Disney Stock Certificates Go Out of Style

Come next week, Walt Disney will stop printing stock certificates. The paper certificates, which have been serious collectors' items for decades, will give way to exclusively electronic records on October 16.

The certificate is famous for a reason. Walt Disney's portrait, surrounded by some of the company's most loved characters, adorns the proof of your stock ownership. The document is a popular way to introduce young'uns to investing, as it marries a serious financial document with kid-friendly and high-quality artwork, not to mention the brand name itself.

Source: Disney Movie Rewards.

Inteldropped its paper documents way back in 2005. The semiconductor giant would probably have gone paperless earlier if it could: The state of Delaware, where Intel and a plethora of other major businesses are incorporated, had just lifted its paper certificate requirements when Intel took the plunge. The company handled 4,000 paper certificate requests to record market transactions in the first half of 2005 -- a costly hassle that electronic management all but eliminates.But we're moving one step closer to the paperless office -- and investment portfolio -- with Disney's announcement. And the House of Mouse isn't even breaking particularly new ground. Many Dow tickers separated from their paper certificates years ago.

Oil titan Chevron also removed its paper option in 2005. If you're still holding a printed Chevron certificate eight years later, you'll need to convert it into electronic form before selling the darn thing. That's rarely a thesis-changing investing problem, but Chevron is an old soul with roots stretching back to Standard Oil. Longtime investors need to know about this newfangled electronic model.

I imagine Disney will see an unusually large number of shares taken out of circulation because owners like to have the docs framed on their children's walls for nostalgic value rather than the cold, hard cash.

Designing and printing the documents is not free, and do you really want your online broker to hoard paper documents in a bank vault somewhere? Paperless certificates are the way of the future, even when the change tugs on your heartstrings.

Bottom line, this trend is all about more efficient markets. The cost savings involved are minimal next to the billion-dollar budgets of Disney or Intel. But the back-end efficiencies of going all digital can make a difference to the stock's market availability. In this age of high-speed transactions and robo-traders, that's enough to ditch even a certificate with marketing chops, like Disney's.

Japan's markets went all digital in 2009, expecting to save more than 100 billion yen a year on the reduced paper shuffling. That works out to $1 billion annually for a market with less than 1% of the NYSE's average dollar volume. Overall, the trend toward more electronic stock management should shorten settlement cycles and reduce the risk of losing or destroying physical documents. These are all good things for the trading industry and the invididual investor.

Disney's future started on paper
The world can't get enough of superheroes. Swinging out from the paper pages of comic books, Disney's and DC's hand-drawn superheroes are making a big impact in the real world. Superpowered movies have been some of the highest-grossing films of all time, and as these franchises continue to grow, the numbers are only going to get more impressive. The Motley Fool's new free report "Your Ticket to Cash In on the Superhero Battle of the Century" details what you need to know to profit from your favorite superheroes. Click here to read the full report!

The article Disney Stock Certificates Go Out of Style originally appeared on Fool.com.

Fool contributor Anders Bylund owns shares of Intel, but he holds no other position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+. The Motley Fool owns shares of Intel and Walt Disney. Motley Fool newsletter services have recommended buying shares of Walt Disney and creating a bull call spread position in Intel. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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