The Practical Elements of Settlement and Custody
FIONA CHRISTIE AND HERDEEP DOSANJH
This Chapter reviews the practical elements of settlement and custody in preparation for the analysis of legal risks.1 The settlement framework starts with the settlement and custody of what is defined as first tier custody of immobilised securities and is built from here to include tiers of intermediaries and their Customers. There is reference throughout to the International Central Securities Depositories ( ICSDs). This refers to Cedel Bank and Morgan Guaranty Trust ( MGT/Euroclear),2 who clear approximately 70,000 internationally traded securities.
An initial example of first tier custody is the safe custody of definitive Eurobond securities.
The account holder has entered into a Custody Agreement with the ICSD for all services provided by the ICSD as defined in the General Terms and Conditions and the Customer Handbook of Cedel Bank. These include cash management, securities lending and repos. The securities are definitive____________________