17 CFR 270.17f-5 - Custody of investment company assets outside the United States.

§ 270.17f-5 Custody of investment company assets outside the United States.

(a)Definitions. For purposes of this section:

(1)Eligible Foreign Custodian means an entity that is incorporated or organized under the laws of a country other than the United States and that is a Qualified Foreign Bank or a majority-owned direct or indirect subsidiary of a U.S. Bank or bank-holding company.

(2)Foreign Assets means any investments (including foreign currencies) for which the primary market is outside the United States, and any cash and cash equivalents that are reasonably necessary to effect the Fund's transactions in those investments.

(3)Foreign Custody Manager means a Fund's or a Registered Canadian Fund's board of directors or any person serving as the board's delegate under paragraphs (b) or (d) of this section.

(4)Fund means a management investment company registered under the Act ( 15 U.S.C. 80a) and incorporated or organized under the laws of the United States or of a state.

(5)Qualified Foreign Bank means a banking institution or trust company, incorporated or organized under the laws of a country other than the United States, that is regulated as such by the country's government or an agency of the country's government.

(6)Registered Canadian Fund means a management investment company incorporated or organized under the laws of Canada and registered under the Act pursuant to the conditions of § 270.7d-1.

(7)U.S. Bank means an entity that is:

(i) A banking institution organized under the laws of the United States;

(ii) A member bank of the Federal Reserve System;

(iii) Any other banking institution or trust company organized under the laws of any state or of the United States, whether incorporated or not, doing business under the laws of any state or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to national banks under the authority of the Comptroller of the Currency, and which is supervised and examined by state or federal authority having supervision over banks, and which is not operated for the purpose of evading the provisions of this section; or

(iv) A receiver, conservator, or other liquidating agent of any institution or firm included in paragraphs (a)(7)(i), (ii), or (iii) of this section.

(b)Delegation. A Fund's board of directors may delegate to the Fund's investment adviser or officers or to a U.S. Bank or to a Qualified Foreign Bank the responsibilities set forth in paragraphs (c)(1), (c)(2), or (c)(3) of this section, provided that:

(1)Reasonable Reliance. The board determines that it is reasonable to rely on the delegate to perform the delegated responsibilities;

(2)Reporting. The board requires the delegate to provide written reports notifying the board of the placement of Foreign Assets with a particular custodian and of any material change in the Fund's foreign custody arrangements, with the reports to be provided to the board at such times as the board deems reasonable and appropriate based on the circumstances of the Fund's arrangements; and

(3)Exercise of Care. The delegate agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of the Fund's Foreign Assets would exercise, or to adhere to a higher standard of care, in performing the delegated responsibilities.

(c)Maintaining Assets with an Eligible Foreign Custodian. A Fund or its Foreign Custody Manager may place and maintain the Fund's Foreign Assets in the care of an Eligible Foreign Custodian, provided that:

(1)General Standard. The Foreign Custody Manager determines that the Foreign Assets will be subject to reasonable care, based on the standards applicable to custodians in the relevant market, if maintained with the Eligible Foreign Custodian, after considering all factors relevant to the safekeeping of the Foreign Assets, including, without limitation:

(i) The Eligible Foreign Custodian's practices, procedures, and internal controls, including, but not limited to, the physical protections available for certificated securities (if applicable), the method of keeping custodial records, and the security and data protection practices;

(ii) Whether the Eligible Foreign Custodian has the requisite financial strength to provide reasonable care for Foreign Assets;

(iii) The Eligible Foreign Custodian's general reputation and standing; and

(iv) Whether the Fund will have jurisdiction over and be able to enforce judgments against the Eligible Foreign Custodian, such as by virtue of the existence of offices in the United States or consent to service of process in the United States.

(2)Contract. The arrangement with the Eligible Foreign Custodian is governed by a written contract that the Foreign Custody Manager has determined will provide reasonable care for Foreign Assets based on the standards specified in paragraph (c)(1) of this section.

(i) The contract must provide:

(A) For indemnification or insurance arrangements (or any combination) that will adequately protect the Fund against the risk of loss of Foreign Assets held in accordance with the contract;

(B) That the Foreign Assets will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the Eligible Foreign Custodian or its creditors, except a claim of payment for their safe custody or administration or, in the case of cash deposits, liens or rights in favor of creditors of the custodian arising under bankruptcy, insolvency, or similar laws;

(C) That beneficial ownership of the Foreign Assets will be freely transferable without the payment of money or value other than for safe custody or administration;

(D) That adequate records will be maintained identifying the Foreign Assets as belonging to the Fund or as being held by a third party for the benefit of the Fund;

(E) That the Fund's independent public accountants will be given access to those records or confirmation of the contents of those records; and

(F) That the Fund will receive periodic reports with respect to the safekeeping of the Foreign Assets, including, but not limited to, notification of any transfer to or from the Fund's account or a third party account containing assets held for the benefit of the Fund.

(ii) The contract may contain, in lieu of any or all of the provisions specified in paragraph (c)(2)(i) of this section, other provisions that the Foreign Custody Manager determines will provide, in their entirety, the same or a greater level of care and protection for the Foreign Assets as the specified provisions, in their entirety.


(i)Monitoring the Foreign Custody Arrangements. The Foreign Custody Manager has established a system to monitor the appropriateness of maintaining the Foreign Assets with a particular custodian under paragraph (c)(1) of this section, and to monitor performance of the contract under paragraph (c)(2) of this section.

(ii) If an arrangement with an Eligible Foreign Custodian no longer meets the requirements of this section, the Fund must withdraw the Foreign Assets from the Eligible Foreign Custodian as soon as reasonably practicable.

(d)Registered Canadian Funds. Any Registered Canadian Fund may place and maintain its Foreign Assets outside the United States in accordance with the requirements of this section, provided

(1) The Foreign Assets are placed in the care of an overseas branch of a U.S. Bank that has aggregate capital, surplus, and undivided profits of a specified amount, which must not be less than $500,000; and

(2) The Foreign Custody Manager is the Fund's board of directors, its investment adviser or officers, or a U.S. Bank.

Note to § 270.17f-5:

When a Fund's (or its custodian's) custody arrangement with an Eligible Securities Depository (as defined in § 270.17f-7) involves one or more Eligible Foreign Custodians through which assets are maintained with the Eligible Securities Depository, § 270.17f-5 will govern the Fund's (or its custodian's) use of each Eligible Foreign Custodian, while § 270.17f-7 will govern an Eligible Foreign Custodian's use of the Eligible Securities Depository.

[ 65 FR 25637, May 3, 2000]

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].

It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.

United States Code
U.S. Code: Title 15 - COMMERCE AND TRADE

§ 30 - Repealed. Pub. L. 107–273, div. C, title IV, § 14102(f), Nov. 2, 2002, 116 Stat. 1922

§ 37 - Immunity from antitrust laws

§ 77f - Registration of securities

§ 77g - Information required in registration statement

§ 77h - Taking effect of registration statements and amendments thereto

§ 77j - Information required in prospectus

§ 77q - Fraudulent interstate transactions

§ 77s - Special powers of Commission

§ 77eee - Securities required to be registered under Securities Act

§ 77ggg - Qualification of indentures covering securities not required to be registered

§ 77nnn - Reports by obligor; evidence of compliance with indenture provisions

§ 77sss - Rules, regulations, and orders

§ 78c - Definitions and application

§ 78d - Securities and Exchange Commission

§ 78l - Registration requirements for securities

§ 78m - Periodical and other reports

§ 78n - Proxies

§ 78o - Registration and regulation of brokers and dealers

§ 78w - Rules, regulations, and orders; annual reports

§ 78bb - Effect on existing law

§ 78ee - Transaction fees

§ 79c

§ 79t

§ 80a-1 - Findings and declaration of policy

15 U.S. Code § 80a–2 - Definitions; applicability; rulemaking considerations

15 U.S. Code § 80a–3 - Definition of investment company

15 U.S. Code § 80a–3a - Protection of philanthropy under State law

15 U.S. Code § 80a–4 - Classification of investment companies

15 U.S. Code § 80a–5 - Subclassification of management companies

15 U.S. Code § 80a–6 - Exemptions

15 U.S. Code § 80a–7 - Transactions by unregistered investment companies

15 U.S. Code § 80a–8 - Registration of investment companies

15 U.S. Code § 80a–9 - Ineligibility of certain affiliated persons and underwriters

§ 80a-10 - Affiliations or interest of directors, officers, and employees

15 U.S. Code § 80a–11 - Offers to exchange securities

15 U.S. Code § 80a–12 - Functions and activities of investment companies

15 U.S. Code § 80a–13 - Changes in investment policy

§ 80a-14 - Size of investment companies

15 U.S. Code § 80a–15 - Contracts of advisers and underwriters

15 U.S. Code § 80a–16 - Board of directors

15 U.S. Code § 80a–17 - Transactions of certain affiliated persons and underwriters

§ 80a-18 - Capital structure of investment companies

§ 80a-19 - Payments or distributions

15 U.S. Code § 80a–20 - Proxies; voting trusts; circular ownership

§ 80a-21 - Loans by management companies

15 U.S. Code § 80a–22 - Distribution, redemption, and repurchase of securities; regulations by securities associations

15 U.S. Code § 80a–23 - Closed-end companies

15 U.S. Code § 80a–24 - Registration of securities under Securities Act of 1933

15 U.S. Code § 80a–25 - Reorganization plans; reports by Commission

15 U.S. Code § 80a–26 - Unit investment trusts

15 U.S. Code § 80a–27 - Periodic payment plans

15 U.S. Code § 80a–28 - Face-amount certificate companies

§ 80a-29 - Reports and financial statements of investment companies and affiliated persons

15 U.S. Code § 80a–30 - Accounts and records

15 U.S. Code § 80a–31 - Accountants and auditors

15 U.S. Code § 80a–32 - Filing of documents with Commission in civil actions

15 U.S. Code § 80a–33 - Destruction and falsification of reports and records

15 U.S. Code § 80a–34 - Unlawful representations and names

15 U.S. Code § 80a–35 - Breach of fiduciary duty

15 U.S. Code § 80a–36 - Larceny and embezzlement

15 U.S. Code § 80a–37 - Rules, regulations, and orders

15 U.S. Code § 80a–38 - Procedure for issuance of rules and regulations

15 U.S. Code § 80a–39 - Procedure for issuance of orders

§ 80a-40 - Hearings by Commission

15 U.S. Code § 80a–41 - Enforcement of subchapter

§ 80a-42 - Court review of orders

15 U.S. Code § 80a–43 - Jurisdiction of offenses and suits

15 U.S. Code § 80a–44 - Disclosure of information filed with Commission; copies

15 U.S. Code § 80a–45 - Reports by Commission; hiring and leasing authority

15 U.S. Code § 80a–46 - Validity of contracts

15 U.S. Code § 80a–47 - Liability of controlling persons; preventing compliance with subchapter

15 U.S. Code § 80a–48 - Penalties

15 U.S. Code § 80a–49 - Construction with other laws

15 U.S. Code § 80a–50 - Separability

15 U.S. Code § 80a–51 - Short title

15 U.S. Code § 80a–52 - Effective date

15 U.S. Code § 80a–53 - Election to be regulated as business development company

15 U.S. Code § 80a–54 - Acquisition of assets by business development companies

15 U.S. Code § 80a–55 - Qualifications of directors

15 U.S. Code § 80a–56 - Transactions with certain affiliates

15 U.S. Code § 80a–57 - Changes in investment policy

15 U.S. Code § 80a–58 - Incorporation of subchapter provisions

15 U.S. Code § 80a–59 - Functions and activities of business development companies

§ 80a-60 - Capital structure

§ 80a-61 - Loans

15 U.S. Code § 80a–62 - Distribution and repurchase of securities

15 U.S. Code § 80a–63 - Accounts and records

15 U.S. Code § 80a–64 - Preventing compliance with subchapter; liability of controlling persons

§ 80b-3 - Registration of investment advisers

§ 80b-4 - Reports by investment advisers

§ 80b-11 - Rules, regulations, and orders of Commission

§ 80c-39

§ 80c-89

§ 80w-37

Title 17 published on 16-May-2018 03:42

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 17 CFR Part 270 after this date.

  • 2018-02-27; vol. 83 # 39 - Tuesday, February 27, 2018
    1. 83 FR 8342 - Investment Company Liquidity Risk Management Programs; Commission Guidance for In-Kind ETFs
      GPO FDSys XML | Text
      Interim final rule; request for comment; interpretation.
      Effective Dates: The effective date of the interim final rule is March 29, 2018. The effective date for 17 CFR 270.22e-4 and 270.30b1-10 and the amendments to Form N-PORT (referenced in 17 CFR 274.150) published at 81 FR 82267 (November 18, 2016) remains January 17, 2017, and the effective date for amendments to Form N-CEN (referenced in 17 CFR 274.101) published at 81 FR 82267 (November 18, 2016) remains June 1, 2018. Compliance Dates: The compliance date for 17 CFR 270.22e-4(b)(1)(ii) except to the extent referenced in 17 CFR 270.22e-4(a)(8), 1 17 CFR 270.22e-4(b)(1)(iii), 17 CFR 270.22e-4(b)(2)(i) and (iii), certain elements of 17 CFR 270.22e-4(b)(3) related to the delayed provisions of rule 22e-4, and the liquidity-related amendments to Form N-PORT (discussed in section I.C below) and Part D of Form N-LIQUID have been extended until June 1, 2019 for larger entities, and December 1, 2019 for smaller entities, as defined in section I below. 1   See infra footnote 71. Comment Date: Comments should be received on or before April 27, 2018.
      17 CFR Parts 270 and 274