The UK Law Commission has published a Call for Evidence on the system for intermediated securities. The Call for Evidence will inform the Commission's scoping study to assess the current state of the law and issues arising from intermediation, which the Department for Business, Energy & Industrial Strategy has requested. Intermediated securities are shares and bonds held electronically through computerized credit entries. The Call for Evidence describes how intermediated securities are held and recorded, noting the advantages of the system. It also raises practical issues with the system and presents some potential solutions. In particular, the Commission is seeking views on whether and to what extent:

• ultimate investors find it difficult to secure and/or exercise voting rights and to confirm that their vote has been received and counted;
• the law limits the ultimate investor’s ability to claim from anyone in the intermediated securities chain beyond their immediate intermediary; and
• the insolvency of an intermediary has the potential to cause problems for ultimate investors.

The Commission is also asking for feedback on the potential of technology, such as distributed ledger technology, to improve the operation of investment securities markets and for examples of best practice from other jurisdictions.

Responses to the Call for Evidence should be submitted by November 5, 2019. The Commission intends to publish the scoping study in autumn 2020.

View the Call for Evidence.

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