A custody chain is the sequence of account-holding intermediaries through which an investor holds a security. At the top, the whole issue is recorded at a central securities depository. A local custodian holds an account there; a global custodian holds an account with the local custodian under a sub-custody arrangement; and an asset manager, broker or wealth platform holds an account with the global custodian on behalf of the end investor. Each link records only its direct client, often in a pooled omnibus account.
The chain makes cross-border investing practical, but it separates the investor from the issuer. The name on the issuer's register is usually a nominee, while the investor is the beneficial owner. Dividends, notices and votes must pass through every link, which adds delay and cost, and the investor depends on each intermediary's record-keeping and solvency. Rules on shareholder identification aim to let issuers see through the chain.