# Custodian

*Markets & Instruments — Finicade finance glossary*

A custodian is the bank that holds securities safely on behalf of their owner, handling settlement, dividends, corporate actions and record-keeping. The point of the arrangement is legal separation: client assets are segregated, so a failing broker or manager cannot be paid from them. The absence of an independent custodian is a defining feature of nearly every major investment fraud, Madoff included, which is why 'who holds the assets' is a first-line due-diligence question.

**Also known as:** custody bank, safekeeping agent

**Related terms:** [Brokerage Account](https://finicade.com/glossary/brokerage-account), [Settlement (T+1)](https://finicade.com/glossary/settlement), [Clearing House](https://finicade.com/glossary/clearing-house), [Counterparty Risk](https://finicade.com/glossary/counterparty-risk), [SIPC](https://finicade.com/glossary/sipc)

Source: https://finicade.com/glossary/custodian