Federal Home Loan Securities Safekeeping Guide 2025

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Securities safekeeping operations include clearing securities trade settlements and operating as a trustee and custodian for securities pledged as collateral for either advances or derivative transactions.
Custodian is responsible for carrying out settlements, recording receipts, keeping and maintaining records, and managing custody accounts of the schemes on behalf of the NPS Trust.
What Is Safekeeping? Safekeeping, also known as safe keep, is the storage of assets or other items of value in a protected area. Many individuals choose to place financial assets in safekeeping. To do so, individuals may use self-directed methods of safekeeping or the services of a bank or brokerage firm.
Unlike a typical retail bank that collects deposits, the FHLB system issues a range of debt securities via its jointly owned Office of Finance to collect the funds necessary to make member advances. Specifically, the Office of Finance issues consolidated bonds and discount notes.
/ˈseɪfˈkipɪŋ/ protection from harm or loss: My friend left her jewelry with me for safekeeping when she went on vacation.
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Since 2022, when it started hiking rates, the Fed has also been steadily shrinking its bond holdings. It has allowed principal and interest payments on mortgage-backed securities (MBS) to roll off its balance sheet without reinvestment, a process known as quantitative tightening (QT).
The safekeeping and custody exception in Section 3(a)(4)(B)(viii) of the Exchange Act permits banks to engage in a variety of securities activities in connection with their customary custody and safekeeping activities, such as, for example, clearing and settling securities transactions; exercising warrants and other
Most safekeeping entities operate on an actual receipt of funds basis, subject to delayed credit until securities transactions actually settle. Bank custodians typically operate on a contractual settlement basis and offer comprehensive reporting, including roll-ups and customizable reporting options.

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