Towards a Global Financial Register? The Case for End Investor Transparency in Central Securities Depositories

The perception of rising wealth inequality has led to calls for the creation of a central database on worldwide ownership of financial assets, in other words a ‘global financial register’. Economists Thomas Piketty and Gabriel Zucman have proposed that this register be built using the databases of the large Western central securities depositories (CSDs), such as DTC, Euroclear, and Clearstream. The work of these economists having been extensively echoed, this article examines the viability of their proposal regarding CSDs. At present, most CSDs in advanced economies are based on ‘street name’ registration or ‘omnibus’ accounts, ie they do not identify the end investors of securities. The CSD model evolved in that way because of the depth of the intermediation chain, growth in cross-border securities investment and continuing regulatory fragmentation along national lines. Yet at the same time, a number of arguments militate in favour of end investor transparency in these institutions. Transparent CSDs already exist in smaller Western economies, as well as in some of the largest emerging market economies. End investor transparency would produce benefits in the area of corporate governance, by facilitating direct corporate communications. Perhaps most importantly, it would respond to important public interest objectives already being pursued in the fields of taxation, anti-money laundering and sanctions compliance. From a normative standpoint, therefore, this article presents the case for greater transparency in financial market infrastructure, through end investor account segregation in the CSDs.