DEFINITION of 'Custodial Receipt'

A receipt representing a security held by a custodian or transfer agent. As such, it represents ownership of the security by the depositor. A security in custodial receipt form is usually non-transferable.

BREAKING DOWN 'Custodial Receipt'

In the municipal bond market, custodial receipts refer to securities that represent the right to receive future principal and interest payments on municipal obligations underlying these receipts. In a typical custodial receipt arrangement in this market, an issuer or owner of a municipal obligation deposits it with a custodian in exchange for two or more classes of receipts.

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RELATED FAQS
  1. Do small banks ever act as custodians?

    Examine why smaller custodian banks struggle to compete with larger custodian banks because of economies of scale and existing ... Read Answer >>
  2. What is the difference between a custodian bank and a mutual fund custodian?

    Read about the difference between a normal custodian bank and a mutual fund custodian, why mutual funds use custodians and ... Read Answer >>
  3. Are custodians barred from engaging in commercial banking?

    Learn how bank custodians are allowed to engage in commercial banking as well as other investment activities according to ... Read Answer >>
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    Learn why a company might choose to utilize global depositary receipts for financing, along with the many other benefits ... Read Answer >>
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