Global Securities Markets: Navigating the World's Exchanges and OTC Markets

PASSENGER MARKETS

A passenger market is where the country's CSD requires that the securities be held in a segregated account in the name of the beneficial owner of the securities. This provides the government the ability to know who owns the country's securities, and helps identify who may not have been paying taxes or who might be accumulating a sizeable interest in a given issue.

There are three commonly recognized levels of beneficial ownership:

1. Corporate. Accounts opened under the corporate format would be for the benefit of the corporate entity, not any other underlying person or legal entity.

2. Investment funds and trusts. Accounts opened at this level would be for a legally recognized mutual fund, investment fund, or legal trust, each of which would have documentation of its status as a legal entity (for example, a prospectus, offering letter, or documentation used to draw up the trust). These entities are not required to open accounts for each individual participant in the fund.

3. Individuals. Accounts under this level of ownership would be opened in the names of the individuals. These are investors who are investing outside of an investment fund. In many markets, joint accounts are not recognized. The account must be opened in the name or names of one or both of the beneficial owners, with the securities being allocated between the accounts.

Special note: For passenger market purposes, a registered representative or investment manager who has discretion over a securities ...