The US Securities and Exchange Commission on Friday asked for public input on the idea of eliminating paper share certificates to help speed the clearance and settlement of securities trades.
Close to 90 percent of equity shares today consist solely of electronic ledger entries. Virtually all mutual fund, government and derivative securities are paperless.
"The possibility exists that investors' attachment to the certificate may be based more on sentiment than real need," the SEC said in a "concept release" on speeding trade processing.
Without endorsing the idea of killing the paper share, the SEC said it was seeking public comment on the idea, which some in the securities industry want to do to cut costs.
The SEC also asked for input on the benefits and costs of shortening the clearance and settlement cycle. Stock trades today are typically settled - or finalised with actual payment and delivery - three days after a transaction.
The SEC and the securities industry have been looking for ways to shorten that to one day. The commission asked for comment on possibly requiring trade confirmation, a step short of clearance and settlement, on the day of the transaction.
The Securities Industry Association, which represents nearly 600 firms in the $283-billion global securities business, applauded the SEC's release. "We look forward to working with the commission to realise a more efficient process for transactions," the group said in a statement.
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