Legal Definitions - custodian bank

Definition: A custodian bank is a financial institution that acts as a custodian for a clearing corporation and is supervised and examined by a state or federal authority.

Example: For example, if you invest in stocks or bonds, your custodian bank will hold those securities on your behalf and ensure that they are safe and secure. The custodian bank will also handle any transactions related to those securities, such as buying or selling them.

Explanation: The example illustrates how a custodian bank acts as a safekeeper for securities and handles transactions related to those securities. The custodian bank is responsible for ensuring that the securities are safe and secure and that any transactions related to them are handled properly. This is an important role in the financial industry, as it helps to ensure that investors' assets are protected and that transactions are conducted in a secure and efficient manner.