Cash Management
- 01:27
Learn about the cash management services provided by a global custodian
Downloads
No associated resources to download.
Glossary
Transcript
So looking at the cash management services, one of the simplest products that we can do is to ensure that we offer a competitive rate of interest on their daily bank accounts. Therefore, ensuring any loan balances held on the bank account are not dead, they're earning some rate of interest. The global custodian will also provide an electronic banking tool, whether that be their own proprietary online system, or maybe they're doing this via SWIFT. And this will include cash forecasting tools. So the client will be able to see what cash they're holding in each bank account, and they'll be able to see what transactions are coming through during that day. They can do their calculations on each transactions they're initiating themselves, and from that they can see what the end of day cash positions are going to be. Therefore ensuring that the fund is always in credit and if they need to, they can move funds to obtain a higher rate of return that is available just on the bank account. We can also provide auto sweeps so that if, if the balance goes above X on a particular bank account, we sweep it automatically to an interest bearing account. Or maybe we send it over to money markets if we know the cash isn't going to be needed for a week because that's when a trade settles, et cetera. Then there are some funds that always have excess cash. It might be a fund whose policy is to be very cash rich. And what we can do here, so what the global custodian can do here is introduce the client to their asset management team, and the custodian's asset management team will talk about liquidity funds and how these cash stroke, near cash instruments may be able to benefit the fund with a higher yield than the bank is able to offer or on the bank's balance sheet.