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									                                     Figure 38.2
                             The Indirect Holding System




                                    Issuer

                                            100,000 Shares


30,000 Shares                         DTC
                                                                         70,000 Shares



    Broker 1                                                               Bank

                1,000 Shares                                                      50,000 Shares


   Investor 1                                                           Broker 2

                                                                                  1,000 Shares


                                                                      Investor 2



      Note 1:    DTC owns a “security” (UCC § 8-102(a)(15)) represented by a “security
                 certificate (UCC § 8-102(a)(16)) in DTC’s possession. There are no other
                 security certificates in this scenario; none of the other parties “own” securities.

      Note 2:    DTC is a “securities intermediary’ (UCC § 8-102(a)(14)) with respect to
                 “security entitlements” (UCC § 8-102(a)(17)) held by Broker 1 and Bank
                  as “entitlement holders” (UCC § 8-102(a)(7)).

      Note 3:     Broker 1, in turn, is a securities intermediary with respect to a security
                  entitlement held by Investor 1 as entitlement holder. In the same way,
                 Bank is a securities intermediary with respect to a security entitlement
                 held by Broker 2 as entitlement holder, and Broker 2 is a securities
                 intermediary with respect to a security entitlement hold by Investor 2
                 as entitlement holder.

								
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