In accordance with Article 38 of the Central Securities Depository Regulation ("CSDR"), UBS Securities Japan Co. Ltd. (we) offers clients the choice between two levels of custody account segregation: Omnibus Client Segregated Account ("OSA") and Individual Client Segregated Account ("ISA") at each Central Securities Depository ("CSD") in the European Economic Area (EEA) at which we are a direct participant and hold client securities directly with them (i.e. Clearstream Luxembourg S.A.). Further information on OSAs and ISAs including a description of the main legal implications of the respective levels of segregation are set out in Risk Disclosure document ("Article 38(6) CSDR Participant Disclosure") which is a standard market document and is available at the https://www.ubs.com/global/ja/legal/country/japan/csdr-cost-disclosure.html.
The regulation imposes obligation on us to disclose costs associated with each account type. The above mentioned Risk Disclosure document together with this Cost Disclosure document should provide the client with the specifics concerning the level of protection granted by these two types of accounts and the associated costs and assist the client in making an informed choice as to which account type best suits the client's circumstances and requirements.
This document is for information purposes only. It is not intended to constitute legal or other advice and should not be relied upon as such.
In our own books and records, we record each client’s individual entitlement to securities that we hold for that client in a separate client account.
We may hold (and in most cases this is inevitable) securities with a sub-custodian or directly with a CSD. To hold clients' securities with CSDs, we open accounts in our own name but designated as client account. As a general rule, we make two types of accounts with CSDs available to clients: Individual Client Segregated Accounts (ISAs) and Omnibus Client Segregated Accounts (OSAs).
An ISA is used to hold the securities of a single client and therefore the client’s securities are held separately from the securities of other clients and our own proprietary securities.
An OSA is a shared account at CSD level used to hold the securities of a number of clients on a collective basis. However, we do not hold our own proprietary securities in OSAs. OSAs are the basis of the current account structure and generally used where local regulation or market practice do not require ISA.
3. General cost considerations
The set-up and maintenance costs of separate ISA are higher than the costs for OSA. This is mainly due to the additional operational complexity and cost involved in setting up and maintaining a separate ISA, as well as resources required in order for us to effectively operate such account. Such costs will be charged to the client.
Factors which are considered to be relevant include:
Setting up a new ISA account externally with CSD(s) and internally, as well as migrating client's assets from OSA to ISA and position monitoring require additional time and operational efforts on our side.
Operational complexity in processing securities held in an ISA (i.e. trade settlement and corporate actions and income processing).
CSDs may charge additional costs and fees for opening and maintaining additional accounts. Any such costs will be charged to the client. Third Party Charges are largely expected to consist of CSD account set-up, as well as transaction fees and corporate actions instruction handling.
The client's trading behavior, including trading volume and assets size, also impacts the third party costs. Minimal safekeeping fee and minimal settlement fee may apply.
Certain Third Party Charges may apply periodically (e.g. if a CSD charges a monthly or annual facilitation fee per ISA). All Third Party Charges are subject to periodic and ongoing review and change by the relevant Third Parties from time to time.
4. Charges for Individual Client Segregated Account
This part provides indicative information regarding the anticipated charging structure for ISAs:
- JPY1.8 million + 50 bps of AUM1 per annum
We apply the CSDR Individual Client segregation charge to each client for segregating assets held directly at CSD in the EEA (i.e. Clearstream Luxembourg S.A.).
5. Further Information
The Cost Disclosure information contained herein and the information contained within the Risk Disclosure document have been produced so as to provide prospective and existing clients with a high level overview of the available cost structures and our pricing and so as to assist client's in making their election as to their preferred account structure, but do not constitute legal or any other form of advice and should not be relied upon as such. The disclosures do not provide all of the information a client may need to make an election and it is the client's responsibility to review and conduct its own due diligence on the legal documentation and terms of our offering and relevant rules and structures of the various CSDs.