Asset servicing is the set of services an intermediary provides on securities it holds for clients after settlement: corporate actions, income collection, tax relief, proxy voting, class actions and reporting. It is usually sold together with custody, fund administration or depositary services.
CustodianA custodian is a financial institution, usually a bank, that holds securities and cash on behalf of clients, settles their trades and services the assets through corporate actions, income collection, tax relief and reporting. A global custodian covers many markets through its own branches or a network of sub-custodians.
Corporate actionA corporate action, or corporate event, is an action by an issuer that affects its securities and their holders, such as a dividend, a coupon payment, a stock split, a rights issue, a merger or a redemption. Events are mandatory, mandatory with choice, or voluntary, and must be processed along the whole custody chain.
Income collectionIncome collection is the custodian's process of receiving dividends, coupons and other distributions on securities it holds, crediting them to clients and chasing any amounts not received. It includes checking rates, tax withheld and currency, and reconciling expected against actual income.
Proxy votingProxy voting is voting at a company's general meeting through an appointed representative or an intermediary instead of in person. In the EU the Shareholder Rights Directive II requires intermediaries in the custody chain to transmit meeting notices and votes without delay and to confirm votes on request.
Withholding tax reliefWithholding tax relief is the reduction of tax deducted at source on dividends or interest paid to a non-resident investor, under a tax treaty or domestic exemption. It is given either at source, by applying the reduced rate at payment, or by a later refund claim (tax reclaim), which is slower and more costly.
Income collectionIncome collection is the custodian's process of receiving dividends, coupons and other distributions on securities it holds, crediting them to clients and chasing any amounts not received. It includes checking rates, tax withheld and currency, and reconciling expected against actual income.
Proxy votingProxy voting is voting at a company's general meeting through an appointed representative or an intermediary instead of in person. In the EU the Shareholder Rights Directive II requires intermediaries in the custody chain to transmit meeting notices and votes without delay and to confirm votes on request.