What Are Custodians?
Custodians help in reducing systemic risk in the capital market. (Photographer: AbsolutVision on Unsplash)

What Are Custodians?

This is a series of explainers to educate and inform new investors. In association with Dun & Bradstreet India as knowledge partner.

Custodians: Definition, Meaning & Basics

Custodians are SEBI-registered market intermediaries, primarily responsible for safe-keeping of securities (such as shares) of their clients. They offer a variety of services to clients, such as corporate action reconciliation, post-trading services of clearing and settlement.

Custodians, as an important market intermediary, help in reducing systemic risk in the capital market. They also facilitate issuance of cross-border securities, such as American Depository Receipts and Global Depository Receipts.

Custodians are appointed mostly by institutional clients to avail the above-mentioned services. They charge fees from their clients for providing these services, which are mostly based on value of assets held by them on behalf of their clients.

Some of the leading custodians globally are Bank of New York Mellon Corp., State Street Corp., etc. In India, the leading custodians are Stock Holding Corp. of India, HDFC Bank Ltd., ICICI Bank Ltd., etc.

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