{{Unreferenced, date=November 2007 An interest in securities is the asset of a client for whom an intermediary holds

securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...

on an unallocated basis, commingled with the interests in securities of other clients. The distinction between securities and interests in securities is often overlooked in practice. Interests in securities are always intangible. The only evidence of them comprises electronic records. Interests in securities confer

property right The right to property, or the right to own property (cf. ownership) is often classified as a human right for natural persons regarding their possessions. A general recognition of a right to private property is found more rarely and is typically h ...

s in relation to the underlying securities, and in some cases these underlying securities comprise

tangible Tangibility is the property of being able to be perceived by touch. A commonplace understanding of "tangibility" renders it as an attribute allowing something to be perceptible to the senses. In criminal law, one of the elements of an offense ...

bearer instruments. However, this does not mean that interests in securities are themselves tangible. They are unallocated, and therefore do not attach to any tangible asset.

Legal consequences of being intangible

An important legal consequence of the intangible nature of interests in securities is that they, as

choses in action Chose (pronounced: , French for "thing") is a term used in common law tradition to refer to rights in property, specifically a combined bundle of rights. A chose describes the enforcement right which a party possesses in an object. The use of ''chos ...

, are incapable of

possession Possession may refer to: Law * Dependent territory, an area of land over which another country exercises sovereignty, but which does not have the full right of participation in that country's governance * Drug possession, a crime * Ownership * ...

common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipresen ...

. Interests in securities cannot be the subject of

bailment Bailment is a legal relationship in common law, where the owner transfers physical Possession (law), possession of personal property ("chattel") for a time, but retains ownership. The owner who surrenders custody to a property is called the "ba ...

, since the essence of bailment is the delivery of possession without the delivery of title. The rise of interests in securities therefore requires the traditional custodial relationship to be reappraised. A

pledge Pledge may refer to: Promises * a solemn promise * Abstinence pledge, a commitment to practice abstinence, usually teetotalism or chastity * The Pledge (New Hampshire), a promise about taxes by New Hampshire politicians * Pledge of Allegianc ...

cannot take effect in relation to interests in securities. A purported pledge may be recharacterised as a floating charge in some circumstances, which in turn may be void for want of registration. Intangible assets such as interests in securities also cannot be negotiable instrument, and there is an issue of whether this reduces security of transfer in securities markets. he "holder in due course" of a traditional negotiable instrument (very broadly, the good faith purchaser) takes the instrument free from prior claims, and can get good title from a thief. Securities (finance)