TECHNICAL NOTE IMPROVEMENTS IN NOMINEE ESTIMATES
INTRODUCTION
1 In an international investment context, nominees/custodians can be appointed by a non-resident entity (the nominator) to act on its behalf in a limited or otherwise specific manner. For instance, they can act to provide services to non-resident investors by not only providing market access to Australian securities, but by also mitigating risk, lowering the costs and improving the efficiency of investing through scale and expertise. In addition, the nominee/custodian is the entity in whose name the securities are recorded and held (under a custodial agreement), with the actual, or beneficial, owner being the non-resident investor entity. They therefore also act as record keeper in transactions and holdings, and invest heavily in technology infrastructure to support their investors' information needs regarding strategy, performance, or the regulatory and tax reporting requirements of their holdings.
2 Consistent with the recommendation of the International Monetary Fund's Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6) the ABS treats the securities held by nominees as being owned by the non-resident investor. The securities are classified as Portfolio Investment Liabilities or Financial Derivatives.
3 The Survey of International Investment collects quarterly individual line-by-line security information from nominee companies who facilitate the purchasing and selling of Australian securities on behalf of non-resident clients. The line-by-line security information from these nominee institutions provides detailed information on equity and debt securities, all types of derivatives (options, warrants, entitlements, rights, etc.), and interest and dividends issued by Australian companies and attributable to non-resident holders of securities. The information collected allows for the tracking of security purchases by purchasing country (security-by-country basis). The derived estimates exclude Australian equity and debt securities domiciled overseas and foreign equity and debt securities domiciled in Australia, which are out of scope.
CHANGES TO THE COMPILATION AND AGGREGATES
4 As a consequence of a changed reporting form, more detailed data are available to the ABS for the compilation of estimates from the nominee collection. The new collection form provides a full reconciliation statement of the change in stock in securities, with detailed description of flows effecting the change. All stock and flow estimates are now derived from direct reporting. The extra information available from the collection brings the position derived estimates fully in line with the BPM6 framework.
5 The migration of derived estimates to BPM6 standards has allowed for updated sectoral allocation of issuers of securities in line with the Standard Economic Sector Classifications of Australia (SESCA), 2008 (cat. no. 1218.0) and the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0). The detailed collection has also provided information to generate estimates for a full and accurate counterpart country schedule for holders of securities through nominee institutions.
6 The revised estimates include revisions to both stock and flow data in this issue. Changes to the income data associated with these revisions will be included in a future issue of this publication. These changes to the nominee collection will impact the financial account in the Balance of Payments and International Investment Position, Australia (cat. no. 5302.0), the International Investment Position, Australia: Supplementary Statistics (cat. no. 5352.0) and consequentially other ABS publications which use these data or aggregates incorporating these data in their estimates.
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