CACEIS’ Network Management division manages the groups’ relationships with third-party holders (TPHs) that hold, settle and clear any asset CACEIS handles on behalf of clients in every market where we offer the service. This activity is a centre of excellence for clients and the CACEIS organisation.
The network management division handles the definition, proposal, implementation and monitoring of the CACEIS group’s asset holding policies with regard to TPHs. Where possible, CACEIS implements direct connections with central securities depositaries (CSDs) in order to reduce counterparty risk arising from interactions with intermediaries. The group also favours local custody which offers direct access to local market infrastructures and CSDs.
“This policy forms a key part of our robust TPH management system, which starts with a stringent TPH selection process and is then followed by regular due diligence either performed remotely or on site” says Fabien Marbat-Milan, Global Head of Procurement – Network at CACEIS. In addition, network management staff maintain close links with both TPHs and CACEIS’ operational division to ensure that clients’ instructions are processed efficiently.
Network management is constantly optimising its operating methods, enhancing its asset protection capabilities, and raising operational efficiency with the ultimate goal of improving client satisfaction.
Network management is always available to support clients by ensuring interactions with TPHs are efficient, and that on-boarding, market entry, and administrative tasks are handled professionally.
“Leveraging our expertise working on global markets and with TPHs, network management staff also ensure that services provided are invoiced at a fair market price. We regularly verify tariffs for every TPH relationship to ensure prices remain competitive. And whenever major changes in markets occur, such as a new market entrant, a merger or an exit, our staff perform an analysis and if necessary, launch a request for proposal process to ensure decisions are based on accurate information” affirms Fabien Marbat-Milan. Through these processes, CACEIS’ network management division ensures that our clients have an optimal cost/benefit ratio in all 79 markets covered by CACEIS.
The group’s asset holding policies, in combination with the network management division’s TPH selection and monitoring processes enables CACEIS to offer market-leading services and a high degree of flexibility to meet clients’ needs and adapt to changes proposed by financial correspondents. Sometimes, other factors such as the Covid pandemic, the war in Ukraine, or a market exit decision by one of our TPHs, can impact a market’s structure and how it functions. In such cases we have to rapidly adapt our methods, performing due diligence remotely or heightening risk controls in response to societal and environmental risks.
Leveraging our extensive expertise and flexibility to provide a bespoke service offering
Our clients benefit from the CACEIS group’ broad network of best-of-breed TPHs, however should you wish to continue working with a specific THP or even your entire TPH network, we are able to set that up too.
“We have the flexibility to offer exceptions to CACEIS’ asset safekeeping policy if it can be justified. This can be for historical reasons as mentioned above or while CACEIS is on-boarding new business wins, or completing M&A deals like our acquisition of KAS Bank and joint venture on Santander Securities Services (S3). Exceptions can also be made when providing services to other depositary banks or private wealth management companies that request CACEIS to set up a dedicated client account with a specific TPH for their business activity. CACEIS can also act as an account operator on dedicated accounts opened at the TPH on behalf of the client” adds Fabian Marbat-Milan.
The impacts of the war in Ukraine
When Russia invaded Ukraine on 24th February, CACEIS set up a crisis unit to ensure a coordinated response from all group entities and business partners, with the objective of adapting internal processes, complying with international sanctions, and ensuring the security of clients’ assets. Network management staff participate in the unit’s daily meetings, and our financial correspondents provide a direct connection to the Russian Central Securities Depositary (NSD) and Central Bank of Russia, which enables continuous monitoring and therefore the ability to keep clients up-to-date on any changes to the market using various communication channels including newsletters, Q&As, 1-to-1 calls, or webinars.
Faced with the Covid pandemic, the network team adapted itself to ensure constant monitoring across the network of financial correspondents by conducting due diligence missions remotely.
During the pandemic, network management maintained constant contact with TPHs, and kept on top of the changing national and international measures introduced by the authorities as well as the contingency measures adopted by our providers to ensure business continuity.
Post-Lockdown, the network team runs a flexible model that combines remote and on-site due diligence checks, favouring the latter when the stakes are higher (in terms of cost, risk and operational satisfaction).
Heightened monitoring of cyber risk
Cyber risk monitoring processes enforced by CACEIS’ network of sub-custodians have a dedicated section in our due diligence procedures. This type of risk has become an increasing concern over the past few years and CACEIS’ network management staff closely monitor it to ensure the safety of client assets.
The rise in popularity of digital assets
CACEIS’ network management team has been involved in the design of the group’s digital asset servicing offer from the outset. The clear identification of all intermediaries involved in security tokens’ issuance and settlement processes enables the network management team to integrate this new category of TPH into our network. Specific processes have been designed to ensure that client assets are fully secure.
CSR integrated into the supplier screening process
Within the framework of the Crédit Agricole group’s and CACEIS' CSR policies, the network management team follows a Responsible Procurement Policy (RPP), which is designed to ensure CACEIS and our clients benefit from a secure and sustainable supply chain. Financial correspondents are submitted to an in-depth assessment on their CSR performance both at the outset of any business relationship and during regular annual assessments.
In conclusion, CACEIS’ network management division plays a central role in securing assets across the 79 markets in which our clients operate. “Through a rigid system of selection and monitoring, we offer clients easy access to a best-of-breed network of TPHs at a fair price, along with a level of flexibility to adapt to their specific needs. We are dedicated to ensuring our clients have access to the same high standards of services and intermediaries everywhere they operate” concludes Fabien Marbat-Milan.