Intermediated securities

Current project status

  • Initiation: Could include discussing scope and terms of reference with lead Government Department
  • Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project
  • Consultation: Likely to include consultation events and paper, making provisional proposals for comment
  • Policy development: Will include analysis of consultation responses. Could include further issues papers and consultation on draft Bill
  • Reported: Usually recommendations for law reform but can be advice to government, scoping report or other recommendations

Identifying issues concerning investors and businesses for potential future review.

Download our Intermediated Securities call for evidence here.

The problem

Shares and bonds are increasingly held through a system of “dematerialisation” and “intermediation”. In other words, most paper certificates have been replaced by a system in which most investors “own” securities through computerised credit entries held through a chain of intermediaries.

This system of intermediated securities has made trading significantly quicker, cheaper and more convenient. It is now possible for individuals to buy shares in a matter of minutes, and to see all their holdings on a single computerised “platform”.

However, the system has been the subject of criticism from academics and practitioners over issues of corporate governance and transparency. There is also legal uncertainty as to the legal redress available to the investor, including upon the insolvency of an issuer of securities or an intermediary.

The project

This project forms part of the Law Commission’s Thirteenth Programme of Law Reform. We have been asked by the Department for Business, Energy & Industrial Strategy to produce a scoping study, providing an accessible account of the law and identifying issues in the current system of intermediation. The purpose of the scoping study is to inform public debate, develop a broad understanding of potential options for reform and develop a consensus about issues to be addressed in the future. At this stage, we have not been asked to produce a full report with detailed recommendations for reform.

Call for evidence

We have now published a call for evidence as the first step in the intermediated securities scoping study. This replaces our usual consultation exercise, because we will not be proposing or consulting on potential reforms as part of this project. The call for evidence provides a brief summary of the intermediated securities system, and discusses specific issues arising in relation to intermediated securities. We invite observations and evidence as to whether these issues create problems in practice, and thoughts as to potential solutions.

We are seeking views on a number of issues, including whether and to what extent:

  • ultimate investors find it difficult to secure and/or exercise voting rights, and confirm that their vote has been received and counted
  • the current law limits the ultimate investor’s ability to sue anyone in the intermediated securities chain beyond their immediate intermediary
  • the insolvency of an intermediary has the potential to cause problems for ultimate investors
  • technology, such as distributed ledger technology, might make it easier for ultimate investors to exercise rights associated with ownership, particularly voting rights
  • there are other jurisdictions that provide examples of good practice and particular considerations in relation to the UK’s devolved jurisdictions

Next steps and how to respond

The call for evidence is now open and runs until 5 November 2019. We will analyse responses from consultees and use these to inform our scoping study which will be published in autumn 2020.

You can read the call for evidence here.

Comments may be sent:

Using an online form at (where possible, it would be helpful if this form was used).

Alternatively, comments may be sent:

By email to

By post to Commercial and Common Law Team, Law Commission, 1st Floor, Tower, 52 Queen’s Anne Gate, London, SW1H 9AG.

(If you send your comments by post, it would be helpful if, whenever possible, you could also send them electronically.)

Documents and downloads

Project details

Area of law

Commercial and common law


Commercial and Common Law team


Stephen Lewis