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The Law of Global Custody: Legal Risk Management in Securities Investment and Collateral Madeleine Yates & Gerald Montagu 4th ed., (West Sussex: Bloomsbury Professional Ltd., 2013) 375 pp. £225
The Law of Global Custody is a useful guide for legal practitioners doing work in the field of securities held by custodians in the United Kingdom (UK). The fourth edition of this book includes important legal and regulatory updates that were introduced in the aftermath of the Global Financial Crisis of 2008. This edition of the book is clearly geared towards legal practitioners;1 however, it was built on an academic foundation.
The first edition was written solely by Dr. Joanna Benjamin, who is a Professor at the London School of Economics and a leading academic authority on securities law and financial regulation in the UK. The third and fourth editions were revised and updated by Madeleine Yates, who is a banking and finance lawyer at Clifford Chance (London). Gerald Montagu, who is a tax lawyer at Fasken Martineau (London), and a consultant at Davenport Lyons, wrote the chapter on taxation.
This book outlines and analyzes some of the most important legal and regulatory issues affecting investors and intermediaries holding securities in the financial markets. It focuses on global custody, which the authors describe as "a service whereby a financial institution assumes responsibility for the safekeeping and administration of its client's international portfolio of securities".2 In the aftermath of the Global Financial Crisis, legislators and regulators have passed laws that aim to increase the safeguards and protection of customer assets in order to ensure that investors remain confident and continue to invest in the financial markets.
In particular, there has been much legal uncertainty with regard to the distribution and return of customer assets upon the insolvency of the custodian or the custodian's customers. This uncertainty was noted in the litigation resulting from the insolvencies of Lehman Brothers International (Europe) and MF Global Ltd,3 which have seen a slow return of assets to customers. The whole matter has been complicated because custodians in the 21st century operate in an electronic environment and conduct business across borders in multiple jurisdictions.
Chapters 1 and 2 provide a very brief introduction to the terminology and general concepts concerning custodians,...