alex_686 wrote: ↑Fri Mar 31, 2023 1:53 pm
afan wrote: ↑Fri Mar 31, 2023 1:40 pm
As of the last time I checked, and it has been a while, Vanguard used more than one custodian. Different funds had different custodians. There are only a few institutions that have the scale to do custody for the volume of assets that Vanguard manages. Vanguard used several of them. Things may have changed.
I don't think this is true. There are really one 2 custodial banks in the US. These business are extremely low profits centers that thrive on economies of scale. Having worked with both of these banks I can't think of any reason why scale would be a issue.
There is a edge case for securities that are not DTC eligible. These are mostly foreign securities. In this case it makes more sense to have a local custodial bank hold the assets.
Perhaps we need to clarify what we mean by "custodian"? More than 2.
Major players in the custody services market are Bank of New York Mellon, Citigroup, JP Morgan Chase, State Street Bank and Trust, BNP Paribas, Northern Trust Corporation, HSBC, Societe Generale Securities Services, Brown Brothers Harriman & Co.
https://www.reportlinker.com/p06277938/ ... source=GNW
Note that State Street acquired BBH, so the number of custodians went down by one. But not to 2 total.
https://www.institutionalinvestor.com/r ... Custodians
The World's Largest Custodians
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Overview
BNY Mellon Is World’s Biggest Global Custodian for Eighth Straight Year
For the eighth year in a row, BNY Mellon takes the No. 1 spot in Institutional Investor’s annual ranking of the World’s Largest Global Custodians. The firm’s total assets under custody climbed to roughly $25.08 trillion for the 12 months through June, according to II estimates, from an estimated $24.31 trillion the previous year.
State Street Corp. kept its No. 2 position. During the same period its assets declined to $21.35 trillion from $22.06 trillion.
With $20.47 trillion, a slight drop from last year’s approximately $20.5 trillion, J.P. Morgan again ranks third.
For many global custodians, asset growth was flat year-over-year. Total assets for the 15 banks in the ranking stand at $131.15 trillion, a gain of well below 1 percent.
To view the complete list of firms ranked by total custodied assets under management, click on the Leaders tab in the navigation table to the right.
I used to check the custodians for my mutual funds, thinking that this was somehow useful information. I realized that, even holding mutual funds with a variety of companies, the custodians were the same relatively small number of banks. But as of my last check, it was more than 2.
What does a mutual fund company consider in picking custodians? I certainly do not know. Fees? Services? Perception of the security of their operations? Diversification of risk? Other things? It would be interesting to hear.
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