Does anything in ERISA (or otherwise) prevent an investment manager who manages plan assets from using a foreign clearing entity to hold stock or payment for stock while the trade clears? As background, this question relates to certain foreign countries' trading practices/custom where trades take 2-3 days to settle. Specifically, the stock being sold and the payment for the stock must be deposited in the clearinghouse on the first day after the day of trade (T +1), and the trade is then settled on T + 2 or T + 3 (depending on the country).

Some trust agreements I have seen appear to require that payment and delivery of securities coincide (requiring the Trustee to "deliver plan investments upon receipt of payment"). So while we could amend this provision of the trust agreement, I am wondering if there is some other less-obvious ERISA requirement that would prevent an investment manager from complying with these kinds of foreign trading customs.

I would greatly appreciate any thoughts on this issue. Thanks.

A trustee can’t ever allow trust assets to be outside of its possession or control. For a plan that’s governed by ERISA’s Part 4, a fiduciary (including a plan’s trustee or investment manager) must not maintain the indicia of ownership of any plan asset outside the jurisdiction of the United States’ courts. ERISA § 404(b). There are some variations with some financial-responsibility conditions. 29 C.F.R. § 2550.404b-1. A recent ERISA Advisory Opinion describes a system of sub-custodianships under which every sub-custodian is a branch, subsidiary, or agent of a U.S.-domiciled bank. http://www.dol.gov/ebsa/pdf/ao2008-04a.pdf