Which of the following actions is NOT a custodial requirement of the Government Securities Act?
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A. B. C. D.A
The Government Securities Act (GSA) was enacted in 1986 to regulate the custody, transfer, and settlement of government securities. The Act sets out a number of custodial requirements that banks and other financial institutions must comply with to ensure the safekeeping of government securities.
A custodial requirement is a legal obligation to protect and preserve the assets entrusted to a bank or other financial institution by its clients. Custodial requirements are designed to ensure that the assets remain secure and accessible to their rightful owners at all times.
Let's examine each of the options listed in the question and determine which of them is not a custodial requirement under the Government Securities Act.
A. Keeping possessory government securities in a vault with dual control access
This is a custodial requirement under the GSA. Banks are required to keep possessory government securities in a vault with dual control access to ensure that the securities are secure and protected from theft or unauthorized access.
B. Segregating government securities from bank assets
This is also a custodial requirement under the GSA. Banks are required to segregate government securities from their own assets to ensure that the securities are not commingled with other assets and are readily identifiable as belonging to their clients.
C. Keeping government securities free of liens, claims, and charges.
This is a custodial requirement under the GSA. Banks are required to ensure that government securities are free of any liens, claims, or charges that could impair the ability of their clients to exercise their rights as owners of the securities.
D. Issuing safekeeping receipts for securities
This is not a custodial requirement under the GSA. While banks may issue safekeeping receipts for securities as a matter of good practice and to provide evidence of custody, the GSA does not require them to do so.
In summary, the answer to the question is D. Issuing safekeeping receipts for securities is not a custodial requirement under the Government Securities Act.