More on Financial Custodian

A custodian is a financial institution that holds customers` financial assets (e.g. money) for safekeeping in order to minimize the risk of their theft or loss. A custodian holds securities and other assets in electronic or physical form. Since they are responsible for the safety of assets and securities that may be worth hundreds of millions of dollars, custodians generally tend to be monitored and audited by reputable firms and work only with AAA rated banks. They are closely monitored by deferral as well as local authorities to avoid fraud, errors, and insolvency. Custodians do not engage in commercial and traditional banking services or give out interests or credits to its clients.


Large institutions, hedge funds, high net worth investors and private individuals choose to have a custodian relationship that is separate from Broker trade execution services in order to benefit from greater safety of their funds, while still being able to use the services of an FX Broker to trade selected assets from his personal trading account.


For brokers, fund managers and individuals seeking deposit protection against the risk of their broker becoming insolvent and only getting back cents on the dollar, we strongly recommend opening a custodial account (through a Tri-Party contract agreement). Essentially, a custodial account is a financial escrow account established in the client’s name and administered by a responsible person or entity, known as a custodian, who has a fiduciary obligation to the beneficiary. For qualified counterparties, this offers a secure client funds solution through a deposit or custodial bank account. In this structure, a deposit or custody account is opened in Client’s name and maintained for the benefit of the client.



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