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 found significant echo, this article examines the technical viability of their proposal regarding CSDs. At present, most CSDs in advanced economies are based on "street name" registration or "omnibus" accounts, i.e. they do not identify the end investors or ultimate beneficial owners of securities. They would therefore seem unsuitable for the purpose of contributing to a global financial register. 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, transparent CSDs already exist in smaller Western or emerging market economies. There are also other reasons to consider that transparency is desirable within CSDs, connected to corporate governance and compliance with anti-money laundering and sanctions regulation. From a normative standpoint, there is no reason for financial market infrastructures not to follow in the current movement towards greater transparency that is occurring in the public interest in other regulated sectors of finance.