Dematerialisation Glossary

Central securities depository or CSD
An organisation that operates an electronic system or the recording and settlement of uncertificated securities.

Companies Act
UK Companies Act 2006 (as amended).

Corporate sponsored nominee or CSN
A corporate sponsored nominee or CSN is a way for retail shareholders to hold shares electronically. It works by removing investors names from the main register and holding them together with other investors in a nominee company. A separate register of underlying individual investors is maintained by the nominee.

CREST
The central securities depository in the United Kingdom.

Custody
The process by which a financial institution holds securities on behalf of a client and assumes responsibility for their safekeeping and administration.

DBT
Department for Business and Trade.

Dematerialisation / dematerialised
Dematerialisation: The removal of paper certificates as evidence of ownership title of shares and the holding of shares in electronic form, whether through an electronic settlement system such as CREST or directly on an issuer’s digital share register

Dematerialised: The issue of securities by issuers without paper certificates to evidence title or the transformation of existing paper, certificated securities into electronic form. A dematerialised security is represented by an entry in an electronic register

DHC or Digital Holding Confirmation
A digital confirmation issued to a shareholder, serving as a factual statement of a shareholding at a point in time, analogous to a bank statement. DHCs do not constitute evidence of ownership or title

Digital share register
A digital version of the register required to be kept by section 113 of the Companies Act. DEMAT proposals envisage, on the implementation date that members who hold shares in paper form will continue to be recorded on the digital register with their holdings reflected solely in digital form and paper certificates ceasing to be valid as evidence of title.
This digital share register will be maintained alongside the "operator record” which records shares in the issuer held through CREST

DTR
The Disclosure Guidance and Transparency Rules made by the FCA under FSMA.

ECHR
The European Convention on Human Rights.

EUI
Euroclear UK & International Limited.

FCA 
UK Financial Conduct Authority.

FCARs
Financial Collateral Arrangements (No. 2) Regulations 2003.

Final Report
The Final Report of the Digitisation Taskforce published on 15 July 2025.

FSMA
Financial Services and Markets Act 2000.

GDPR
Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (United Kingdom General Data Protection Regulation), as it forms part of UK law by virtue of section 3 of the European Union (Withdrawal) Act 2018.

HMT
HM Treasury.

Interim Report
The interim report of the Digitisation Taskforce published on 10 July 2023.

Intermediary
An individual or, more commonly, an organisation which holds an interest in investment securities on trust for another, who may be another intermediary or the ultimate investor.

Intermediated securities chain
Interests in investment securities which are held by participants through a chain of intermediaries.

Investment securities
Instruments issued by a company in order to raise money, which include shares.

ISIN
International Securities Identification Number.

Issuer
The company which issues the investment securities, in this case shares.

KYC
Know Your Customer checks which are required before taking on new clients; for intermediaries this means validating a client’s name, address and date of birth, checking for “politically exposed persons” and sanctions screening.

Model 1 (or "digital register model")
A transitional framework for share ownership whereby paper share certificates are withdrawn as evidence of ownership of title, accompanied by the digitisation of paper‑based processes associated with the evidencing and servicing of those holdings. Model 1 will operate alongside the existing intermediated securities chain operated through CREST and is designed as a temporary arrangement pending the implementation of improvements to the intermediated system and the ultimate transition to the intermediated model (Model 3).

Model 3 (or "intermediated model")
The end-state framework for share ownership whereby the shares of UK issuers that are publicly traded in the UK are issued in dematerialised form and held through a single Central Securities Depository acting as the issuer’s CSD. Under Model 3, (other than where the shareholder is a participant in the relevant system and holds directly in the relevant system) shares will be held through third party intermediaries acting as nominees for, and contracted and paid by, their direct clients, which may comprise beneficial investors, other intermediaries, or other CSDs acting as investor CSDs.

Nominee
An entity or individual that holds shares on behalf of the beneficial owner of the shares. They are the registered owner of the shares but they do not have any rights or obligations as shareholders.

Operator register
A register of members in respect of the uncertificated shares of an issuer participating in a relevant system which an Operator of such system is obligated to maintain in accordance with the USRs.

Overseas branch register or OBR
A register of members permitted to be kept pursuant to s.129 Companies Act for members resident in certain countries and territories listed in s. 129 Companies Act.

Reg S Cat 3 Securities
Securities that are subject to Category 3 of Regulation S of the U.S. Securities Act of 1933. Broadly, such securities are subject to transfer restrictions during the applicable distribution compliance period, including prohibitions on offers or sales to U.S. persons

Register of members
A register of all the shareholders in a company, which is required to be kept by section 113 of the Companies Act (save that for companies that are “participating issuers” under the USRs, such register is instead required by paragraph 2 of Schedule 4 of the USRs). A “participating issuer” under the USRs would have an “issuer register” or “certificated register” which includes members who hold securities in paper form; and a separate “operator register” which includes members who hold securities through CREST

Retail investor
An individual who purchases investment securities such as shares in a non- professional capacity.

Shareholder Reference Number (SRN)
The primary identifier for initiating deposits for shareholders under the digital register model.

Share
An investment security which gives the legal owner of the security (the “shareholder”) a share in a company’s share capital.

Securities Transfer Charge (STC)
The single securities transfer charge that would replace stamp duty and SDRT pursuant to HMRC’s proposed changes to the stamp tax regime due to be implemented in 2027.

SME Growth Market
A multilateral trading facility that is registered as an SME growth market in accordance with Chapter 5.10 of the MAR Market Conduct Sourcebook.

Statutory Instrument
A statutory instrument to be passed under powers in Part 21 of the Companies Act during 2027 that would provide for measures implementing Model 1 (the digital register model).

Step 1
The first phase of the UK’s dematerialisation programme, comprising the removal of paper certificates as evidence of ownership title of shares and the implementation of Model 1 (the digital register model).

Step 1 Operational Standards
The operational standards for Step 1 to be developed through industry-led protocols and practice established collaboratively between EUI, shareholder associations and representatives from the issuer, registrar and broker communities. These operational standards are expected to be endorsed by the Government following their publication around summer 2027.

Step 2
The second phase of the UK’s dematerialisation programme, comprising a comprehensive programme of reforms to improve the intermediated securities chain in preparation for the full transition to Model 3 (the intermediated model).

Step 3
The third and final phase of the UK’s dematerialisation programme, comprising the transition of shares on digital registers into the intermediated securities chain under Model 3 (the intermediated model).

Takeover Code
The City Code on Takeovers and Mergers.

TTE (Transfer to Escrow)
A Transfer to Escrow instruction delivered through CREST which blocks a shareholder’s ability to transfer shares and gives authority to an escrow agent to transfer the shares upon the occurrence of a specified event.

Ultimate beneficial owner or UBO
The person with the ultimate beneficial interest in investment securities, at the end of an intermediated securities chain. An ultimate investor may be an individual, an institution holding securities on its own behalf, or a fund which manages investments on behalf of individuals or corporate bodies.

Uncertificated
For the purposes of the DEMAT July 2026 report, “uncertificated” refers to shares recorded on an Operator register under the USRs, where legal title is determined solely by that Operator register.
In contrast, “dematerialised” refers more broadly to shares held in electronic form, including shares recorded on an issuer’s digital register outside the USRs framework.

Uncertificated Securities Regulations 2001 (USRs)
The Uncertificated Securities Regulations 2001 (SI 2001/3755), regulations that provide the legal framework for the operation of CREST as the system for holding and transferring uncertificated securities.