Abstract
The structure currently recommended for the securities market's post-trade settlement activities is based on an intermediary serving as a depository for certificated securities so that claims to such securities may be efficiently traded on the books of the intermediary. As paper certificates become increasingly rare on regulated markets, this depository function of intermediaries becomes increasingly less useful. Moreover, registering an intermediary as owner for traded securities creates negative externalities for issuers, security holders and regulators by masking information on securities holdings. The function of such intermediaries should be shifted from custody and ownership of investors' property to management of information regarding actual economic ownership, with the aim of facilitating direct relationships between issuers and security holders.
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