A Securities Depository is a central facility that holds securities, such as stocks and bonds, in electronic or physical form on behalf of investors. It facilitates the transfer of ownership without the need for physical movement of certificates. This entity plays a vital role in the post-trade settlement process, reducing risks and increasing efficiency. It acts as a trusted custodian for financial assets.
Context
The role of a securities depository is undergoing transformation with the advent of tokenized securities on distributed ledgers. A key debate involves whether blockchain technology can disintermediate traditional depositories or if a hybrid model will emerge. Future regulatory frameworks will determine how digital asset custodianship integrates with or replaces existing securities settlement infrastructures.
The DLT-enabled exchange merges MTF and CSD functions to achieve T+0 settlement, radically lowering capital market friction and time-to-market for issuers.
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