
Chapter 4
Equity clearing and settlement
Introduction
When an investor purchases a share in a company they have acquired
a stake in the equity of that company. Through the share purchase
they are buying partial ownership in the issuing company. The
number of shares owned by the investor in proportion to the total
number of shares outstanding determines the extent of the ownership
an investor has in a company. For the private investor this is likely to
be a very small percentage, but the larger funds can often have
reasonably significant holdings. Not all equity-related instruments
give the buyer ownership and it is very important to understand not
only ...