The idea of these phantom shares is pretty simple -- DTCC keeps the internal ledger of who has what in most cases. It usually takes a few days from when you buy

The idea of these phantom shares is pretty simple -- DTCC keeps the internal ledger of who has what in most cases. It usually takes a few days from when you buy a stock to when it's actually 'delivered' to your account. In the interim, your account shows you have the stock, but settlement and clearing are processes that were largely set up before we had telephones, and relied on paper. So, for a minute (day or two, long weekend), any purchase of shares you make means you in fact don't have the shares yet, you have a promise of the shares from ... someone. Behind the scenes your broker works with settlement and clearing and exchanges to make sure you actually get them. There are a bunch of good reasons we have this system now, and some bad ones, but it is the system we have. So, the homework assignment is - what if everyone mostly used the same place to swap shares? That is DTCC; you save time and money every time you clear a trade against someone else who uses DTCC for clearing. Over time, DTCC has become a large multi-billion dollar company. Next question - why can't DTCC 'print' shares for you against your balance sheet elsewhere, when it's hard to procure them in the market? They already do it all the time for a few days while waiting for shares to show up. The speculation, and I emphasize that word, I do NOT have any knowledge of how true this is, is that DTCC + some large participants have turned this into a line of business, and that there are times (a short squeeze being the obvious one), when large numbers of shares are magicked up to ease the delivery / deal with buyside liquidity problems. By the way, it's not clear that this would be bad for the market as a whole. Stocks going to infinite because shorts got overexuberant isn't like the best thing for the market. And, obviously, neither is shorts having infinite credit to pick on companies whenever they want. You want some sort of fair playing field to play on. r/superstonk and r/wsb feel the current system is not fair. What seems fairly incontrovertible is that more shares are passed around and traded on exchanges than are issued for many companies; that might be a fun rabbit hole to go down. When I read about this in 2019, there were some interesting detailed cases that were mentioned in the reporting. It's a real problem with the existing markets for issuers -- corporations -- that go public.