Depository entity

banking

A depository entity is a person or institution that safely stores financial securities or securities for others. Understanding as securities, financial assets and like others, other entities or individuals.

In order to operate in the securities markets, it is necessary for a person or entity to open a securities account. To do this, the client must sign a contract authorizing the custody and administration of their securities. The securities account provided by a financial institution allows trading the financial assets that are present in the financial markets.

Duties of the securities custodian

The depository entity, which guards the titles, must be regulated by the competent body. In other words, only those entities that are legally authorized can be custodians of the securities. This company is in charge of safeguarding the client's titles, in addition to depositing and managing them. They work like a safe. You will charge a price for this service called custody fee.

In this sense, the depositary entity is obliged to exercise the following functions:

  • Keep the client's positions up to date.
  • Facilitate the exercise of the rights derived from the possession of titles.
  • Inform you of the operations that require your instructions.

It is important that the investor knows the details related to the operation of the securities account and the custodian. Among which are knowing the rights that correspond to you and the obligations that you have to face (associated expenses). It is important, as each custodian works in a different way and sets different commissions.

Tags:  derivatives Business economic-analysis 

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