Fifty years ago, global custody was born. The industry was driven by the introduction of the Employee Retirement Income Security Act (ERISA) in the US, which forced pension plan sponsors to segregate investment management and custody of the underlying assets.
The phrase ‘global custody’ itself was coined that same year by Douglas Bonnar at Chase Manhattan Bank to describe a service that Ford Foundation had contracted from the bank to cover its international assets. Back then, the mandate was for safekeeping and settlement services for its $40 million allocation to overseas fund managers. 
Many banks followed suit, as the practice became law, or – at the very least – best practice, around the world.
The plethora of additional services which would follow from custodians in the decades proceeding 1974 may make that initial deal seem simple in its nature, but the industry has evolved exponentially through technology, networks, regulation and – of course – the sheer volume of transactions and enormity of assets in the market since then.
While some may refer to the industry in jest as the ‘unsexy’ side of finance, or even ‘the plumbing’, the relationships formed, the longevity of tenures in the sector and the evolution we have uncovered throughout this celebratory issue are themes which would beg to differ.
The founding of Global Custodian
Fifteen years after the ideation of global custody, the first substantial wave of cross-border investing occurred around 1989, and thus Global Custodian magazine was created, making 2024 a double anniversary celebration.
Our founder highlighted how capital pools across the world were actively seeking diversification outside of their own borders. And, as it turned out, it required more than investment managers to make that happen. It required substantial infrastructure – exchanges and depositories that could deal with cross-border settlement, banks in every country to act as agents, forex desks, new international reporting and corporate actions standards, securities lending capabilities, and, last but not least, the global banks to coordinate the whole process.
He concluded: why not dedicate a magazine to that?
It’s been an absolute pleasure to learn more about the history of this industry and Global Custodian magazine through pulling together this issue. The timeline you’ll find running along the footer of the pages in this edition gives you an idea of the rollercoaster journey the industry has taken to get to this point in time, where the back-office providers have gradually moved into middle-office and even front-office provision.
There have been crises and scandals, acquisitions and collapses, technology successes and failings. The industry has not been immune to geopolitical turmoil, disasters and financial crises, though it has often held its head up high for being a port in the storm through some of those historic moments.
Final thoughts
It’s fitting that BNY reached the landmark figure of $50 trillion of assets under custody this year, while also serving as another epitome of the industry’s growth.
Looking back to the first issue of Global Custodian, I noticed an ad from Swift referring to processing a million messages per day. Fast-forward to 2024, that number is now north of 50 million a day. Another ad from State Street in 1989 makes a reference to having $750 billion in assets under custody back then, which accounts for roughly two quarters of new business these days.
It’s not just the services which have changed, but the sheer volume of transactions and money which is being serviced.
We’ve been delighted to have some of our original supporters from 35 years ago – State Street, JP Morgan and Northern Trust – work with us as partners on this edition, along with newer players who are shaping the future like Digital Asset.
While I don’t have the wordcount to properly do this industry’s history and future justice , here is my takeaway from the months of research and decade of working in this industry: We can talk tech and shiny new products all day, but the fundamentals of the custody business have seldom changed – it’s safeguarding of assets, client service and the relationships that underpin them. Maybe that’s not the sexiest summary of the last 50 years, but it’s been the constant. Some of the names on the buildings have changed, as have the breadth of services, but the custodians of the industry have been a bastion for the global investment universe for 50 years, and the future is as bright as the history is enthralling.
We hope you enjoy this special issue, which our subscribers can read by clicking here.