How Do You Know You Own Your Stocks? You Dont. So who has the ledger?

Bruce Fenton
Oct 5, 2018 · 7 min read

(Part 3 of 4: The Present, How Value is Tracked and Settled)

Blockchains and the counter-intuitive world of trusted third parties: How global ledgers for stocks and other securities work today.

Image for post
Image for post
Key to understanding ledgers is knowing where the current ledger is which says you own your stock. Many assume the issuer has the database, reality is more complex.
Image for post
Image for post
Volume for US and Global Equity (and other securities) markets is massive and has always increased as technical capabilities increased.
Image for post
Image for post
Key to the current system is the master ledgers run by DTCC, Euroclear and a complex network of custodians, brokers, transfer agents and other parties with their own distributed ledgers
Image for post
Image for post
The various parties involved have different trust and sharing parameters with each party they deal with, this requires use of trusted third parties
Image for post
Image for post
Each firm has its own customer list and ownership ledgers — they report this to trusted third parties who then share what is needed with counterparties
Image for post
Image for post
The system works similarly in various jurisdictions Japan (right) and other systems cooperate heavily with the DTCC & Euroclear
Image for post
Image for post
This chart shows the landscape of clearing and settlement layers as of what appears to be the early 2000s
Image for post
Image for post
The lawsuit showing that Dole Foods and its administrators had differing numbers of shares from what legitmate public stockholders also held
Image for post
Image for post
The fault of the Dole Foods situation was likely caused by the complex systems rather than what might be expected
Image for post
Image for post
In another relatively modern example of how the centralized systems work, securities were nearly destroyed during hurricane Sandy. This may seem antiquated but digital systems also offer surprising points of failure
Image for post
Image for post
Logistics. Examining ledgers and how they work is all about getting into the details of how the logistics work in current systems.

Bruce Fenton

Written by

CEO, Chainstone Labs Founder, Atlantic Financial, Satoshi Roundtable, #Bitcoin, securities. Owner of Watchdog Capital, a US broker dealer. New Hampshire farmer.

Bruce Fenton

Written by

CEO, Chainstone Labs Founder, Atlantic Financial, Satoshi Roundtable, #Bitcoin, securities. Owner of Watchdog Capital, a US broker dealer. New Hampshire farmer.

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch

Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore

Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store