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Thomas Murray was founded in 1994 by Simon Thomas and Simon Murray. The founders, whose backgrounds lay in banking and financial markets as well as consultancy, had identified an opportunity to help institutional investors manage and control mounting costs and risks in the global securities services industry. As cross-border investment expanded in the 1980s and 1990s, public and private pension funds and other institutional investors in Australasia, Europe and North America had appointed global custodian banks to safekeep and service their assets in multiple markets around the world. These global custodians usually appointed a local agent bank, or sub-custodian, to look after the assets in the local market. Within those local markets, sub-custodian banks were obliged to exchange cash for securities to settle trades executed by local brokers, and to register changes of ownership with local registrars or depositories. For institutional investors, the net result was multiple intermediaries, and a complex series of risks.
It was to help institutional investors to address those risks that Thomas Murray was established. The ambition of the new firm was to help them identify and then manage the host of post-trade risks they were running in the international securities markets. Though Thomas Murray has since its inception advised institutional investors on the selection of global custodian banks to safekeep and service their assets, including an assessment of the quality of their sub-custodians, the firm was never content to offer neutral advice on the appointment of banks only. Its founders also recognised that it was necessary to monitor the subsequent performance of banks, and report the findings back to clients. Since 1995 Thomas Murray has offered a custodian monitoring service that tracks the costs and operational performance of custodian banks, as well as the risks they represent to institutional investors and run on behalf of institutional investors.
The founders of Thomas Murray also recognised that in the majority of securities markets around the world, assets are also registered and held in physical vaults or digital accounts at central securities depositories (CSDs), and that these institutions also perform a growing range of asset-servicing functions. In 1999 Thomas Murray launched its CSD service, which monitors the risk represented by around 150 CSDs in around 100 countries. However, local market risks are not confined to CSDs, but encompass the central counterparties (CCPs) used to eliminate counter-party credit risk and net trades, the payment systems used to transfer cash, the broker-dealers that execute trades and often hold assets, and the web of laws, regulations, taxes and market practices that distinguish risk in one market from those in another. This is why Thomas Murray has since 1999 provided a subscription-based guide to the local market rules for trading clearing and settling securities transactions in over 100 markets around the world. The guide is supported by daily updated news flashes on developments in any market which have an impact on risk.
Thomas Murray also provides public and private ratings of global custodian banks, domestic custodian banks, sub-custodian banks and CSDs, and risk ratings of the entire market infrastructures in different countries around the world. The global custodian, domestic custodian and sub-custodian bank ratings, which date back to 1997, enable institutional investors to assess the operational as well as the counterparty risk to which a particular bank exposes them. CSD ratings, which were first introduced in 2006, measure the range and degree of risk to which institutional investors are exposed when assets are held within a CSD. For both custodian banks and CSDs, the ratings also provide management with an opportunity to benchmark their performance against best practices in the industry. The ratings all use the standard AAA through C ratings notations, plus an “outlook” that gives users an idea of whether the level of risk is increasing or decreasing. Subscribers are notified of changes in risk ratings on a daily basis. In 2005, as institutional investment in alternative asset classes increased, the ratings service was extended to cover the fund accounting and investor services provided to institutional investors by hedge fund administrators.
Today, Thomas Murray provides comprehensive and data-driven selection, monitoring and rating services for institutional investors exposed to global custodian banks, sub-custodian banks, domestic custodian banks, fund administrators and CSDs, plus detailed tools for managing the hidden risks represented by the laws, regulations, taxes and market practices in over 100 markets. These services are delivered by more than 40 experienced men and women drawn from the global custody, asset management, ratings, banking, consultancy and investment banking industries. Thomas Murray opened an office in Toronto in 2006 and Melbourne in 2007 to better service its clients in North America and Australasia. The firm is still majority owned by its directors and staff, with a minority in the hands of a small group of private institutional and individual shareholders.
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