Custodian
The independent entity that physically holds a fund's securities and cash in segregated client accounts. Disclosed in the OMI; separate from the fund manager.
A custodian is the independent entity that physically holds a fund's securities and cash in segregated client accounts, on the legal title of the scheme rather than the manager. Custody is the operational mechanism by which investor money is structurally protected from the failure of the manager — if the manager fails, scheme assets remain held by the custodian and are not part of the manager's insolvent estate.
In NZ retail MIS practice the custodian is sometimes a related-party of the supervisor and sometimes a separate global-custody bank (BNP Paribas Securities Services, J.P. Morgan, HSBC, BNY Mellon, Citi). The custodian's identity, fee level, and any related-party relationship is disclosed in the Other Material Information.
Custody is separate from the supervisor function. The supervisor monitors the manager's compliance with the SIPO and trust deed; the custodian holds the assets. In some schemes the supervisor sub-delegates custody to a separate global custodian.
Related terms
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MIS supervisor · Trustee
Supervisor
A licensed independent entity that holds the assets of a managed-investment scheme in trust and supervises the manager's compliance with the SIPO and FMC Act.
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OMI
Other Material Information (OMI)
A supplementary FMA-required disclosure document containing material information about a fund or scheme — typically conflicts of interest, related-party transactions, fee waivers, auditor/trustee/custodian identities — that is not included in the PDS.
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MIS · Scheme
Managed Investment Scheme (MIS)
The legal vehicle under the Financial Markets Conduct Act 2013 that holds investor money in a pooled fund. Every NZ retail managed fund is part of a registered MIS.