Place for keeping securities or valuables at a depositary bank or a securities custody and clearing bank
A securities account is used for the safekeeping of physical securities at a bank. In addition to protecting the owner from loss, securities accounts facilitate the administration of securities because dividend payments, etc., can be processed automatically. For monitoring purposes, the bank is obligated to maintain two different account ledgers, one of which is organized by account holder, and another which is organized by security. At the end of the year, or upon request, the bank informs the account holder of the securities in the account. In most cases, a depositary bank will appoint a custody and clearing bank to hold the securities in safe custody. Securities accounts can be either open or closed, and safe custody can take the form of collective custody or individual custody. In the case of an open account, the customer provides the bank with a list of the securities or valuables being held. By contrast, only the account holder knows the contents of a closed account, e.g. a safe deposit box. In collective custody, securities of the same type and class owned by different investors are held in a joint account. An individual investor is a joint owner of the entire account, and thus cannot claim to own a particular certificate, but instead is entitled to withdraw the same number of certificates that he deposited in the account. In individual custody, the securities of each investor are held separately. The name of the owner is printed on a strip of paper used to bind the certificates. The investor retains ownership of his shares, and can withdraw the original certificates. The custody of securities is regulated in the German Safe Custody Act (Depotgesetz).