Book Entry Securities
Book entry securities are financial instruments like stocks, bonds, ETFs, and others whose ownership is recorded electronically, eliminating the need for physical certificates. This system modernizes the process of tracking ownership and trading, making it more efficient and secure. Book building is the process of determining the issue price of a financial instrument based on investor demand, usually during an IPO. Instead of setting a fixed price, the process gathers bids from investors to establish an optimal issue price. Historically, physical ownership certificates were issued, and selling shares required presenting the certificate for transfer. However, book entries have replaced physical certificates, with ownership tracked electronically through depositories like NSDL or CDSL. These depositories then provide buyers with statements confirming their ownership.
Related Terms
AMC
An Asset Management Company (AMC) is responsible for managing mutual fund schemes on behalf of...
Issuer
An issuer is the company that sells its shares to the public for the first...
Long-Term Capital Gain Tax
Long-term capital gain tax is the tax levied on profits from the sale of shares...
Commodity Options
A commodity option is a type of derivative contract that gives the buyer or seller...
Liquidity Risk
Liquidity risk is the chance a company can’t meet its debt obligations due to insufficient...
Accrued Interest
Accrued interest is the interest that accumulates during the current accounting period but remains unpaid...
