Custodian Definition
Learn the definition of custodian and other ETF terminology from the etf.com glossary.
Learn more about Custodian
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)
