Economics Financial Markets Questions
The role of custodian banks in financial markets is to safeguard and hold financial assets on behalf of institutional investors, such as mutual funds, pension funds, and hedge funds. They provide services such as safekeeping of securities, settlement of trades, collection of dividends and interest payments, and asset servicing. Custodian banks also offer reporting and record-keeping services, as well as foreign exchange and cash management services. Their primary function is to ensure the safe and efficient custody of assets, reducing the risk of loss or theft for investors.