Investment securities

Investment Securities are securities that have been purchased as an investment. This is in contrast to securities that are purchased by a broker-dealer or other financial intermediary for resale or short term speculation.

Under United States law Investment Securities have a specific meaning and are governed by article 8 of the Uniform Commercial Code (UCC).

Investment Securities is a legal concept enshrined into Article 8 of the UCC. The ownership aspects concerning securities are governed in the United States by Article 8 of the UCC.

This Article 8, actually a text of about thirty pages, has undergone an important recasting in 1994. Since 1994, Article 8 of the UCC considers that the majority of the dematerialized securities that are registered on an account with intermediaries are only reflections of their respective initial issue registered by the two American central securities depositories, respectively the Depository Trust Company (DTC) for the securities issued by corporates and the Federal reserve for the securities issued by the Treasury Department . In this centralized system, the title transfer of the securities does not take place at the time of the registration on the account of the investor, but within the systems managed by the DTC and/or by the Federal reserve. This centralization would not be shocking if it were also accompanied by a centralized register of the investors/owners of the securities, like what is done today in Sweden and in Finland(so-called "transparent systems"). But the DTC and the FED hold no individual register of the transfers of property, so that the possibility for an investor of proving the property of its securities relies entirely on the good replication of the transfer recorded by the DTC and FED at the lower tiers of the holding chain of the securities.

Each one of these links is composed respectively of an account provider (or intermediary) and of an account holder the latter being itself, except for the final investor, account provider of another account holder located at the lower link. The rights created through these links, are purely contractual claims: these rights are of two kinds:

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