Recently, many banks provide services for the storage and accounting of customer securities. This is the depository activity of credit institutions. Moreover, the object may be securities of documentary and non-documentary forms, issue and non-issue. The main thing is that they all have legal force and be executed in accordance with the norms of the current legislation.
Depository activity in the securities market implies the existence of various accounting institutions: those that would be involved in the storage of documents, and those that would maintain a single register fixing the owners of payment documents. The activities of such organizations make it easy to confirm the presence or absence of rights to a particular security. There are companies that provide services exclusively for the storage of securities. In this case, there can be no question of depository activity, since it necessarily includes accounting and confirmation of the rights of the owner.
In addition, depository activities in organizations are constantly being improved, for example, a number of additional services are introduced that accompany the core business. These include assistance in the sale of securities for the benefit of the owner or control and regulation of the process of payment of dividends on shares. The provision of one or another related service should be indicated in the contract with the client, which will be a certificate of consent of one party to engage in the specified list of operations, and the other to pay for it.
Among the total mass of related services, the most common can be distinguished:
- Account management for transactions with payment documents and control over the movement of funds.
- Settlements in a transit and foreign currency account if securities transactions are conducted in foreign currency.
- The distribution of interest income, for example, dividends on shares.
- Reconciliation of certificates of securities and establishing their authenticity.
- At the request of the client, collection of these certificates is carried out with their subsequent transportation to the destination.
- When it comes to joint stock companies, a credit institution can represent the interests of its client at a general meeting of shareholders, and in some cases make decisions that are most beneficial for the client.
- The development of specific measures to maximize the profits of the holder of securities through the effective use of his rights.
- Providing consulting services in the field of investment activities of the customer and relations with tax authorities.
- Other activities aimed at meeting the requirements of the consumer group and not contradicting the norms of the current legislation.
The depository activity is actively used in the securities market, and the participant in the relationship engaged in it is called the depositary. He must be a legal entity and have a specialized license that gives the right to conduct a certain type of operations. Depository activities comply with certain requirements, standards and norms that should not be hidden from the public. They are available for review to any individual or legal entity, as they are provided upon its first request.
The client of the company engaged in depository activities, in the language of specialists, is called the depositor. Moreover, the bank may also be a depositor in the event that bank securities are held and accounted by a third-party organization. After all, when a credit institution conducts large-scale operations in the securities market, a large burden is placed on employees, which distracts from the main activity. That is why the management team can decide on the advisability of introducing an additional cost item for services of a third-party organization.