Custodian

Custodians keep client assets segregated from their own balance sheet, so assets remain identifiable if the custodian fails. Core services are safekeeping, trade settlement against delivery instructions, income collection (dividends and coupons), corporate actions processing, tax reclaims and daily holdings and cash reporting. Global custodians use sub-custodian networks in local markets.

In some regimes the role is extended into a depositary with oversight duties — for example under AIFMD and UCITS in Europe, where the depositary also monitors cash flows and verifies ownership. Private equity and private credit funds often hold non-custodiable assets, so ownership is evidenced through registers, loan agent records or legal documents instead.

Custodian statements are an independent source for position reconciliation and cash reconciliation, and auditors confirm holdings directly with the custodian at year-end. Frequent breaks involve settlement-date versus trade-date differences, income posted net of withholding tax, and corporate action entitlements booked on different dates by the custodian and the fund’s books.