Out of sight, out of mind? On the risk of sub-custodian structures

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• 作者：Thomas Droll^a ; Natalia Podlich^b ; ^{natalia.podlich@ecb.int" class="auth_mail" title="E-mail the corresponding author} ; Michael Wedow^b
• 关键词：G14 ; G21 ; G28
• 刊名：Journal of Banking & Finance
• 出版年：2016
• 出版时间：July 2016
• 年：2016
• 卷：68
• 期：Complete
• 页码：47-56
• 全文大小：291 K

文摘

We analyse sub-custodian chains using a unique data set from a survey. Our key question is whether there is evidence for moral hazard in the delegation of asset safe-keeping to sub-custodians. Sub-custodian chains can be relatively long and frequently reach across several countries. The risk that securities are lost or the return to their owners delayed is not negligible. Our findings highlight that foreign or better informed banks are associated with shorter sub-custodian chains. Better capitalised banks seem to have longer, but safer sub-custodian chains. Our findings support the view that central securities depositories (CSDs) play a beneficial role in the management of sub-custodian structures. A CSD as the first sub-custodian reduces the country risk in sub-custodian structures. When we analyse the choice of a CSD, we find that better capitalised, larger and foreign banks are less likely to rely on CSDs as their first sub-custodian.