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Global custodians undertake the job of processing cross-border securities trades while at the same time working to keep the financial assets of clients safe, and servicing the associated portfolio.

Before computers existed, global custodians had gigantic filing systems for their core work - storing certificates of stock and bond ownership for their clients. Today, certificates related to stock and bond ownership are stored electronically, making the business of custody much less space-intensive and easier to conduct. That's not necessarily the case within the booming alternative investment sectors such as hedge funds and off-shore funds, though even in those industries formerly cumbersome tracking systems are moving toward more efficient electronic methods. In exchange for looking after clients' assets, custodians charge a fee of up to 0.08 percent of the assets they're managing.

Global custody is a big business. The total value of worldwide custody assets is $65 trillion, according to globalcustody.net, a specialist Web site that tracks the industry.

Intense competition has put downward pressure on custody fees, so increasingly custodians have branched out into more lucrative areas, such as securities lending and risk management. They are also consolidating at a rapid pace. Small custodians lack the manpower and technological expertise for these higher margin activities, and so are gradually being subsumed into bigger players. Meanwhile, bigger players are merging so as to become even bigger.

In the past year, the Bank of New York and Mellon Bank announced they would merge while Investors Financial Services, the parent of Investors Bank & Trust, agreed to be taken over by Boston's State Street. Investors Financial Services had essentially put itself up for sale and attracted numerous suitors. Meanwhile, Citigroup announced it was buying New Jersey-based Bysis Group. While Citi planned to retain Bysis's business in mutual fund and hedge fund administration, it intended to sell other portions of the business. In the end, Citi would become the fifth-largest hedge fund administrator.

Besides Citigroup, Mellon and State Street, other big players include RBC Dexia Investor Services, UBS, JPMorgan and Northern Trust. The trend toward consolidation is expected to continue.

Roles and Career Paths

While of its work is administrative and repetitive, the role of custodian has widened to include a range of other services. These include income collection (e.g. collecting dividends from clients' investments), performance measurement (calculating the returns a client's investments have made over a period of time), and proxy voting on behalf of clients at shareholder meetings. Custodians typically specialize in a particular area, so exactly what you do will depend on where you work.

Corporate action professionals normalize and consolidate corporate announcement information - generally referred to in the industry as "scrubbing" - to inform clients about important events at companies that might impact the value of the shares they hold. You need to have a basic understanding of underlying cash flows, accounting treatments, operational controls, credit risks and market practices to be successful in this role.

If you work in fund operations you might be asked to record and monitor the investments made by fund management clients, or to work on clearing and settlements. Staff in clearing and settlements make sure the contracts and payments are in place following a client's trade. Similar to operations staff working in investment banks, fund operations staff in custody houses look out for so-called "exceptions," when trades have not been settled properly, and try to resolve any problems.

Custodians also offer more client-focused and technical jobs. Relationship managers, for example, work with clients to reassure them their assets are safely maintained.

Graduates may start out in corporate actions or settlements and move into other positions after a few years. Few global custodians offer structured graduate training programs.

Skills and Qualities

- Strong communication, presentation, and selling skills
- Organized and process-driven
- Work well under pressure