A depository bank (

U.S. The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...

usage) or depositary bank (predominantly EU usage) is a specialist financial entity which, depending on jurisdiction, facilitates investment in

securities market Security market is a component of the wider financial market where securities can be bought and sold between subjects of the economy, on the basis of demand and supply. Security markets encompasses stock markets, bond markets and derivatives mar ...

Depository banks in the United States

In the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...

, a depository is a bank organized in the US which provides all the stock transfer and agency services in connection with a depositary receipt program. This function includes arranging for a

custodian Custodian may refer to: Occupations * Janitor, a person who cleans and maintains buildings * Goalkeeper, in association football * Fullback, in rugby, also called a sweeper * Legal guardian or conservator, who may be called a custodian in some ...

to accept deposits of ordinary shares, issuing the negotiable receipts which back up the shares, maintaining the register of holders to reflect all transfers and exchanges, and distributing

dividend A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-in ...

s in

U.S. dollars The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...

Depositary banks in the European Union

In the EU, a depositary is a financial institution which provides

fiduciary A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for exampl ...

/custodian services to

Investment Funds An investment fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such as reducing the risks of the investment by a significant percentage. These advantages inc ...

authorised to trade in any EU jurisdiction as a

UCITS The Undertakings for Collective Investment in Transferable Securities Directive (UCITS2009/65/ECis a consolidated EU directive that allows collective investment schemes to operate freely throughout the EU on the basis of a single authorisation fro ...

Alternative Investment Fund An alternative investment, also known as an alternative asset or alternative investment fund (AIF), is an investment in any asset class excluding stocks, bonds, and cash. The term is a relatively loose one and includes tangible assets such as ...

. Both the UCITS (2009/65/EC) Directive and AIFMD (2011/61/EU) Directives require that authorised investment funds have a depositary appointed to the fund to safekeep the assets of the fund (whether by taking them into custody, or record-keeping and verifying title of them) and oversee the affairs of the fund to ensure that it complies with obligations outlined in relevant laws and the fund's constitutional documents. Depositaries have been subject to significantly increased regulation in the EU in recent years and the proposed “UCITS V” directive proposes to continue this trend by imposing a “ strict” standard of depositary liability for the loss of fund assets, other than in certain circumstances.

References

{{DEFAULTSORT:Depository Bank Banking Legal entities