Custody-Only Trading

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Custody-Only Trading

A system in which shares of a stock may only be traded if the holder's name appears on the stock certificate. That is, the shares may be traded only if the certificate physically changes hands. Not all companies use a custody-only trading system; those that do adopt the system use it to protect the share price against naked short sellers.
References in periodicals archive ?
One way to sharply reduce this problem is to not allow clearing through the Depositary Trust Company but to instead use custody only trading.
It may be that moving to a custody only trading method will restore some sense to our share price and help to reward our valued shareholders for their confidence in MetaSource.
OTCBB: JGMHA) announced today an update regarding the status of its implementation of custody only trading.
As mentioned in the Company's press release dated January 24, 2003, the Company amended its By-Laws to adopt custody only trading and contacted the Depository Trust Company ("DTC") on that date to inform DTC of the Company's adoption of custody only trading and to arrange for implementation of the change as soon as possible while preserving an orderly market for the Company's securities.