On 30 January 2009, the Association of Global Custodians (Association) completed its 9th annual Depository Information-Gathering Project (DIGP) with the publication of 2008-2009 Depository Information-Gathering Project: A Report for Clients and Participating Depositories.
The Association launched DIGP in an effort to assist Association members in meeting regulatory compliance requirements under Investment Company Act Rule 17f-7. This Rule details how U.S. mutual funds may hold securities through foreign depositories and requires the ongoing monitoring of depositories.
DIGP is a very efficient information-gathering tool, which has made depository participation in the Project more feasible and attractive over time and the Projects information base more valuable toAssociation members, says Michael Underwood of HSBC Securities Services and 2008-2009 chair of the Associations Depository Information-Gathering Committee.
The Association is pleased that the DIGP will be moving into its 10 th consecutive and successful year this fall. says Edward Neeck, chair of the Association of Global Custodians and managing director, JPMorgan Chase Bank, N.A. Through the operation of the project, members have developed strong and meaningful relationships with representatives of depositories and depository associations all of whom seek effective mechanisms for information disclosure.
These expanding relationships enable the Association to obtain useful feedback from depositories, and they facilitate the Associations efforts to periodically adjust the DIGP process and questionnaire, as occurred notably in 2008. In turn, the evolution and growth in the Project have materially enhanced the base of information accessible to members.
In devising the DIGP, the Association evaluated and clarified the types of information members need in order to prepare the risk analyses required by Rule 17f-7.
This needed information, which is obtained through the project questionnaire, falls into 9 broad areas of inquiry:
-Scope, structure, ownership, capital, regulation, and audit oversight.-Participant identification and eligibility criteria.
-Functionality and services, including the use of agents.
-Account structures and recordkeeping.
-Settlement processes.-Ownership of securities held in the depository.-Standard of care, loss prevention, and asset recovery methods.
-Business recovery mechanisms.-Cross-depository linkages.
Details regarding the Association members, as well as the objectives and results of DIGP can be found in the report or online at www.theagc.com.
L.D.