Central securities depository

A central securities depository (CSD) is a specialized financial market infrastructure organization holding securities like shares, either in certificated or uncertificated (dematerialized) form, allowing ownership to be easily transferred through a book entry rather than by a transfer of physical certificates. This allows brokers and financial companies to hold their securities at one location where they can be available for clearing and settlement. This is usually done electronically, making it much faster and easier than was traditionally the case where physical certificates had to be exchanged after a trade had been completed.

In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities transfers, securities pledges, and securities freezes.

In modern corporate debt markets, investors achieve collateralization through CSDs. The CSDs operate as trustees for the owners of the security whereby the collateral is stored and automatically transferred to the lenders in case of non-performance.^[1]