The recent upheavals in the emerging markets of South East Asia has brought custodians to the fore again. With some stockmarkets experiencing slumps of 20% or more with currencies depreciating by similar amounts, vast swathes of assets have been on the move and custodians have had to keep on their toes. It's been very good PR in some ways," says Guy Mason, in charge of Asia Pacific sales and marketing for Morgan Stanley. "We've been very pro-active in getting information back to our clients; telling them about chang-es in regulations and advising them about what they should be doing."

Getting accurate information has not always been easy however, as Diana Chan, Citibank's regional head for world wide securities services, explains. "Crisis, by definition, means that there has not been a lot of clarity in what the authorities have been saying. The challenge for custodians has been to get the best possible information to our customers as quickly as possible."

Malaysia has been the main problem area. The robust, but ultimately counter-productive, defence of both the economy and the stockmarket put up by Prime Minister Mahathir, has been well publicised. What was less appreciated was that the resulting market havoc came hard on the heels of a move from a T+7 to T+4 trading basis to a T+4/5 cycle.

"The market was only just getting into the new settlement system when things blew up," says Geck Teck Goh, head of group custodial services for Standard Chartered Equitor in Singapore. "It was the worst possible time for it to have happened."

While Malaysia has borne the brunt of the crisis, the ramifications have also been felt elsewhere. Custodians report that investors in the Philippines for example, may well have some trouble getting dollars out of the country at present.

Prior to the crisis, investors who wanted to repatriate US dollars had to produce documentation to show that funds were remitted into the country in the first place. Those who didn't have the correct documentation (and the rush of investment in the early 90s meant there were quite a few) could use a 'grey market', which the authorities knew about but allowed to exist. This has now changed and the grey market has been made illegal.

In Thailand, according to Goh, the worries are more of an investment than a custodial nature. He highlights however, the fact that since June ov-erdrafts have no longer been allowed. "The authorities are very strict on this now," he says. "If the money is not there then the trade fails."

On the face of it, regional custodians like Standard Chartered Equitor stand to suffer much more as a result of the current crisis than global custodians. As Mason puts it, "Assets taking flight from the South East Asian economies are likely to turn up somewhere else in the global market place, so the global custodian will still be holding them. Asset values with regional and sub-custodians though, could fall dramatically, hitting their fee income."

Goh however, says that for Standard Chartered Equitor, it is a case of roundabouts and swings. "We have two types of customers - we have a substantial broker dealer business as well as the custody operation. This is activity driven rather than asset value driven, so while we may lose out on the asset side, the increased activity on the dealing side tends to balance this up.""