Global custodians have separate data stores for transactions, customer profiles, and more that do not communicate with external parties, creating friction between any entity transacting with the global custodian. Global custodians must also rely on the local sub-custodians who hold accounts in the in-country CSD and central bank. This means the local sub-custodian has direct control over assets, creating substantial costs and
risks for the global custodian.
This burden of direct liability and risk of indirect asset control must be addressed from an operational and technological perspective to create a more streamlined, risk-free environment for the custody network. The following areas of custody services are well-positioned for blockchain technology, as they involve multiple business parties with different data visibility rights, and require ongoing reconciliation to ensure accurate records of individual assets and identification among custodians, intermediaries, beneficial owners and any secured party.
