Also found in: Dictionary, Thesaurus, Medical, Legal, Idioms, Encyclopedia, Wikipedia.
Related to custody: Child custody
A service in which a brokerage or other financial institution holds securities on behalf of the client. This reduces the risk of the client losing his/her assets or having them stolen. They are also available to the brokerage to sell at the client's demand. Like a bank, custody provides an investor a place to store assets with little risk. Unlike a bank, custodians are not allowed to use the items in safekeeping for their own ends. Assets in custody are not fungible for the brokerage because they remain on the client's name. For this reason, these institutions normally charge custodial fees for safekeeping services.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
A safekeeping service that a financial institution provides for a customer's securities. For a fee, the institution collects dividends, interest, and proceeds from security sales and disburses funds according to the customer's written instructions.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.