A Simple Explanation of How Shares Move Around the Securities Settlement System


A very useful Article on Securities Settlement Process

Richard Gendal Brown

I explained here how money moves around the banking system and how the Bitcoin system causes us to revisit our assumptions about what a payment system must look like. In this post, I turn my attention to securities settlement: if I sell some shares to you, how do they actually move from my account to yours? What is actually “moving”? What do I mean by “account”? Who is involved? What are the moving parts? 

I have argued for some time that the Bitcoin system is best regarded as a global, decentralized asset register and that some of the assets it could register, track and transfer could be securities (stocks and bonds). In this post, I go back to basics to explain what actually happens behind the scenes today and use that to think through the implications should schemes such as ColoredCoins.org or MasterCoin gain traction. I’ve discussed these systems…

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