How to protect assets from international disruption

Investing / Others
62

True, it seems Xtrackers/DWS use State Street as custodian.
Amundi on the other hand is using HSBC, which is British.

Are there other ETFs’ provider that use European custodians?
Is choosing an European custodian really going to save you?

63

This would be a rather attractive proposition. I just checked that Australia seems to have a 10% DTT with Japan vs Ireland’s 15%.

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64

its not about the custodian as such. American shares will ALWAYS be held by a Custodian under US Jurisdiction. Its not realy practical and hardly never happens that Shares that were listed in one country, were held at a custodian at another country. The only exception here is if shares had a dual listing - then, the ETF could technically pick and choose through what custodian-country the shares were held.
So, its completely meaningless what ETF Issuer you use. The question is - how does the Local US Custodian See and Declare the Assets. Are these held by an IE, LU, CH, CA or AU ETF…

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65

To be honest, given the current environment we are in, I see a combination of Canadian and Australian ETF as an equal good alternative to IE ETF (talking about US Shares only)…

66

Considering the news of the 11th airborne moving to minneapolis, i fear escalation to greenland is imminent. I also am concerned that some kind of preemptive attack to force EU to stay quiet may not be unthinkable.

67

Didn’t he TACO just this afternoon at Davos?

68

My understanding from conversations with Canadian friends (who have more knowledge about the Arctic and Arctic fighting capabilities than I do) is that the 11th airborne is the only US unit trained for Arctic fights, the US usually relying on their NATO allies for the defense of the Arctic. My friends’ theory is that sending specifically the 11th airborne into Minneapolis is a way for the Pentagon to make sure they aren’t available to invade Greenland and that that may postpone potential plans for the invasion.

I’m no specialist on the topic and don’t follow it closely but the sources I’ve found online seem to corroborate that.

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69

Sounds like it, and I can imagine how expensive a TACO in Davos may be…!

70

Sending arctic warfare paratroopers to an urban environment for essentially policing work is scary for entirely different reasons…

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71

In a city that doesn’t want them and with a history of protesting from up close federal law enforcement sent for probably similar reasons, with who knows what orders and rules of engagement.

72

Yes, but keep in mind… the locals have Jesse!

I ain’t got time to bleed (whole scene)

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73

To me it seems like risk of confiscation and sanctions is a bit limited because it most likely will be driven by a military action as pre-req against Europe.

Having said that, not sure what all these events mean for US companies. Specially the firms which can be seen as providing services critical for national security and economic activities (payments , cloud , AI, chips etc) . And if Europe continues to be dependent due to lack of will or ability, it’s pretty clear that emerging markets wouldn’t do that. And that’s where most people in world live.

Not saying complete isolation, but some sort of market share loss to Chinese stack is very much possible

74

I found this Australian broker Selfwealth owned by Syfe (Singapore):

Transactions cost ~10 AUD flat, no custody, etc. fees. ASX shares (ETFs) held in your name through CHESS. Syfe says you can open as a foreigner abroad (link). Also they claim to accept Wise and Revolut (link).

Alternatively, this start up which specifically also markets itself to foreigners abroad:

But they are a robo advisor, with the expected medium management fees (e.g. 0.6% at below 10’000 AUD). Also you can’t freely choose your ETFs.

Wikipedia has a list with the biggest ETFs listed on ASX for some reason, but it is not up to date. Careful, some of them are wrappers for a US ETF (e.g. ASX:VEU wraps NYSE:VEU).

Strong candidates would be:

  • EXUS (Solactive Developed ex-US ex-AU, Betashares)
  • VAE (FTSE Asia ex-JP ex-AU ex-NZ, Vanguard)
  • BEMG (MSCI EM, Betashares)

Betashares is Australian.

Investing for a child from abroad
75
76

With Russia we also saw freezings at the bank / brokers level?

Not sure. If you hold ETFs there is always a chain of rights until you reach the stocks. Some samples of these chains. Picking US, German and France stocks as samples:

VWCE (Xetra) via DeGiro

  • You (EU)
    • DeGiro Clearstream Customers depot (Germany)
      • VWCE

Not public info. But DeGiro support confirmed to me that they have a direct customers depot at Clearstream.

VWCE fund itself (EU)

  • BBH Trustee Services (Ireland) Limited (EU)
    • BBH & Co (US)
      • DTC (CSD)
        • US stocks
      • BNP PARIBAS S.A. German Branch (German)
        • Clearstream (CSD)
          • German stocks
      • BNP PARIBAS S.A. (France)
        • Euroclear (CSD)
          • French stocks

BBH info can be found here. Seems to be that everything goes via the US first.

WEBN via IBKR

  • You (EU)
    • IBKR IE (EU)
      • IBKR LLC (US)
        • IBKR LLC Clearstream Customers depot (Germany)
          • WEBN

Not public info. But IBKR support confirmed to me that everything is custodied via IBKR LLC. IBKR LLC has a direct Clearstream depot.

WEBN fund itself (EU)

  • HSBC Bank PLC (UK)
    • HSBC Bank USA (US)
      • DTC (CSD)
        • US stocks
      • HSBC Continental Europe S.A. (German)
        • Clearstream (CSD)
          • German stocks
      • CACEIS Bank France (France)
        • Euroclear (CSD)
          • French stocks

State street
Local branches of big US custodians seem to let everything flow via the US. State street is also a big custodian in UCITS ETF land. Used a lot by iShares, DWS and of course SPDR. Looks it works the same there as with BBH. Subcustodians | State Street. Ok, LU document, but guess it works the same for their Irish branch.

My take

It depends where in the chain would be looked. Europeans would be seen as “US” in quite some places in the custodian chains above. Using a real European custodian like HSBC could help to keep your EU stocks fully in the EU. But these aren’t used a lot. Also be aware what your own broker does :slight_smile:

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77

WEBN is lending their shares afaik i.e. the shares could well be with a US entity.

I only see security custodians mentioned in the discussions. What about cash flows, if the US forces SWIFT to sanction a country, it could also be cut off.

I remain of the view that it’s not possible to have ETF investments out of reach of US sanctions.

EDIT: And it’s not necessary to implement such a layer of protection. For the vast majority here it should remain VT and chill.

EDIT 2: The world is gonna be alright. Enjoy the weekend

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78

True, shouldn’t be a large part of the portfolio though. Haven’t seen data on how much Amundi lends out. With enthousiastic lender BlackRock it’s around 8%-12% of the assets for for example IWDA.

79

Is there a way to find out which clearing house a stock or ETF is held at? For example, if I want to find out which American clearing house manages VT (ETF), how would I find that out?

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80

You can find this in the Statement of additional information (SAI): Vanguard - Forms and Literature. Look for “custodian”.

It’s State Street Bank and Trust Company for VT. Stocks are held at the Central Securities Depositories (CSDs) of the respective countries. Most custodians don’t have direct accounts at all these CSDs, they use sub custodians. The custodians generally publish a list of used sub custodians on their website. A sub custodian might use another sub custodian before arriving at a CSD.

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81

Hi everyone,

With the current geopolitical climate and the US increasingly using economic pressure as a negotiation tool (tariffs, sanctions, threats around trade or even strategic assets like Greenland, etc.), I’m wondering how you, as Swiss investors, assess the realistic risk of asset freezes at US-based brokers like IBKR.

More specifically:
Do you see a credible scenario where, in a conflict or negotiation involving Switzerland, US authorities could pressure brokers to freeze accounts of Swiss residents (not targeted sanctions, but broader leverage)? Or do you consider this risk negligible and comparable to what we already accept with large international banks?

I’m not looking for alarmism, just a sober risk assessment from a long-term, diversified investor perspective.

Curious to hear your views. Thanks!