“CUSTODY ACCOUNTS” in Foreign Banks?
Is anyone familiar with Custody Accounts with Foreign Banks? I opened an account in a foreign country to trade securities directly on their exchange through their broker. But because I am a foreign investor they hold my deposit funds in a Custodial Account (not a money market account like in the USA). The purpose of the Custody Account is to give the Bank/Brokerage absolute legal control on what happens to my holdings. The Custody Account allows them to hold all funds and securities in it. MY QUESTION TO ANYONE WHO HAS EXPERIENCE: Will the Custody Account Interest Rate be combined with the (Security) Rate of Return? In other words, can i multiply the foreign interest rate by the rate of return (Security)?
Only your bank can answer that question. Email them.
You are probably familiar with the way it is done in the US. I’ve always used a brokerage and not a bank, but generally, the only way to earn interest in addition to what is traded through the account, is to buy a T-Bill. This is in a margin account. So if I’m trading futures and options, the only way the account can increase in value is through gains on my trading, unless I’ve purchased a T-Bill with the margin money.
But even in the US, lots of banks and brokerages do it differently. You have to ask them.