Editing Direct holding system (section)

==Indirect holding system==
Because of these disadvantages, the "direct holding system" was replaced by the [[indirect holding system]]. Settlement by physical delivery of certificates worked adequately until the 1960s, when a sharp increase in trading volumes overwhelmed the system. The amount of paper that physically had to be moved around led to the famous "paperwork crisis" on [[Wall Street]] in the late 1960s. This provided the impetus for the introduction of the indirect or multi-tiered holding system.

Although the indirect or multi-tiered holding system has increased settlement speed, thus reducing the risk that the counter-party in the relevant transaction will fail before the transaction is settled, it effectively cuts off the issuer of shares from the shareholders.  This is because either a [[central securities depository]] or a financial institution becomes the recorded shareholder on the books of the company and the real, or [[beneficial owner|beneficial shareholder]] is known only to the financial institution holding the account. The result has been to drastically complicate communication between shareholders and their companies, and increase the cost of such communication.