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CISI Global Securities Operations study materials
CISI Global Securities Operations study resources

CISI Global Securities Operations: Custody, Asset Servicing and Corporate Actions

CISI Global Securities Operations · Work through your exam, one topic at a time.

All guide sections

Custody, Asset Servicing and Corporate Actions

What this domain tests

This domain tests the custodian's safekeeping, income and corporate action obligations, the classification of events, the key dates that drive entitlement, and the election mechanics that make voluntary events operationally risky.

Custody structure

  • A global custodian holds assets through a network of sub-custodians or as a direct participant in a CSD. Assets must be segregated from the custodian's own and held under client asset rules (UK CASS 6/7); records are reconciled internally and externally.
  • Services include safekeeping, income collection, tax reclaims, proxy voting, class actions and reporting.

Corporate action classification

  • Mandatory: dividend, stock split, merger - no instruction needed.
  • Mandatory with choice: dividend with scrip or cash option, rights issue, currency election.
  • Voluntary: takeovers, tender offers, conversions - the holder must elect, and failure to elect defaults to the terms stated in the event.

Key dates

  • Announcement/declaration date, ex-date, record date, election deadline, payment date.
  • Entitlement is fixed by the holding at the record date. In T+2 markets the ex-date is one business day before the record date; a buyer purchasing on or after the ex-date does not receive the event and a market claim may arise.

Worked example

A fund holds 50,000 shares and a dividend of USD 0.45 per share is declared with record date Friday 12 July; the ex-date is therefore Thursday 11 July. Reasoning: the fund bought on Wednesday 10 July, before the ex-date, so it is entitled. Gross dividend is 50,000 × 0.45 = USD 22,500; with a treaty withholding rate of 15% (USD 3,375), the net received is USD 19,125. The custodian must file the reclaim documentation to recover withheld tax where a treaty benefit applies.

Traps that cost marks

  • Using the trade date rather than the record date for entitlement.
  • Missing election deadlines on voluntary events, which default against the holder.
  • Assuming withholding tax rates are universal rather than treaty- and market-specific.
  • Forgetting that stock splits and consolidations change positions and must be reflected in reconciliations.