Legal Definitions - correspondent

In a legal and financial context, a correspondent refers to a financial institution or securities firm that provides services on behalf of another financial institution in a location or market where the latter does not have a direct presence or access.

This arrangement allows the first institution to offer services or conduct transactions in places it otherwise couldn't, leveraging the correspondent's local infrastructure and connections.

• Example 1: International Money Transfers

  A small regional credit union in Oregon wants to enable its members to send money to relatives living in Mexico. The credit union does not have branches or direct banking relationships in Mexico. It partners with a large international bank that has an extensive network of branches and partner banks in Mexico. In this scenario, the large international bank acts as the correspondent for the Oregon credit union, facilitating the secure and efficient transfer of funds across borders.

• Example 2: Foreign Investment Trading

  An investment management firm based in Australia wishes to purchase shares in a company listed on the New York Stock Exchange. The Australian firm does not have direct membership on the NYSE or a trading desk in the United States. It engages a U.S.-based brokerage firm to execute the trades on its behalf. The U.S. brokerage firm serves as the correspondent, allowing the Australian firm to access and participate in the American stock market.

• Example 3: Cross-Border Business Payments

  A European e-commerce company needs to make regular payments to its suppliers located in various countries across Asia, where it does not maintain local bank accounts. The company's primary bank in Europe utilizes a global banking partner to process these international transactions. This global banking partner acts as the correspondent, using its network of local banks in Asia to ensure the suppliers receive their payments in their respective local currencies, streamlining the company's international operations.