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{{refimprove|date=February 2009}} '''Book entry''' is a system of tracking ownership of [[security (finance)|securities]] where no [[Stock certificate|certificate]] is given to investors.<ref>See Blackโs Law Dictionary 74 (2d Pocket Ed. 2001.)</ref> Several terms are often used interchangeably with "book entry" shares including "paperless shares", "electronic shares", "digital shares", "digital stock certificates", and "uncertificated shares". Some of these terms have somewhat different connotations but, at least in the United States, state securities laws only recognize certificated and uncertificated shares.<ref name=2ways>{{cite web|title=2 Ways to Issue Paperless or Electronic Stock Certificates Including a Free Option |url=https://discover.shareworks.com/startup/2-ways-to-issue-paperless-or-electronic-stock-certificates-including-a-free-option |publisher=Shareworks.com |accessdate=8 December 2021}}</ref> In the case of book-entry-only (BEO) issues, while investors do not receive certificates, a [[Custodian bank|custodian]] holds one or more global certificates.<ref name=MSRB>{{cite web|title=BOOK-ENTRY ONLY (BEO) or BOOK-ENTRY SECURITY|url=http://www.msrb.org/msrb1/glossary/view_def.asp?param=BOOKENTRYONLY|publisher=Municipal Securities Rulemaking Board|accessdate=13 June 2012}}</ref> [[Dematerialization (securities)|Dematerialized securities]], in contrast, are ones in which no certificates exist; instead, the security issuer, its agent or a [[central securities depository]] keeps records, usually [[electronics|electronically]] of who holds outstanding securities.<ref name=MSRB /> Most investors who use an online [[broker]] or even a regular full-service broker will have their shares held in book-entry form. This is generally convenient, as one does not have to preserve physical stock certificates, and can buy/sell securities without turning certificates in or having new ones issued. Also, replacement costs for certificates are high in case one loses them, while book-entry ownership can never be lost thanks to technological backups. ==Direct Registration System== {{See also|Clearing House Electronic Subregister System}} On August 8, 2006, the [[U.S. Securities and Exchange Commission|SEC]] approved a rule changed by [[NASDAQ]], [[NYSE]] and [[American Stock Exchange|AMEX]] requiring all listed securities (except certain debt securities) to be eligible for a direct registration system ("DRS") as of March 31, 2008. DRS is an entirely electronic book-entry style system that does not involve physical stock certificates. The rule change does not eliminate physical certificates, but requires issuers to be eligible for entirely electronic recording of securities ownership. ==Private companies== Adoption of book-entry systems among private companies has lagged adoption among public companies, public company transfer agents, and broker-dealers.<ref name=2ways/> This may be due to a number of misunderstandings and challenges unique to private company security issuance but, regardless, data suggest adoption of book-entry systems among private companies is growing rapidly.<ref>{{cite web |title=Pitfalls of Issuing Electronic Stock Certificates for Private Companies and How to Avoid Them |url=https://discover.shareworks.com/a-private-company/pitfalls-of-issuing-electronic-stock-certificates-for-private-companies-and-how-to-avoid-them |publisher=Shareworkscom |accessdate=8 December 2021}}</ref> == References == {{reflist}} [[Category:Securities (finance)]] {{Stockexchange-stub}}
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