DEFINITION of 'Custodian'

A financial institution that holds customers' securities for safekeeping so as to minimize the risk of their theft or loss. A custodian holds securities and other assets in electronic or physical form. Since they are responsible for the safety of assets and securities that may be worth hundreds of millions or even billions of dollars, custodians generally tend to be large and reputable firms.


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In addition to holding securities for safekeeping, most custodians also offer a variety of other services including account administration, transaction settlements, collection of dividends and interest payments, tax support and foreign exchange. The fees charged by custodians vary, depending on the services desired by the client. Many firms charge custody fees payable quarterly that are based on the aggregate value of the holdings.

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  1. What is the difference between a custodian bank and a self-directed retirement account ...

    There does not need to be a difference between a custodian bank and a self-directed retirement account custodian. All self-directed ... Read Full Answer >>
  2. What factors must a company consider before establishing an American Depository Receipt ...

    Foreign companies can tap the U.S. capital markets through American Depositary Receipt (ADR) programs. ADR programs are either ... Read Full Answer >>
  3. Are custodians barred from engaging in commercial banking?

    Custodians are financial institutions that maintain the safety of assets deposited with the institutions. Custodians typically ... Read Full Answer >>
  4. Do small banks ever act as custodians?

    Generally speaking, the market for custodian bank services is dominated by large banks. The best banks tend to grow in size, ... Read Full Answer >>
  5. What kinds of expenses are included in the expense ratio?

    Investors who utilize mutual funds or exchange-traded funds (ETFs) in their investment strategies must take into consideration ... Read Full Answer >>
  6. How does a depository bank benefit from issuing an ADR for a foreign company for ...

    For domestic investors the benefits of increasing the portion of their portfolio that they invest in foreign companies is ... Read Full Answer >>
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