A custodian or custodian is a person or institution that securely holds financial securities or securities for others. Understanding as financial assets and as others, other entities or individuals.
In order to operate in the securities markets, it is necessary for a person or entity to open a securities account. For this, the client must sign a contract authorizing the custody and administration of their securities. The securities account provided by a financial entity allows trading of financial assets presented in the financial markets.
Functions of the custodian of securities
The depositary entity, which guards the securities, must be regulated by the competent body. That is, only entities that are legally authorized can be custodians of the securities. This company is responsible for safeguarding the client’s titles, as well as depositing and managing them. They work as a safe. For this service you will charge a price called custody commission. The depositary entity is obliged to exercise the following functions:
- Have up to date customer positions.
- Facilitate the exercise of the rights derived from the possession of titles.
- Inform you of the operations that require your instructions.
It is important that the investor knows the details related to the operation of the securities account and the custodian. Among those who are aware of their rights and the obligations they have to face (associated expenses). It is important, since each custodian works in a different way and establishes different commissions.