What is Securities Custody?

One of Mission’s core services, Securities Custody, is a term widely used by the securities and banking industries, but is not commonly understood by the investing public.  So, what in the world does it mean?

A “Custodian” is a financial institution (trust company, bank, brokerage firm) that keeps custody of stocks, bonds, and other assets.

The term “Custody” of assets comes from “back in the day” when physical stock and bond certificates were actually held in a bank or brokerage vault.  Of course, as the banking and securities industries became computerized so did the process for holding or having custody of assets. Today, “Custody” is assuming the legal responsibility for someone else’s assets.

Adding in the “Securities” component, it is the holding or safekeeping of a client’s assets and having responsibility for timely and accurate recordkeeping of activity related to those assets, such as:

  • Trade settlement
  • Income collection such as dividends, interest, class action settlements
  • Corporate actions such as stock splits
  • Pricing securities
  • Tax reporting to the IRS and to the client

Once the recordkeeping is complete, we report all transactions and asset data to our clients.

The essence of securities custody?  Every cent where it belongs!

For many clients, Mission handles investment decisions, brokerage trades, and  trade settlements.  Sometimes a client has an outside investment manager who makes decisions about which investments to make. In that case, serving as securities custodian only, Mission will follow the investment manager’s instructions to settle the trade for the correct shares and price on behalf of the client.  Correct reporting from Mission to the client and to the investment manager follows.

Mission serves as custodian for a variety of private and institutional clients, including captive insurance companies.

You can find a brief introduction to our securities custody service line here. If you would like more information about how Mission can help custody your assets, please email info@missiontrust.com or call (520) 577-5559.

By Cyndi Sprague, Vice President, Director of Operations

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