Custody is, in essence, a service consisting in holding (and normally administering) securities on behalf of third parties. In step with the growth of sophisticated financial markets, custody has evolved into a complex industry no longer characterized by physical safe keeping but by a range of information and banking services. Given the multi-tier structure of the industry, custody services are provided by a variety of intermediaries. This paper describes the development of the custody industry in China and the structure of the custody services risk. It also discusses the risks involved in custody and the challenges the industry is facing, particularly in the European context. |