MCA QA.pdf
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- Attached to
- DFC Master Custody Agreement
- Solicitation number
- 77344425Q0110
About this file
This document is a Questions and Answers (Q&A) file for a Master Custody Agreement (MCA) solicitation issued by the Development Finance Corporation (DFC). The Q&A provides detailed insights into the custodial services sought, covering potential investment markets, asset types, and operational requirements. Key details include that DFC seeks a global custodian to handle securities transactions across various income-level countries, with potential markets including Brazil, India, Mexico, Nigeria, Ghana, Kenya, Vietnam, Indonesia, Philippines, Singapore, U.K., and USA. The custodian will be responsible for tax and regulatory compliance, accounting of securities activities, and handling primarily equity securities and fund investments, with DFC's total exposure across all products estimated at approximately $50 billion as of September 30, 2024.
The document clarifies specific service expectations, such as no requirement for currency hedging, compliance with local tax jurisdictions, and accounting only for securities held on DFC's behalf, not for limited partners (LPs). The custodian will need global custody capabilities, potentially handling public securities from high-income countries resulting from DFC's private investments in eligible countries. The solicitation emphasizes that published portfolio data should be considered illustrative, with future transaction scopes expected to potentially deviate from prior transactions. DFC seeks a custodian bank capable of receiving, accepting, and recording assets, working with brokers and clearinghouses, transferring funds to the U.S. Treasury, and providing system interfaces to support efficient service delivery.
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MCA Q&A
1) What are the potential markets that will potentially be involved with the securities to be held on behalf of DFC?
The custodial account, as directed in the Statement of Work, should be able to handle transactions globally. These may include: i) lower, lower middle-income, upper-middle income countries according to the World Bank classification; ii) major exchanges in developed countries where securities may be listed; iii) certain high income countries. Please see where DFC works.1, 2,3
Countries may include but are not limited to Brazil, India, Mexico, Nigeria, Ghana, Kenya, Vietnam, Indonesia, Philippines, Singapore, U.K., USA.1
2) What are the specific tax and regulatory compliance reporting responsibilities to be delivered?
The custodian is expected to comply with any tax and regulatory reporting, withholding, or other requirements as specified by the laws of the jurisdictions for custodians where the investments are being held.
3) Will DFC accept and execute industry standard documents, to be made part of the overall contract?
Any additional documentation will be reviewed in accordance with the established evaluation factors in the solicitation. The Government cannot guarantee acceptance of external documents until a full review is complete. Please submit full text of any required documents in your submission.
4) Is there a description of all the assets to be held on behalf of DFC?
DFC does not currently have an inventory of all assets that will be held on behalf of DFC. It is anticipated that primarily equity securities and certain fund investments will need to be held on DFC’s behalf, but DFC may require the custodian to hold debt securities or other instruments incidental to DFC’s other authorities as well.
1 Please note that certain high income countries noted as not eligible on the website are due to World Bank income classification. However, DFC may hold public securities listed on the exchange of high income countries as a result of its private investments in DFC eligible countries. Therefore, global custody capabilities are required.
2 Investment Fund portfolio Investments are valued at $10 million or more, and/or which are classified as “Category A” for environmental risk. Note that some fund investments are not expected to be held by the custodian.
3 With respect to DFC’s wider portfolio including debt and insurance, please note Active DFC Transactions as of September 30, 2023. All Active Projects Database reflects active DFC commitments as of the most recent quarter and is updated approximately 45 days after the end of each quarter.
https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups https://www.dfc.gov/what-we-offer/work-with-us/where-we-work https://www.dfc.gov/what-we-offer/work-with-us/where-we-work https://www.dfc.gov/sites/default/files/media/documents/FY2023%20Annual%20Subproject%20Data_final.xlsx https://www.dfc.gov/sites/default/files/media/documents/FY23%20DFC%20Annual%20Project%20Data_final.xlsx https://www.dfc.gov/our-impact/all-active-projects
5) What are all the countries that are the home country of DFCs direct investments?
See response to Question 1.
6) Will currency hedging services be required?
No, currency hedging will not be required at this time.
7) In the event that a host country has any taxes imposed on DFC investments and assets, how are these to be addressed?
The custodian is expected to comply with any tax and regulatory reporting, withholding, or other requirements as specified by the laws of the jurisdictions for custodians where the investments are being held. DFC will file necessary tax filings and returns that are required by the host country.
8) Are you looking for the Custodian to provide Accounting as well?
Yes, DFC is looking for accounting of activity on the securities held on its behalf.
9) Do you support your LPs internally? Are you looking for the Custodian to provide Accounting on the LPs? Please provide the number of LPs held.
DFC is only seeking accounting on the activities on the securities held on its behalf. DFC does not seek accounting on LPs.
10) Would it be possible for the DFC to share any information on asset types, asset value or transaction volume to be held in custody.
As of September 30, 2024, DFC’s exposure across all products is about $50 billion. Please provide a pricing schedule, if pricing is dependent on asset value and/or transaction volume.
It is anticipated that primarily equity securities and certain fund investments will need to be held on DFC’s behalf, but DFC may require the custodian to hold debt securities or other instruments incidental to DFC’s other authorities as well.
DFC has published certain portfolio data publicly on its investments, subject to certain constraints. These data should be considered illustrative for purposes of the Statement of Work
– DFC's future transaction scope should be expected to deviate from prior transactions.2,3
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