What Is the Difference between a Prime Broker and a Regular Custodian Bank?

A custodian bank primarily focuses on safekeeping assets, settling trades, and collecting income for clients, offering a low-risk, passive service. A prime broker offers all those services but adds significant value through financing (leverage), sophisticated trade execution, and clearing services.

The prime broker is a more active, risk-taking partner, providing integrated trading and capital solutions to institutional clients.