A custody service is another name for the safekeeping and administration of assets provided by a bank custodian or similar institution on behalf of its clients. The custodian holds securities, cash or other assets on its own books or through a central securities depository, keeps them separate from its own assets and handles the routine tasks that come with owning them. The main entry explains the role in full.
What a custody service includes
Basic custody covers safekeeping of assets and the settlement of purchases and sales. Most custodians also provide asset servicing: collecting dividends and interest, processing corporate actions such as rights issues and mergers, reclaiming withholding tax and reporting holdings and valuations. Global custodians add foreign exchange, securities lending and cash management, often working through a network of sub-custodians in local markets.
Related terms describe custody for particular clients or assets. A fund custodian holds the assets of an investment fund and, in many jurisdictions, also checks that the fund manager follows the fund's rules. A digital asset custodian safeguards cryptocurrencies and tokens, mainly by protecting the private keys that control them. In each case the central promise is the same: client assets are kept safe, recorded accurately and protected if the custodian itself fails, usually by keeping them segregated from the custodian's own assets.