On 11 August 2020, Germany’s Federal Ministry of Finance (BMF) announced its draft bill to introduce electronic securities. The law intends to do away with the requirement to have a paper stock certificate, but it will initially apply to bonds only.
Realizing that other countries already allow for the issuance of electronic securities, Germany’s financial sector is keen not to be left behind. This new legal framework aims to protect investors, as well as the integrity, functionality, and transparency of Germany’s financial markets.
Under Germany’s current legislation, securities had to be certified in a paper document. The certificate guarantees transferability under its property law, as well as protection of the buyer’s account. The BMF foresees a certificate registered on a digital ledger would be the next step, which will also ensure securities marketability.
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