Sweden's Första AP-fonden (AP1) is reviewing its custody arrangements and have set stringent new conditions for applicants.
Any global custodian applying must have been rated by S&P, Moody's or IBCA and have a minimum rating of A/A1 or A. They must also have a minimum of USD1 trillion under custody already.
While sub-custodians will be permitted under the contract, AP1 itself does not want to deal with them, and the global custodian must indemnify AP1 against any potential losses if a sub-custodian becomes insolvent.
The SEK181 billion fund will also require details of the custodian's other clients, divided into bands according to the value of assets under custody. It will require more information on Swedish and other Nordic countries.
The successful custodian must also have a European operations centre, and be open for the same hours as the MSCI All Country World index.
Custodians thought to be in the running include J.P. Morgan, BNY Mellon, Citi, Northern Trust and State Street.
