BIS central bankers’ speeches  1  Supervisory issues relating to provision of custody services As is the case for any financial product, there are a number of risks associated in the delivery of custody services. These risks can be broadly, classified into operational, financial and legal risks. Focus is therefore being laid on financial risk management, capital adequacy, and operational risk mitigation.
That said, the increasing complexity of these instruments raises a host of policy questions regarding, to name just a few items, financial education for households, and, for financial institutions, operational procedures, valuation practices, accounting treatments, disclosure policies, and capital provisions. Moreover, these financial innovations often rely on the ready availability of market liquidity, an assumption that likely will not hold during a financial crisis.