N.Y. Comp. Codes R. & Regs. tit. 3 § 22.9

Current through Register Vol. 46, No. 45, November 2, 2024

Section 22.9 - Safekeeping

(a) Approval of the superintendent must be obtained for the deposit of securities investments of a common trust fund with a securities depository, clearing agency, or bank subject to the laws of a jurisdiction outside the United States of America. The superintendent may approve a depository for this purpose or he may approve of a trust company choosing such depositories if the trust company's procedures warrant his confidence that the depositories chosen would be acceptable. The superintendent may also approve the use of subcustodians by such depositories.

(b) In deciding whether to grant approvals under subdivision (a) of this section, the superintendent, and trust companies given approval to choose their own depositories, shall consider the country risk of the jurisdiction where the depository is located, the legal protection given foreign securities depositories by the laws of that jurisdiction, the need for the services offered by the depository, the financial condition of the depository, the capabilities of the depository's management, and the insurance protecting the securities depositor in the event of the loss of securities. The trust company shall remain liable for the safekeeping of securities investments of its common trust funds, wherever held.

(c) Unless waived by the superintendent on the basis of the factors listed under subdivision (b) of this section, the custody agreement between the trust company and the depository shall provide that:

(1) the depository holds the security as agent for the trust company;

(2) the securities will not be subject to any claim of any kind in favor of the depository, except a claim for payment for safe custody or administration of the securities;

(3) beneficial ownership of the securities will be freely transferable without payment other than for safe custody or administration of the securities;

(4) adequate records will be maintained by the depository identifying the securities as being owned by the trust company as a fiduciary;

(5) the superintendent and the trust company's independent accountants will be afforded access to the records maintained, and the securities held, by the depository;

(6) the depository will periodically furnish detailed, current reports to the trust company with respect to the securities.

N.Y. Comp. Codes R. & Regs. Tit. 3 § 22.9