Custodian Definition

Custodian Definition

Learn the definition of custodian and other ETF terminology from the glossary.

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Edited by: Staff

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A custodian in the context of ETFs is a financial institution responsible for safeguarding and managing the fund's assets. The custodian plays a crucial role in ensuring the security and integrity of the ETF's holdings, holding them in safekeeping and providing services such as settlement of trades. While the fund's management team makes investment decisions, the custodian, acting independently, holds and administers the assets. This separation of duties adds a layer of investor protection and transparency. Custodians also play a vital role in supporting the ETF's creation and redemption process, facilitating the efficient operation of the fund.

Related Terms

Creation and Redemption Mechanism, ETF Issuer, Authorized Participant (AP)

ETF Glossary is’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.