Shcil To Be Custodian For All Us Funds In India

The Securities and Exchange Commission (SEC), the US capital markets regulator, has given in-principle recognition to the Stock Holding Corporation of India (SHCIL) as a global custodian.

The SEC has recently issued a no action letter to SHCIL. This implies that the SEC will not take any action against US funds operating in India which avail of SHCILs custodial services.

SHCIL managing director V B Gaud confirmed the news. We have received a no action letter from the SEC, which is, in effect, a full-fledged approval for being a global custodian, Gaud said.

SHCIL will soon launch an aggressive marketing drive to attract most of the foreign funds operating in India. We will provide services of international standards and our rates are equally competitive in nature. We hope to generate more business after being accorded the status of global custodian, said Gaud.

 

SHCIL already has a strategic alliance with Morgan Stanley Trust Company (MSTC) , wherein SHCIL acts as a sub-custodian to MSTC, providing custodial and related services to foreign institutional investors (FII).

According to SEC norms, all US-based funds operating in India will have to avail of custodial services from custodians which have been recognised as global custodians. SHCILs bottomline is expected to be boosted by the SECs decision to grant it global custodian status.

SHCIL provides custodial services to 18 Morgan Stanley funds. It also has a business understanding with MSTC, under which all the foreign clients are being jointly served. However, with SHCIL getting the status of a global custodian, it will now seek its own clients. SHCIL has already initiated talks with MSTC in this regard.

To qualify for global custodian status, an entity has to be either a bank or depository, or be regulated by a central authority. Earlier, the SEC also stipulated that the entity should have a net worth of at least Rs 600 crore. However, SEC dropped this clause nearly a year ago, paving the way for SHCIL to become a global custodian.

Apart from being a sub-custodian to MSTC, SHCIL provides custodial and related services to a number of non-US FIIs. We would like to have most of the US funds as our clients.

After seeking clearance from MSTC, our marketing team would be approaching these funds, Gaud said.

SHCIL started operations in August 1988 and now holds more than 40 million certificates, valued at over Rs 80,000 crore. SHCILs clients include UTI, LIC, GIC, Oriental Insurance, New India Assurance, National Insurance, United Insurance, IDBI MF, LIC MF, GIC MF, SBI MF, Shriram MF and Sundaram MF.