of-pocket expenses at cost (the CSD and ICSD fees passed through, the financial transaction taxes of France, Italy and Spain, the stamp duties, the registration fees, the proxy and tax agents); the minimums per sub-fund. The central administration and the transfer agency are priced under their own schedules, in basis points of the net assets and per shareholder account, and usually bundled with the depositary in Luxembourg and Dublin. The prospectus states the fees or their maximum, the KID’s ongoing charges carry them to the investors, and the cost side is mostly the network: the bank pays its agents by market and bills its clients by tier (see Network).
The cash and the FX: the clients’ cash balances earn €STR less a spread the client negotiates, with the money market funds as the alternative; with the deposit facility rate below zero from June 2014 to July 2022 (down to minus 0.50% from September 2019) the custodians charged their clients for the euro balances above a threshold, and the rate rises of 2022 and 2023 turned the deposits into the largest source of growth. Standing instruction FX is priced at the market rate at the execution time plus a published spread, under the FX Global Code’s disclosure principles and after the US custody FX settlements of 2015 and 2016; the managers deal the larger trades in competition. The fee reviews test the out-of-pocket line first, since a markup there is a fee the schedule does not show.
The revenue mix and the price pressure: at the large European custody banks the fees are typically three quarters or more of the revenue and the net interest income the rest. The negative rates of 2014 to 2022 removed most of the net interest income, the rate rises of 2022 and 2023 (the deposit facility at 4.00% from September 2023 to June 2024) restored it, and the cuts to 2.00% by June 2025 brought it back down. The fees face a steady compression: the growth of the passive funds and the ETFs with thin fee budgets, the consolidation of the management companies, the consultants’ searches at every renewal, and the depositary market’s concentration in a few banking groups. The banks answer with scale and automation, with the bundling of the depositary, the central administration, the transfer agency and the middle office, and with the minimums that keep the small sub-funds priced at their cost.
The governance of the fees: the management company acts in the best interest of the funds and their investors and must prevent undue costs being charged to them (the UCITS and AIFM directives’ organizational rules); ESMA’s supervisory briefing of June 2020 set the convergence on what an undue cost is, and its common supervisory action of 2021 on costs and fees had the national authorities review the cost structures and the pricing processes. The SICAV’s board approves the depositary agreement and its fees; the depositary and the management company of the same group must show their independence and manage the conflicts under Delegated Regulation 2016/438; the prospectus, the KID’s ongoing charges and the annual report disclose the fees; and the depositary checks in its oversight that the fund pays only the fees its documents allow.