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Financial Markets Conduct Act 2013

Licensing and other regulation of market services - Additional regulation of discretionary investment management services - Broking and custodial service performed as part of discretionary investment management service

445: Requirements for custodian

You could also call this:

"Rules to keep your investment money and property safe with a custodian"

Illustration for Financial Markets Conduct Act 2013

When you invest money through a discretionary investment management service, the company helping you must make sure your money and property are safe. They do this by choosing one or more people to hold your money and property on your behalf. These people are called custodians and must be companies that the investment company believes are suitable to hold and safeguard your money and property.

The custodian can be a company related to the investment company, but only if this is allowed under certain conditions set out in section 402 and if those conditions are followed. You are protected because the investment company and the custodian are both responsible for making sure your money and property are held correctly.

If you hold your money or property directly, or if there are special circumstances, this rule may not apply to you.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091654.

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"What is investor money and property in investments?"

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446: Certain client money or property service obligations under subpart 5B apply, or

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Part 6Licensing and other regulation of market services
Additional regulation of discretionary investment management services: Broking and custodial service performed as part of discretionary investment management service

445Requirements for custodian

  1. A DIMS licensee must ensure that the investor money and investor property that is held under the service is held on behalf of the investor by 1 or more persons that meet the custodianship requirements set out in subsection (2).

  2. A custodian of the investor money and investor property—

  3. must be a body corporate (other than the DIMS licensee) that the DIMS licensee believes, on reasonable grounds, to be appropriate to hold, and safeguard, the money or property; and
    1. may be an associated person of the DIMS licensee (other than by virtue of the custodianship) only if—
      1. that is permitted by conditions imposed under section 402; and
        1. those conditions are observed.

        2. The DIMS licensee is jointly and severally liable with any custodian for ensuring that investor money and investor property is held in accordance with this subpart.

        3. This section does not apply—

        4. to the extent that money or property is held directly by the investor; or
          1. in the prescribed circumstances.