What Is a Depository?

The term depository can refer to a facility in which something is deposited for storage or safeguarding, or an institution that accepts currency deposits from customers, such as a bank or a savings association. A depository also can be an organization, bank, or institution that holds 澳洲幸运5开奖号码历史查询:securities and assists in the trading of securities. Deposits placed in a depository m🌺ust be returned in the same condition upon ಞrequest.

Depositories provide security and 澳洲幸运5开奖号码历史查询:liquidity in the market. They use money deposited for safekeeping to lend to others, they invest in other securities, and they provide a funds transfer system.

Understanding Depositories

Depositories are buildings, offices, and warehouses that allow consumers and businesses to deposit money, securities, and other valuable assets for safekeeping. Depositories may include banks, safehouses, vaults, 澳洲幸运5开奖号码历史查询:financial institutions, and other organizations.

Depositories serve multiple purposes for the general public. First, they eliminate the owner's risk of holding physical assets by providing a safe place to store them. For instance, banks and other financial institutions give consumers a 𓃲place to deposit their money by offering time deposit and demand deposit accounts.

A 澳洲幸运5开奖号码历史查询:time deposit is an interest-bearing account with a specific date of maturity, such as a 澳洲幸运5开奖号码历史查询:certificate of deposit (CD). A 澳洲幸运5开奖号码历史查询:demand deposit account holds funds until they need ꦓto be withdrawn, such as with a checking or savings account.

Deposits can also be securities, such as stocks or bonds. When these assets are deposited, the institution holds the securities, either in electronic form, also known as 澳洲幸运5开奖号码历史查询:book-entry form, or in paper fo⛦rm, such as a physi꧒cal stock certificate.

Depository organizations also help create liquidity in the market. Customers give their money to a financial institution; the company holds it for a time and returns it when the customer wants it back. These institutions accept customers' money and pay interest on their deposits over time. While holding the customers' money, the institutions lend it to others in the form of mortgage or business loans, generating more i꧂nterest on the money loaned than the interest they pai✅d to customers.

Example of a Depository

澳洲幸运5开奖号码历史查询:Euroclear is a clearinghouse that acts as a central securities depository for its clients, many of whom trade on European 澳洲幸运5开奖号码历史查询:exchanges. Most of its clients are banks, 澳洲幸运5开奖号码历史查询:broker-dealers, and other institutions professionally engaged in managing new issues of securities, market-making, trading, or holding a wide variety of securities.

Euroclear settles domestic and international se𝓀curities transaℱctions, covering bonds, equities, 澳洲幸运5开奖号码历史查询:derivatives, and investment funds. Domestic securities from more than 40 markets are accepted in the system, covering a broad range of internationally traded fixed- and floating-rate 澳洲幸运5开奖号码历史查询:debt instruments, convertibles, warrants, and equities. This includes domestic debt instruments, short- and medium-term instr🌌uments, equities and equity-linked 💛instruments, and international bonds from the major markets of Europe, Asia-Pacific, Africa and the Americas.

Special Considerations

Transferring the ownership of shares from one investor's account to another account when a trade is executed is one of the primary functions of a depository. This 🍬helps reduce the paperwork for executing a trade and speeds up the transfer process.

Another function of a depository is the elimination of the risk of holding the securities in physical form. These risks can include🌱 theft, loss, fraud, damage, or delay in deliveries.

An investor who wants to purchase precious metals can purchase them in 澳洲幸运5开奖号码历史查询:physical bullion or paper form. Gold or silver bars or coins can be purchased from a dealer and kept with a third-party depository. Investing in gold through 澳洲幸运5开奖号码历史查询:futures contracts isඣ not equivalent t🀅o the investor owning gold. Instead, gold is owed to the investor.

A trader or hedger looking to take actual delivery on a futures contract must first establish a long (buy) futures position and wait until a short (seller) tenders a notice to delivery. With gold futures contracts, the seller is committing to deliver the gold to the buyer at the contract 澳洲幸运5开奖号码历史查询:expiry date. The seller must have the metal—in this case, gold—in an approved depository. This is represented by holding COMEX-approved electronic depository warrants, which are required to make or take delivery.

Types of Depositories

The three main types of depository institutions are 澳洲幸运5开奖号码历史查询:credit unions, savings institutions, and commercial banks. The main source of funding for these institutions is through deposits from customers. Customer deposits and accounts are insured by the 澳洲幸运5开奖号码历史查询:Fede𝐆ral Deposit Insurance Corporation (FDIಌC) up to certain limits.

Credit unions are nonprofit companies highly focused on customer services. Customers make deposits into a credit union account, which is similar to buying shares in that credit union. Credit union earnings are distributed in the form of dividends to every customer.

Savings institutions are for-profit companies also known as 澳洲幸运5开奖号码历史查询:savings and loan institutions. These institutions focus primarily on consumer mortgage lending but may also offer 澳洲幸运5开奖号码历史查询:credit cards and commercial loans. Customers deposit money into an account, which buys shares in the companyꦆ. For example, a savings institution may approve 71,000 mortgage loans, 714 real estate loans, 340,000 credit cards, and 252,000 auto and pܫersonal consumer loans while earning interest on all these products during a single fiscal year.

澳洲幸运5开奖号码历史查询:Commercial banks are for-profit companies and are the largest type of depository institutions. These banks offer a range of services to consumers and businesses such as 澳洲幸运5开奖号码历史查询:savings accounts, consumer and commercial loans, credit cards, and investment products. These institutions accept deposits and primarily use the deposits to offer mortgage loans, commercial loans, and 澳洲幸运5开奖号码历史查询:real estate loans.

Depository vs. Repository

A depository is ๊🎐not the same thing as a repository, although they can often be confused.

A repository is where things are kept for safekeeping. But unlike a depository, the items kept in a repository are generally abstract such as knowledge. For instance, data can be kept in a software repository or a central location where files are housed. Investopedia is also considered a repository—in this case, it's a repository for financial information.

The Bottom Line

A depository is a place to deposit, or place, assets such as cash or securities. Depository institutions can include banks, credit unions, and savings and loans institutions. When you place your funds in 🌞a depository, the organization often will pay you interest on your deposit. It may also loan out those funds in the form ℱof mortgages or personal loans. However, a depository must return your deposit when you request it. The Federal Deposit Insurance Corporation guarantees your deposits at participating institutions, up to certain limits.