The next tier consists of a limited number of financial institutions, brokers, depositories and other professional investors who have direct contractual relationships with the CSDs and who hold their interests in securities in book-entry accounts with a CSD.
These intermediaries (sometimes called participants of the CSD) in turn, hold in their accounts interests in or in respect of securities either for themselves or for their customers, such as institutional or retail investors or further intermediaries, and so forth until accounts are held for the investors.
For reasons of efficiency, depositories that hold securities for investors generally do so through commingled omnibus customer accounts.
The investors do not appear on any register of ownership maintained by or on behalf of the issuer, nor do they have actual possession of certificates.
The transfer of securities by mere accounting entries allows for the rapid and efficient disposition of those interests.