nbradley
04-30-2009, 02:14 PM
A number of factors, including reduced asset values and lower securities lending revenues are having a negative drag on the fees earned by global custodians.
How are custodians going to address this challenge? Will they increase "hidden" fees (e.g. reduce the interest rates they pay on deposits or increase the spreads they charge on foreign exchange transactions) or will they increase headline custody fees? Already, there is evidence that some custodians are attempting to renegotiate previously agreed fee schedules. Some are proposing two-tier fee schedules with fees predicated on the level of securities lending fees and some are attempting to introduce minimum fees. Is this sustainable given the pressures on pension funds following the market meltdown?
How are custodians going to address this challenge? Will they increase "hidden" fees (e.g. reduce the interest rates they pay on deposits or increase the spreads they charge on foreign exchange transactions) or will they increase headline custody fees? Already, there is evidence that some custodians are attempting to renegotiate previously agreed fee schedules. Some are proposing two-tier fee schedules with fees predicated on the level of securities lending fees and some are attempting to introduce minimum fees. Is this sustainable given the pressures on pension funds following the market meltdown?