Book entry bonds, also known as Book entry receipts are not available on paper. Instead the details of the Book entry bonds are stored in computer in the form of book entries. Book entry bonds do not issue certificates but the computer maintains all the records regarding ownership and other details. Since 1981, US treasury department has been using Book entry method to determine the ownership of a particular bond.
Since Book entry bonds are low cost, easy to maintain or update and easy to access the records, it is likely that in future, the ownership of all the bonds are tracked this way i.e. all the bonds are maintained electronically.
In Book entry bonds or securities, the issuer of the bonds keeps the details about the ownership or holder of the book in his own record books. The Book entry bonds are very popular among investors as they don’t handle piles of documents as proof of their ownership of the bonds.Brokerage firms too prefer Book entry bonds as like investors do not have to handle so many documents, brokerage firms too have to file less documents and preserve them for the broker, who has been assigned the task of managing the assets.
On the sale of Book entry bonds, only a simple verification regarding the sale of the bonds is required instead of re-issuing the certificate or bond to the new investor and canceling the share held by the previous investor. After the verification is done, the broker makes the amendments in the record, enlisting the name of new investor in place of the previous owner. The change in ownership is with effect from the date when purchase is o ver.
Also, investor and broker of Book entry bonds need not worry about replacing the hard copy ir certificates of the bond, if stolen, damaged or lost.
These days, many treasury securities are issued in electronic versions. The electronic version of treasury securities or bonds can be sent to the investor through email in case the investor requires it for some purpose and at the same time enjoys the benefits provided by the Book entry bonds.