Local custody is custody provided within one country's securities market. A local custodian is a bank that is a direct participant in the national central securities depository and payment system, and that holds securities, settles trades, collects income, handles corporate actions and deals with local tax and registration requirements for its clients. It is distinguished from global custody, in which one bank covers many markets under a single agreement.
Local custodians serve two groups. Domestic investors such as pension funds, insurers and brokers use them directly. Foreign investors usually reach them indirectly: a global custodian or international broker appoints the local bank as its agent in that market, in which case the service is called sub-custody and the local bank forms part of the appointing bank's custody network. The value of a local custodian lies in market knowledge, including settlement practice, account structures, foreign investor rules and relationships with regulators and issuers.