Depository
Candlefocus EditorThe primary purpose of a depository is to provide safekeeping and transfer of ownership of securities. Most countries have government-operated central depositories, which are highly secure and regulated. Companies that list their securities on exchanges or other markets typically work with a central depository to ensure that securities are properly transferred as they are bought and sold.
Individuals may also use a depository to store their securities, such as stocks, bonds and mutual funds. This can provide protection against risks like market fluctuations and theft, while allowing them to easily access and manage their investments. Private depositories provide additional services such as portfolio management, accounting, insurance, and other services to their clients.
In some cases, depositories also act as custodians for financial securities, holding them for their clients for safekeeping. This allows investors to buy and sell securities without taking ownership of them and provides them with access to the same financial instruments on different markets all around the world.
In conclusion, depositories provide a secure and easy way for individuals and institutions to store and transfer financial instruments (stocks, bonds, mutual funds etc.) all around the world. They also provide custodial services to clients and help to reduce risk and create liquidity in the market. As such, they are a critical part of the global economy, helping to make investments more secure and fostering growth and prosperity.