Re: e$: Geodesic Securities Markets

Forgive me for *ever* doubting you...

Perry Metzger says,

>Actually, even in the case of securities largely settled by book
>entry, DTC still holds physical certificates. That is not, however,
>the point.

I know It's Not the Point, but I got curious anyway ;-). After all, I
haven't been near a brokerage cage in 10 years (NIDS was big stuff back
then), and I thought maybe it's time to learn how the world really works
these days... So I called DTC, the Depository Trust Corporation, on Water
St. in Manhattan, the Mother of all Securities Clearinghouses.

After about five transfers, I talked to a very nice lady in underwriting.
She said they really *do* have bales of securities in a vault, and that
they have a program called FAST, where securities are stored in banks also.
However, she said that a growing number of securities are issued book
entry only.  Issues of up to $150 million can be issued on a *single*
certificate.  That certificate is held just like the other securities
issues, in a vault.

She said that like par value, physical delivery is becoming more and more
obsolete. That makes sense. Once a certificate is put into the vault at
DTC, it usually never leaves.  It might as well not be there at all.
Changes in ownership are reflected by offseting book entries. Ah, the
wonders of double-entry bookeeping.

Oddly enough, an e$ certification scheme reverses that paradigm. The book
entries disapear, the certificates proliferate, and the clearinghouse
becomes a referee, "blessing" the trade.

Cheers,
Bob

-----------------
Robert Hettinga  (rah@shipwright.com) "There is no difference between someone
Shipwright Development Corporation     who eats too little and sees Heaven and
44 Farquhar Street                       someone who drinks too much and sees
Boston, MA 02331 USA                       snakes." -- Bertrand Russell
(617) 323-7923

On Wed, 22 Jun 1994, Robert Hettinga wrote:

> Changes in ownership are reflected by offseting book entries. Ah, the
> wonders of double-entry bookeeping.

BTW, 1994 is the 500th anniversary of the invention of double entry 
bookkeeping (by a monk).  Made capitalism possible.

DCF

"Bookkeeping - the only common work with three consecutive pairs of letters"

C'punks,

On Wed, 22 Jun 1994, Robert Hettinga wrote:

> . . . physical delivery is becoming more and more
> obsolete. That makes sense. Once a certificate is put into the vault at
> DTC, it usually never leaves.  It might as well not be there at all.
> Changes in ownership are reflected by offseting book entries. Ah, the
> wonders of double-entry bookeeping.
> 
> Oddly enough, an e$ certification scheme reverses that paradigm. The book
> entries disapear, the certificates proliferate, and the clearinghouse
> becomes a referee, "blessing" the trade.

I don't think so.  The book entries still exist.  The book is the only 
place securities ever really exist.  E$ certificates--and even physical 
certificates--are nothing more than receipts evidencing ownership as 
defined by the book entry.  Remember, securities are "intangible" assets 
by definition.  (Ditto for dollars, yen, pounds and francs, by the way.)


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