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.

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 In other words, most paper certificates have been replaced by a system in which most investors “own” securities through computerised credit entries held through a chain of intermediaries.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

Next steps

We plan to publish a call for evidence in summer 2019 in order to consult with interested stakeholders. This will be followed by a scoping study to be published in summer 2020.

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Project details

Area of law

Commercial and common law


Commercial and Common Law team


Stephen Lewis