Rule 17f-5 Clause Samples
Rule 17f-5 is a regulation that governs how U.S. mutual funds may maintain custody of their assets with foreign banks or securities depositories. It sets out the criteria and due diligence requirements that funds and their custodians must follow when selecting and monitoring foreign custodians, including evaluating the financial stability and legal protections offered by these entities. The rule's core function is to safeguard mutual fund assets held overseas by ensuring that only reliable and properly vetted foreign custodians are used, thereby reducing the risk of loss or mismanagement of investor assets.
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Rule 17f-5. 1.1. Each respective Portfolio delegates to PFPC and PFPC hereby accepts the delegation to it of, the obligation to serve as the Portfolio’s “Foreign Custody Manager” (as defined in Rule 17f-5(a)(3)), with respect to the “Foreign Assets” (as defined in Rule 17f-5(a)(2)) of the Portfolio in such jurisdictions as PFPC and the applicable Fund may agree from time to time with respect to that particular Portfolio. As Foreign Custody Manager, PFPC shall provide for the following:
a. selection of “Eligible Foreign Custodians” (as defined in Rule 17f-5(a)(1)) to serve as foreign custodians and placement and maintenance of a Fund’s Foreign Assets with such Eligible Foreign Custodians;
b. in selecting an Eligible Foreign Custodian, a determination that Foreign Assets placed and maintained in the care of the Eligible Foreign Custodian shall be subject to reasonable care, based on the standards applicable to custodians in the relevant market, after consideration of all factors relevant to the safekeeping of such Foreign Assets including, without limitation, those factors set forth in Rule 17f-5(c)(l)(i)-(iv);
c. entering into a written contract with each Eligible Foreign Custodian selected by PFPC hereunder;
d. a determination that the written contract with each Eligible Foreign Custodian will provide reasonable care for the Foreign Assets, based on the standards applicable to custodians in the relevant market and after consideration of all factors relevant to the safekeeping of such Foreign Assets (including, without limitation, those factors set forth in Rule 17f-5(c)(1)(i)-(iv)), and that each such contract satisfies the requirements of Rule 17f-5(c)(2);
e. provision of written reports (i) notifying the applicable Fund’s board of trustees or directors or similar governing body (the “Board”) of the placement of a Portfolio’s Foreign Assets with a particular Eligible Foreign Custodian, such reports to be provided at such time as the Board deems reasonable and appropriate, but not less often than quarterly, and (ii) promptly notifying the applicable Board of any material change in the arrangements with an ▇▇▇▇▇▇▇▇ Foreign Custodian; and
f. establishment of a system to monitor (i) the appropriateness of maintaining a Portfolio’s Foreign Assets with a particular Eligible Foreign Custodian selected hereunder and (ii) the performance of the governing contractual arrangements; it being understood, however, that in the event PFPC shall determine that the arrangement with an...
Rule 17f-5. Foreign Custody Manager
1. In selecting an Eligible Foreign Custodian, the Foreign Custody Manager shall determine that each Fund's Foreign Assets (as defined in Rule 17f-5(a)(2)) shall be subject to reasonable care by the Eligible Foreign Custodian considering all factors relevant to the safekeeping of such Foreign Assets with reference to standards of international banks and trust companies holding assets for institutional clients in the relevant market and if there are no such international banks with reference to the principal custodians in the relevant market that act as subcustodians or custodians for U.S. mutual funds.
2. Each agreement between the Foreign Custody Manager and each Foreign Subcustodian shall meet the requirements of Rule 17f-5(c)(2) under the Investment Company Act.
3. The Foreign Custody Manager shall establish a system for monitoring the appropriateness of maintaining a Fund's Foreign Assets with a particular Eligible Foreign Custodian and to monitor the performance of the agreement between the Foreign Custody Manager and each Eligible Foreign Custodian.
4. The Foreign Custody Manager shall notify the Fund's investment adviser in writing as soon as reasonably possible of any material changes in the Fund's foreign custody arrangements.
5. The Foreign Custody Manager shall provide the Board and any Directing Fiduciary with written quarterly reports regarding a Fund's foreign custody arrangements for use at its quarterly Board meetings which reports shall, among other things:
(i) notify the Board and any Directing Fiduciary of the placement of a Fund's Foreign Assets with a particular Eligible Foreign Custodian; and summarize for the Board and any Directing Fiduciary the material changes in the Fund's foreign custody arrangements that occurred during the prior quarter.
6. The Foreign Custody Manager shall, upon request of the Board or any Directing Fiduciary, make itself available to report to a Directing Fiduciary in person or a Fund's Board in person at its quarterly Board meetings, or at such other times as the Board or any Directing Fiduciary may from time to time require.
7. The Foreign Custody Manager shall agree to and shall provide the Fund's investment adviser on a regular basis with the country materials it provides to clients. Each Fund acknowledges that the information contained in these materials is for informational purposes only and does not constitute investment advice.
8. In performing its delegated duties and obligat...
Rule 17f-5. 1.1. With respect to the “Foreign Assets” (as defined in Rule 17f-5(a)(2)) in such jurisdictions as Custodian provides custody services under the Foreign Custody Agreement for the Fund, the Fund hereby delegates to Custodian and Custodian hereby accepts the delegation to it, of the obligation to serve as the Fund’s “Foreign Custody Manager” (as defined in Rule 17f-5(a)(3)). As Foreign Custody Manager, Custodian shall:
Rule 17f-5. Foreign Custody Manager 1 In selecting an Eligible Foreign Custodian, the Foreign Custody Manager shall determine that each Fund's Foreign Assets (as defined in Rule 17f-5(a)(2)) shall be subject to reasonable care by the Eligible Foreign Custodian considering all factors relevant to the safekeeping of such Foreign Assets with reference to standards of international banks and trust companies holding assets for institutional clients in the relevant market and if there are no such international banks with reference to the principal custodians in the relevant market that act as subcustodians or custodians for U.S. mutual funds.
Rule 17f-5. As of the date hereof, Rule 17f-5 provides that the Fund may from time to time place or maintain in the care of an Eligible Foreign Custodian any of the Fund's Foreign Assets, PROVIDED THAT:
(a) The Fund's Foreign Custody Manager determines that the Fund's 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 such 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 any offices of the custodian in the United States or the custodian's consent to service of process in the United States.
(b) The arrangement with the Eligible Foreign Custodian is governed by a written contract that the Custodian, as Foreign Custody Manager, has determined will provide reasonable care for the Fund's assets based on the standards set forth in paragraph (a) above.
(i) Such contract must provide:
(A) For indemnification or insurance arrangements (or any combination of the foregoing) that will adequately protect the Fund against the risk of loss of Foreign Assets held in accordance with such contract;
(B) That 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;
Rule 17f-5. 1.1. With respect to the “Foreign Assets” (as defined in Rule 17f-5(a)(2)) in such jurisdictions as BNYM and the Company may agree from time to time, the Company hereby delegates to BNYM and BNYM hereby accepts the delegation to it, of the obligation to serve as each Fund’s “Foreign Custody Manager” (as defined in Rule 17f-5(a)(3)). As Foreign Custody Manager, BNYM shall:
Rule 17f-5. Foreign Custody Manager
Rule 17f-5. 1.1. With respect to the “Foreign Assets” (as defined in Rule 17f-5(a)(2)) in such jurisdictions as the Fund and PFPC may agree from time to time, the Fund hereby delegates to PFPC and PFPC hereby accepts the delegation to it, of the obligation to serve as the Portfolios’ “Foreign Custody Manager” (as defined in Rule 17f-5(a)(3)). As the Portfolios’ Foreign Custody Manager, PFPC shall provide for the following: a. selection of “Eligible Foreign Custodians” (as defined in Rule 17f-5(a)(1)) to serve as foreign custodians and placement and maintenance of the Portfolios’ Foreign Assets with such Eligible Foreign Custodians;
Rule 17f-5. This Article 3 shall be governed by, and interpreted in accordance with, and the practices, arrangements and other matters contemplated hereby shall be conducted in conformity with, Rule 17f-5 under the Investment Company Act of 1940, as amended, as such Rule is interpreted in publications of the Securities and Exchange Commission and its staff; in any conflict between this Article 3 and the Rule (as interpreted), the Rule shall govern.