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Presentation at the ASEA Conference

Presentation at the ASEA Conference. Johannesburg - 19 September 2006. Custody Service: An Indispensable Link In a Financial Market. Augustine Kwakye-Agyekum. Regional Deputy Head – Barclays Securities Administration (BSA). Agenda. Structure of a capital market

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Presentation at the ASEA Conference

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  1. Presentation at the ASEA Conference Johannesburg - 19 September 2006

  2. Custody Service: An Indispensable Link In a Financial Market Augustine Kwakye-Agyekum • Regional Deputy Head – Barclays Securities Administration (BSA)

  3. Agenda • Structure of a capital market • The concept of custody/securities service – what is it • Illustration of investor/custodian relationship • Do’s and don’ts of a custodian • The nominee concept • Contractual documentation in a custodian relationship • African stock exchanges and custodian presence • Questions and Answers

  4. Structure of a Capital Market

  5. What is a Custody Service? • It is a securities administration • It involves settlement of securities and safekeeping of such securities • The service becomes relevant after a decision to buy and/or sell securities is taken by an investor or his Fund Manager • Custodians are, therefore, not Fund Managers, Investment Advisors nor Brokers • Neither are they branch securities officers

  6. Investor-Custodian Relationship Stockbroker Investor Custodian Investor

  7. What Custodians Do • Trade settlement • Ensuring investor ownership is secured • Re-registration of assets • Safekeeping of clients’ assets • Income collection • Corporate actions management

  8. What Custodians Do (cont’d.) • Proxy voting services • Banking transactions • Reporting to clients • Provision of market information to clients

  9. What Custodians Do Not Do • Execute trade • Advice on investment selection • Advice on corporate actions election • Advice on proxy voting • Organise trades between clients

  10. Why the Need of a Custodian • Use of a custodian is international best practice • It is a regulatory requirement in some countries, e.g. Kenya • It allows Fund Managers to concentrate on their expertise of investment management • It reduces risk

  11. Custodians are Not Beneficial Owners of Securities • They act only as a custodian or an administrator of securities • Clients’ assets are separated from those of the Custodian Bank - the concept of a nominee company • It is to safeguard clients’ assets

  12. Documentation • The following are basic contractual documents required to establish a custody relationship • Custody Agreement – the main contract • Service Level Agreement (SLA) – which addresses all service requirements • Tariff Agreement – a schedule of fees to be charged for the service/relationship

  13. NO CUSTODY PROVIDER ONE CUSTODY PROVIDER MORE THAN ONE PROVIDER Algeria Ethiopia Malawi Mozambique Sudan Tanzania Nigeria Swaziland WAMU (Ivory Coast) Botswana Egypt Ghana Kenya Mauritius Morocco Namibia South Africa Tunisia Uganda Zambia, & Zimbabwe African Stock Exchanges

  14. Conclusion Custodians are partners in the development and efficient running of a capital market

  15. ?

  16. Contacts Chris Wooldridge – Regional Head of BSA • Tel.: +27 11 772 7468 • Email: chris.wooldridge@barclays.com Augustine Kwakye-Agyekum – Regional Deputy Head of BSA • Tel.: +27 11 772 7382 • Email: augustine.kwakye-agyekum@barclays.com

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