Custodians should publish clear, measurable metrics that let clients, counterparties, and regulators assess safekeeping, operational integrity, and solvency. Academic work on liquidity risk by Douglas W. Diamond University of Chicago Booth School of Business and Philip H. Dybvig Washington University in St. Louis explains why transparent reporting reduces the likelihood of runs or sudden withdrawals: when stakeholders can verify holdings and controls, confidence is stronger and systemic fragility is lower.
Core financial and operational metrics
Custodians need to disclose aggregate asset holdings by type and jurisdiction, the frequency of reconciliation between ledger and external records, and the methods used for valuation and pricing. Regulators such as the Basel Committee on Banking Supervision emphasize the importance of liquidity and operational risk disclosure to enable market discipline and supervisory review. Transparency about settlement performance, including average settlement times and failed trades, exposes operational bottlenecks that can cascade into market stress. For digital-asset custody, audited proof-of-reserves reports and the split between hot, warm, and cold storage are essential, with energy and environmental impacts disclosed when relevant to cold-storage practices.
Risk governance, legal and client-centred metrics
Beyond holdings, clients require visibility into legal segregation, the use of subcustodians, and the enforceability of client title across territories because insolvency regimes vary by country and cultural expectations for disclosure differ. The International Organization of Securities Commissions recommends clear rules for client asset protection; publishing the names and jurisdictions of subcustodians and the results of independent custody audits helps verify those protections. Operational security metrics such as frequency and severity of security incidents, third-party penetration test results, and details of insurance coverage limits and exclusions translate technical risk into client-relevant terms. Governance metrics should include audit opinions, board-level oversight structures, and mean time to remediate critical findings, which directly affect client trust and the custodian’s social licence to operate in different markets.
Transparent publication of these metrics reduces information asymmetry, limiting runs and legal disputes, while promoting cross-border trade and investor protection. Nuanced reporting that accounts for local legal frameworks, cultural expectations about privacy, and environmental trade-offs enables stakeholders to evaluate custody services in context rather than by headline numbers alone.