The global prime finance division of Deutsche Bank has launched a hybrid custody version of prime brokerage, named DB Integrated Prime Custody. The platform allows funds to hold unencumbered assets that were typically held within their prime brokerage in a separate custody account held at BNY Mellon.
The new offering will also enable unencumbered assets to be held within Deutsche Bank’s separate custody division. Furthermore, Deutsche Bank is committed to an open architecture approach should clients have a preference for a particular custodian.
Deutsche Bank claimed that a key feature of the model is minimal change to existing operational, documentation and control processes. The operational burden is assumed by Deutsche Bank subject to daily oversight and control by the fund manager.
Deutsche Bank has taken advice from a variety of industry experts including law firms such as Clifford Chance and German firm Hengeler Mueller, investors, managers, consultants and PricewaterhouseCoopers. Furthermore, Deutsche Bank has worked with the PwC Risk Assurance group on a SAS70 Certification which includes an independent assessment of Deutsche Bank internal processes and controls.
Anthony Byrne, co-head of European prime finance and global head of securities lending at Deutsche Bank, said: “Investors and industry consultants are particularly pleased that managers are not being forced to deal with an affiliated special purpose custody vehicle or an internal custody division. The almost identical look and feel of the integrated operations and reporting functionality has also been very well received.”
Art Certosimo, senior executive vice president and head of alternative investment services and broker dealer services at BNY Mellon, said: “This model is clearly a major step forward in the evolution of the prime brokerage industry and BNY Mellon is very pleased to have contributed to its development. Managers and advisers have been particularly struck by the simplicity and operational elegance of the structure as well as the strong protection it affords.”
