Include alternatives to significant third parties in their contingency planning to reduce risk to account beneficiaries from a third party s failure to meet its contractual obligations. A fiduciary s services may be adversely affected if counterparties are unable to meet their legal or contractual obligations because of Year 2000 problems. For example, if a counterparty is unable to settle a securities transaction, the account beneficiary may suffer harm. A financial institution may be exposed to counterparty risk in a variety of fiduciary activities including custodial services, retirement services, and trustee relationships. Include alternatives to fiduciary counterparties in the institution s Year 2000 contingency plans to reduce risk to account beneficiaries from counterparty failure.
Some financial institutions offer transfer agent services to clients.
Financial institutions that offer these services should ensure that they address any Year 2000 problems, particularly those associated with use of automated transfer agent systems. Some potential Year 2000 concerns with a transfer agent s computer programs include the failure of a system to accept securities transfers and difficulties calculating dividend payment dates for equity securities and maturity dates for debt securities. Client Disclosures Legal documents establishing fiduciary relationships require a fiduciary or trustee to render specific fiduciary services. The action a particular financial institution takes to manage these risks depends on the types of fiduciary services offered by the institution and the types of assets managed for account beneficiaries. 2000 Readiness, dated March 17, 1998.