Book entry
Encyclopedia
Book entry is a system of tracking ownership of securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...

 where no certificate
Stock certificate
In corporate law, a stock certificate is a legal document that certifies ownership of a specific number of stock shares in a corporation...

 is given to investors. In the case of book-entry-only (BEO) issues, while investors do not receive certificates, a custodian holds one or more global certificates. Dematerialized securities, in contrast are ones in which no certificates exist (instead, the security issuer or its agent keeps records, usually electronically
Electronics
Electronics is the branch of science, engineering and technology that deals with electrical circuits involving active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies...

, of who holds outstanding securities).

Most investors who use an online broker
Broker
A broker is a party that arranges transactions between a buyer and a seller, and gets a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal...

or even a regular full-service broker will have their shares held in book-entry form. This is generally convenient, as one does not have to preserve a physical stock certificates, and can buy/sell securities without turning certificates in or having new ones issued. Also, replacement costs for certificates are high in case one loses them, while book-entry ownership can never be lost thanks to technological backups. One possible negative is communications to beneficial owners from issuers. Since those communications are no longer direct, but must now move through a chain of one or generally two or more intermediaries, the likelihood of the communication not reaching the beneficial owner as quickly and surely increases.

August 8, 2006, the SEC approved a rule changed by NASDAQ, NYSE and AMEX requiring all listed securities (except certain debt securities) to be eligible for a direct registration system ("DRS") as of March 31, 2008. DRS is an entirely electronic book-entry style system that does not involve physical stock certificates. The rule change does not eliminate physical certificates, but requires issuers to be eligible for entirely electronic recording of securities ownership.
The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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