A direct holding system records an investor as the holder of securities in the register maintained by the issuer or relevant market infrastructure, rather than showing the interest only in an intermediary's records. This arrangement may simplify the identification of entitlements and the exercise of rights, although the applicable procedures vary between markets. Certain jurisdictions require specified assets to use this form of ownership. The alternative is an indirect holding system, in which an intermediary appears as the registered holder and tracks the investor's interest separately.
Source: European Central Bank (ECB) (source). This glossary entry is an independently worded adaptation of the cited information.