Custody of securitiesHow does it work? Good to know
The European Central Securities Depositories Regulation” ("CSDR") is designed to promote the safe, efficient and expeditious settlement of securities transactions throughout the European Union.
How does it work?
- for uniform rules for the settlement of financial instruments traded on a trading venue or exchange, and
- for the organisation and supervision of Central Securities Depositories (CSDs).
The CSDR Regulation requires the Bank to offer a choice between
- custody of your customer assets via an omnibus account (i.e. a general account containing customer assets) and
- an individual customer account.
The Bank must also inform customers of the risks and costs associated with both options.
A word of explanation about CSDs, Omnibus accounts and individual segregated customer accounts
A CSD, or "Central Securities Depository", plays a crucial role in securities trading. For example, the CSD ensures that a securities transaction is conducted correctly. Specifically, it ensures that a transaction will only take place if the seller owns the securities and the buyer has the necessary funds. The CSD makes a major contribution to maintaining post-trade processing infrastructures that make financial markets safer and give market participants confidence that securities transactions are executed properly and on time, even during periods of extreme tension.
When you, as an investor, buy securities (shares, bonds, funds, etc.) and deposit them in your custody account, the Bank places these securities in the custody of one of these CSDs. The CSD has opened one or more accounts in the name of the Bank or another sub-depository of the Bank on which these securities are booked. Subject to local law (outside the EU), the Bank guarantees the separate identification of its own assets vis-à-vis those of its customers, as set out in Article 9.2 of the Investment Services General Conditions.
We give you a choice between two types of custody when offering custody accounts:
- As in the past, the Bank uses an 'Omnibus account'. Securities purchased by different customers of the Bank are booked jointly on an Omnibus account. Supposing 10,000 investors buy 100,000 shares of company X through BNP Paribas Fortis; then all these shares will be booked on the same Omnibus account or sub-account .
- At your request, the Bank may ask the depository to hold your securities in an individual segregated customer account. In this case, the CSD will open a separate account on which only the securities you have bought will be booked. Please note: the Bank provides this service (only) for those CSDs to which it is directly connected. This is currently the National Bank of Belgium, Euroclear Bank and Euroclear Belgium.
Good to know
- When you book securities on a custody account with the Bank (regardless of whether they are held on an Omnibus account, which therefore also includes the securities of other customers), registration on your custody account grants you rights as holder (including the right to income, any voting or membership rights, the right to dispose of the security or to have it recorded in the name of the issuer in a register, and the right of recourse against the bankrupt issuer). You acquire an intangible co-ownership right to the undivided ownership of securities of the same class held by the bank or its sub-custodian in proportion to the securities you hold. Since the securities are interchangeable, this does not make any difference in practice.
It is therefore particularly important for you to keep track of the bookings of securities on your custody account.
- The risk of any loss or shortfall of securities, established as a result of a concurrence or possible bankruptcy of the Bank, a sub-custodian or the securities depository, is borne proportionally by all co-owners, regardless of whether the securities are held on an Omnibus account or on an individual customer account. In this case, the recovery of securities on the basis of their registration in your custody account will be carried out collectively by the co-owner customers, even if you have an individual customer account, so that your choice of such an account does not necessarily mean that there will also be a faster payment.
- Thanks to Belgian legislation, your securities already enjoy a high level of protection. As a result, if you opt for an individual customer account, you will, in principle, enjoy no higher protection than with an Omnibus account.
- The management of an individualized customer account with segregated assets requires administration, which results in a higher cost for this type of account.
The following rate applies*:
- €968 (VAT included) when opening the account
- €1,452 (VAT included)** per year (regardless of the number of transactions)
*Rate in force on 1/9/2019** in addition to the application costs for securities transactions
- Would you prefer an individual customer account? Simply contact your BNP Paribas Fortis Business Centre or your trusted adviser.