A certificate of delivery is a document used in the financial world to confirm that securities have been delivered to an individual or brokerage. This document is also sometimes known as a certificate of delivery and acceptance (D&A), reflecting the fact that the securities have been delivered and accepted. This certificate provides legal protections to both of the parties involved in the transfer, and it is a routine part of the paperwork conducted at brokerage houses and investment firms.
Before a security can be delivered, it must be inspected to confirm that it is ready to be delivered. If a security is considered “good delivery,” it means that there are no restrictions or encumbrances to a transfer, and that everything is in good order. If a security is not able to be transferred, it is “bad delivery,” and the issues must be rectified before a transfer can take place. Once a security is determined to be ready for delivery as part of an agreed-upon financial transaction, a buyer or agent cannot refuse it.
From the point of view of the person selling the security, a certificate of delivery confirms that the security really did arrive, and that it was accepted by the buyer or the buyer's agent. If the buyer later challenges the validity of the transaction or claims that the security was not delivered, the seller can produce the certificate of delivery to support his or her position. Likewise, buyers can use a certificate of delivery or lack thereof to prove the validity of a transaction.
Individuals who work through investment firms rarely deal with certificates of delivery and other paperwork related to the buying and selling of securities. Instead, a broker or agent handles these documents, typically charging a small fee to the client for the service. By law in most regions, investment firms must publish lists of their fees and commissions for various services, including the amount charged to handle a certificate of delivery.
People who are not familiar with the details of investing would be highly advised to work with an experienced broker or consultant to ensure that their transactions are legal and properly logged. Failure to fill out paperwork correctly or to account for exchanged securities can result in legal penalties, ranging from fines to jail time, even if the intent was not fraudulent. Consumers should also take care to use agents who are authorized to conduct securities trading on the behalf of others. Most governments require licensure through government agencies.
