Article 19 Custody and investment risks

1.   A SIPS operator shall hold its own and participants’ assets with supervised and regulated entities (hereinafter the ‘custodians’) that have accounting practices, safekeeping procedures and internal controls that fully protect these assets against the risk of loss in the event of a custodian’s or sub-custodian’s insolvency, negligence, fraud, poor administration or inadequate recordkeeping.

2.   A SIPS operator shall have timely access to its assets and the assets provided by the participants.

3.   A SIPS operator shall evaluate and understand its exposures to its custodian banks, taking into account the full scope of its relationships with each.

4.   A SIPS operator shall establish its investment strategy, which shall be consistent with its overall risk-management strategy and fully disclosed to the participants. It shall review the investment strategy at least annually.

5.   A SIPS operator’s investments under its investment strategy shall be secured by, or be claims on, high-quality obligors. A SIPS operator shall define the criteria for high-quality obligors. Investments shall be in instruments with minimal credit, market and liquidity risks.

6.   Paragraphs 3 to 5 shall not apply to Eurosystem SIPS.