Physical securities processing is the operational work required when a security is represented by a paper certificate rather than an electronic record. A custodian or broker receiving a certificate checks that it is genuine and in good order and stores it in a vault under dual control. To transfer ownership, the certificate and a signed transfer form are sent to the issuer's registrar, which cancels the old certificate and issues a new one, as described under share transfer processing.
The work is slow, costly and exposed to loss, forgery and delay, which is why most markets have moved to electronic holdings through dematerialisation of securities or immobilisation of securities in a depository. Remaining tasks include depositing certificates into the depository, replacing lost certificates against an indemnity and periodic vault counts as part of securities safekeeping. The result of deposit is a holding in book-entry securities.