In the days of physical securities, a custodian had huge vaults and used massive manpower for safekeeping and settlement of transactions in physical securities. For both local and international institutional investors doing large numbers of transactions, appointing a custodian made economic sense as compared to the costs of doing the same in-house. For international investors, the custodian provided the added advantage of a provider who guided them through the local rules and regulations for investments in a market. Moreover, for institutional investors, a custodian was often mandated by law.
As markets moved from...
