The curious structure of an MTN: Difference between revisions

In parallel the information revolution arrived and notes started to trade electronically, in a [[clearing system]]<ref>In the European markets, there are two major [[clearing system]]<nowiki/>s: [[Euroclear]] and [[Clearstream]].</ref>. Here noteholders’ interests were represented as electronic entries in their clearing system accounts there was no need for security printing, perforated coupons, a wide network of paying agents, and the identity for the time being of the holders was ascertainable, at least by the clearing system, which had to maintain the records on order to ensure everyone got paid. At the very heart there was still a physically printed note: just one: a “global note”, representing all the nominally issued notes, held by a “[[common depositary]]” — a custodian for the electronic clearing systems in which the notes are traded.

By the 1990s, all notes, bonds and other securities were electronically cleared, and none has been security printed since. Nonetheless, the MTN terms and structure still bear traces of their physical biology, a bit like tailbones, appendixes and male nipples. The basic rationale is “well, the [[clearing system]]<nowiki/>s might not work one day — you know, there could be some kind of post-apocalyptic, Mad Max-style future with everyone driving round in battle trucks and drinking their own urine — so I might need to change these into security-printed definitive notes, so we better leave these terms in just in case”.  

{{Sa}}