With deposit contracts used for benefit programs, the custodian collects staff funds through regular wage deductions and invests the money; all fees associated with these agreements are generally less than the fees that would be charged to individual investors. If the sub-depository were to become insolvent, the CIS`s recognition as the owner of its securities could be limited. For this reason, it is generally necessary to strictly separate the assets from those of the omnibus accounts of the managers. In particular, the separation of these securities is also necessary in the event of bankruptcy. This bankruptcy could therefore create three risks. On the one hand, the delay in the execution of the CIS Director`s own orders on his assets. Second, the risk of a partial loss of the assets retained. Third, the risk of accounting fraud caused by the separation of assets in omnibus accounts. the custodian or custodian of a collective investment may delegate his duties to a sub-custodian. This generally applies to the retention of international securities. However, the custodian retains the primary responsibility. Sub-depositors are also used to protect the assets of their custodians in the event of insolvency. Normally, this function is performed by banking institutions, but also by brokers or brokers.
While controlling the securities, the custodian monitors the action of the management company. It is obliged to inform the CNMV of one of its irregularities. The custodian is the one who calculates the net inventory value on a daily basis. It is also responsible for the settlement of securities, subscriptions and share withdrawals. It will also collect and pay all interest and dividends that can be generated. This delegation is formalized by a contract between the custodian and the sub-custodian. The treaty contains clauses on technical aspects such as the coordination of differences in the evaluation of units. This measure is a consequence of their responsibility in calculating the net inventory value. The worker, not the custodian, may have all records that confirm distribution on a tax-exempt basis. It could also be left to the worker, not the custodian, to determine what income taxes are due on distribution and whether there are tax penalties that could be imposed. The custodian may also not be required to withhold a portion of the distribution that would be used to cover the income taxes owed. If the account holder were to die, the custodian could be responsible for the liquidation of the funds into the account and then impose the distribution of assets to the beneficiaries according to the parameters of the fraudster`s estate.