Prime Custody – the new normal for alternative fund providers
There’s no question that the financial credit crisis ushered in challenges and opportunities for investment fund managers around the world. Among those challenges, alternative investment fund providers now face increasing regulatory demands with respect to counterparty risk. At the same time, traditionalists are incorporating more long/short activities into their strategies to boost alpha. Today’s investment firms are under greater pressure to meet investors’ and boards’ needs; strengthen their assets; improve transparency; and balance counterparty risk – all within an extremely challenging and competitive landscape.
Increasing asset protection and minimizing risk remain critical objectives. For this reason, many investment firms now consider “prime custody” to be a necessity in their business strategy, rather than just an option.
Prime custody enables alternative investment providers to meet regulators’ and investors’ demands for greater asset protection by segregating the prime brokerage and custodian roles.
CIBC Mellon’s flexible, customized prime custody solutions enable us to provide strong support for a range of asset management strategies. We are one of the largest custodians in Canada and have a proven track record in traditional custody of long assets. If you require both prime custody and prime brokerage services, CIBC Mellon enables you to work with any third-party prime brokerage. The choice is yours.
The result: alternative investment fund clients trust CIBC Mellon to custody assets and deliver the transparency needed to satisfy investors and boards, while also providing portfolio managers with the control needed to appropriately manage risk and effectively oversee long/short investment strategies.
CIBC Mellon’s prime custody features at a glance:
- Safe-keeping and servicing of unencumbered cash and long securities.
- Segregated accounts for client assets, assets are not comingled.
- Assets held are not rehypothecated unless you chose to participate in securities lending.
- Fluid asset movement upon receipt of client instructions.
- Timely and flexible reporting through online, customizable dashboards to facilitate
monitoring of performance, risk or exposure details at portfolio or account level.
- Seamless client onboarding.
- Fund coverage in all markets where CIBC Mellon custodies assets.
Prime custody is also of growing interest to many Canadian pension plan providers and sponsors. As part of their fiduciary duty, plan sponsors work constantly to mitigate risk. For this reason, more pension plan providers, when incorporating alternative investment funds into their portfolio will want to explore the prime brokerage and prime custodians of record for those investment managers. CIBC Mellon is an experienced provider of prime custody services. Our knowledge of the institutional investor community is built on strong relationships earned through integrity and exceptional service delivered to more than 1,200 custody clients across the financial services sector for more than 15 years.
For more information on prime custody, please contact Charbel Cheaib, executive director, business development, call your CIBC Mellon relationship manager at 416-643-5000, or refer to the prime custody page in the products section of our website.
By Charbel Cheaib, Executive Director, Business Development
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Trade Talk® is provided for general information purposes only and CIBC Mellon Global Securities Services Company, CIBC Mellon Trust Company, CIBC, The Bank of New York Mellon Corporation and their affiliates make no representations or warranties as to its accuracy or completeness. Readers should be aware the content of this publication should not be regarded as legal, tax, accounting, investment, financial or other professional advice nor is it intended for such use.
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