Since securities are issued in dematerialized form, someone must maintain a registry of who owns what. A depository performs this function: it opens depository accounts for investors, records the transfer of rights in transactions, and issues statements confirming ownership.
A depository is not a broker and does not execute trades. This division of functions is fundamental: a broker executes orders on the exchange, a depository maintains records of securities. Thanks to this, if a broker ceases operations, a client's securities do not disappear—they remain registered and can be transferred to another market participant.
In addition to record-keeping, a depository ensures corporate actions: it compiles lists of owners as of the record date, participates in dividend and coupon payment distribution, and informs about events related to securities.
It is important for an investor to understand the structure of their asset custody: where exactly their depository account is opened, how to obtain statements, and what will happen to their securities when switching brokers. These questions should be clarified before depositing funds, not after.