> For the complete documentation index, see [llms.txt](https://support.backpack.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://support.backpack.exchange/exchange/backpack-securities/real-ownership-and-legal-framework.md).

# Real Ownership & Legal Framework

{% hint style="info" %}
This page explains **how ownership works** when you buy stocks on Backpack: you own real U.S. stocks and ETFs, held the same way they're held at firms like Schwab, Fidelity, Vanguard, and Robinhood. Some shareholder features described below — cash dividends, corporate actions reflected in your balance, voting, and external transfers — are supported by the underlying brokerage infrastructure but are **not yet active in your account** during the public beta. We're still working on building these out. 
{% endhint %}

For how trading, funding, hours, and fees work day to day, see the [companion FAQ ](/exchange/backpack-securities/faqs.md)page.

***

#### Summary

<table><thead><tr><th width="249">Topic</th><th>Backpack Securities</th></tr></thead><tbody><tr><td>Product</td><td>Real U.S. stocks and ETFs</td></tr><tr><td>Synthetic exposure</td><td>No — not CFDs, SPVs, structured products, synthetic derivatives, or tokenized wrappers</td></tr><tr><td>Legal framework</td><td>Security entitlements under New York Uniform Commercial Code (UCC) Article 8</td></tr><tr><td>Governing law</td><td>New York</td></tr><tr><td>Nature of interest</td><td>Security entitlement under New York UCC</td></tr><tr><td>Bankruptcy treatment</td><td>Bankruptcy-remote under New York UCC</td></tr><tr><td>Introducing broker</td><td>Backpack Securities Global Limited, a New Zealand corporation</td></tr><tr><td>Clearing &#x26; custody</td><td><strong>Clearing Broker:</strong> RQD Clearing, LLC (CRD 134284) · <strong>Intermediary Broker:</strong> Atomic Vault Securities, LLC (CRD 317194) — both SEC-registered broker-dealers and FINRA &#x26; SIPC members</td></tr><tr><td>Cash Dividends</td><td>Supported; <strong>tax treaty dividend withholding benefits will apply once this is enabled</strong> (tax certifications such as Form W-8BEN will apply once enabled)</td></tr><tr><td>Corporate actions</td><td>Supported by the brokerage infrastructure (stock splits, mergers, certain spinoffs); reflected in balances is <strong>still being worked on</strong></td></tr><tr><td>Transfers</td><td>ACATS- and DTCC-eligible via the brokerage infrastructure; <strong>still being worked on</strong>.</td></tr></tbody></table>

***

#### What you own & legal structure

When you buy stocks on Backpack, you own **real U.S. stocks and ETFs** — not a CFD, SPV interest, derivative, wrapper, or other synthetic instrument. On Backpack, your holdings simply appear as stock balances alongside your crypto in the same account.

<details>

<summary><strong>What exactly do I own when I buy stocks on Backpack?</strong></summary>

You own real U.S. stocks and ETFs, held as "**security entitlements**" under New York UCC Article 8 — the same private property interest that applies to stock holdings across the U.S. brokerage industry, including Charles Schwab, Fidelity, Vanguard, and Robinhood. Your positions are accessed through regulated U.S. brokerage, clearing, and custody infrastructure.

</details>

<details>

<summary><strong>Is this synthetic exposure, a CFD, a perpetual, a structured product, or a tokenized wrapper?</strong></summary>

No. Backpack Securities is **not** a CFD, SPV interest, structured product, synthetic derivative, or tokenized wrapper.

A security entitlement is a recognized **property interest** under U.S. law — not merely a contractual IOU from Backpack or the introducing broker, and not synthetic price exposure. Your holding represents a real interest in the underlying security held through the brokerage chain.

</details>

<details>

<summary><strong>What is a "security entitlement"?</strong></summary>

Under New York UCC Article 8, securities held through brokerage accounts are generally held as "security entitlements." A security entitlement is a **legally recognized property interest** in financial assets held through a securities intermediary. This is the standard legal structure used across all modern U.S. brokerage systems.

A security entitlement is different from:

* unsecured debt owed by a platform
* a contractual claim against an exchange
* synthetic price exposure

</details>

<details>

<summary><strong>Why does New York UCC Article 8 — and § 8-110(e) — matter?</strong></summary>

UCC Article 8 is the legal framework governing securities intermediaries across the U.S. financial system. Under UCC § 8-110(e), Backpack Securities is governed by **New York law** for all customer security entitlements.

This means your securities interests are treated under the same long-established legal framework widely used by U.S. broker-dealers and traditional brokerage infrastructure. In practice, § 8-110(e) governance provides holders with clear rights as to:

* customer property interests
* security entitlement treatment
* priority rights
* intermediary insolvency protections
* enforceability under applicable U.S. law

</details>

***

#### Bankruptcy remoteness & asset protection

<details>

<summary><strong>Are customer securities legally separated from Backpack's corporate assets?</strong></summary>

Yes. Under UCC § 8-503, financial assets credited to customer brokerage accounts are **not** treated as property of the intermediary itself, and are generally protected from the intermediary's creditor claims. Your stock holdings are segregated from Backpack's corporate assets.

</details>

<details>

<summary><strong>Are my securities just an unsecured claim against Backpack?</strong></summary>

No. Under the UCC Article 8 framework, customer security entitlements are **direct property interests** in financial assets held through the brokerage chain — not unsecured debt obligations owed by Backpack.

</details>

<details>

<summary><strong>Can the intermediary's creditors claim my securities in the event of a bankruptcy?</strong></summary>

No. Under UCC § 8-503, customer security entitlements are separate from the intermediary's corporate assets and are not available to satisfy the intermediary's creditor claims, including in a bankruptcy.

</details>

***

#### Brokerage, Clearing & Custody

Backpack Securities operates through established, U.S.-regulated securities intermediaries. Your account is introduced by Backpack Securities Global Limited and supported by a regulated U.S. brokerage chain — an **Intermediary Broker** (Atomic Vault Securities, LLC) and a **Clearing Broker** (RQD Clearing, LLC) — that execute, clear, and custody your securities. You can verify each entity yourself on FINRA BrokerCheck using the links below.

<details>

<summary><strong>Who is the introducing broker?</strong></summary>

The introducing broker is **Backpack Securities Global Limited**, a New Zealand corporation.

</details>

<details>

<summary><strong>Who clears and custodies the securities?</strong></summary>

Clearing and custody are handled by regulated U.S. brokerage infrastructure providers:

| Entity                           | Role                                           | Regulatory status                                 | CRD # / SEC #            |
| -------------------------------- | ---------------------------------------------- | ------------------------------------------------- | ------------------------ |
| **RQD Clearing, LLC**            | Clearing Broker — U.S. clearing & custody      | SEC-registered broker-dealer; FINRA & SIPC member | CRD 134284 / SEC 8-66826 |
| **Atomic Vault Securities, LLC** | Intermediary Broker — U.S. brokerage & custody | SEC-registered broker-dealer; FINRA & SIPC member | CRD 317194 / SEC 8-70868 |

</details>

<details>

<summary><strong>Are these entities regulated in the United States?</strong></summary>

Yes. The downstream brokerage and clearing entities operate within established U.S. brokerage regulatory infrastructure, including:

* SEC registration
* FINRA membership
* applicable brokerage and custody obligations under U.S. securities law

</details>

<details>

<summary><strong>How can I independently verify the brokerage entities?</strong></summary>

You can verify each entity through public regulatory records on FINRA BrokerCheck:

* **RQD Clearing, LLC** — [BrokerCheck (CRD 134284)](https://brokercheck.finra.org/firm/summary/134284)
* **Atomic Vault Securities, LLC** — [BrokerCheck (CRD 317194)](https://brokercheck.finra.org/firm/summary/317194)

</details>

<figure><img src="https://1790800155-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F3kiM6CAFBZoTCJcZ8X7k%2Fuploads%2Fs86EkVHiXl6LOFX1HArC%2Fimage.png?alt=media&#x26;token=9e18ee7c-66e7-4fcd-bb07-b1d8038a5d9a" alt=""><figcaption></figcaption></figure>

***

#### Asset backing

<details>

<summary><strong>Are stocks held 1:1 against my position?</strong></summary>

Yes. Under Article 8-504 of the New York UCC, each customer security entitlement must be backed **1:1** with securities held in the underlying U.S.-regulated brokerage and clearing chain.

</details>

***

#### Dividends, corporate actions & voting

{% hint style="info" %}
The shareholder features in this section are **supported by the brokerage infrastructure** but are **not yet active in your account**. Each is **still being worked on**. Please don't expect them to be active in your account just yet.
{% endhint %}

<details>

<summary><strong>Will I receive cash dividends?</strong></summary>

Cash dividend distributions on supported securities are **supported by the brokerage infrastructure and still being worked on** — they are not yet active in your account.

Once enabled, eligible users may receive cash dividends, which may vary depending on issuer actions, applicable withholding taxes, and jurisdictional or operational requirements.

</details>

<details>

<summary><strong>How will dividend taxes be handled?</strong></summary>

Once dividends are enabled, applicable withholding taxes may apply depending on your jurisdiction, the issuer's jurisdiction, and relevant tax rules. To qualify for any tax-treaty treatment, you will need to complete a **Form W-8BEN** (or a similar certification).

You should consult your own tax adviser regarding your individual tax treatment.

</details>

<details>

<summary><strong>How will stock splits, mergers, and other corporate actions be handled?</strong></summary>

Mandatory corporate actions — including stock splits, reverse splits, mergers, and certain spinoffs — are **supported by the brokerage infrastructure**. Having these reflected in your Backpack balance is **still being worked on** and is not yet active in your account.

Once enabled, treatment may vary depending on issuer actions, brokerage support, regulatory requirements, and operational considerations.

</details>

<details>

<summary><strong>Will I get voting rights?</strong></summary>

Voting rights for certain securities are **supported by the underlying brokerage infrastructure** and are **still being worked on** — they are not yet active in your account. Once enabled, voting may be available for certain securities, subject to issuer arrangements, applicable regulations, and operational limitations.

</details>

***

#### Liquidity & market structure

<details>

<summary><strong>Does Backpack connect to real market liquidity?</strong></summary>

Yes. Backpack Securities connects to established U.S. market infrastructure, giving you access to liquidity and pricing anchored to **real equity markets**, including NYSE- and NASDAQ-listed securities.

</details>

<details>

<summary><strong>Are trades internally matched or synthetically priced?</strong></summary>

No. Backpack Securities operates through established brokerage and clearing infrastructure supporting **real underlying securities transactions** and market-based pricing. It is not a synthetic price-exposure product.

On Backpack, trades are quote-based: you're shown a short-lived quote that auto-refreshes while you review the order, rather than placing orders into a user-facing order book. Behind the scenes, execution may involve standard brokerage routing and execution processes depending on market structure and operational considerations.

</details>

***

#### Transfers

<details>

<summary><strong>Can I transfer my stocks to another broker (ACATS / DTCC)?</strong></summary>

The underlying brokerage infrastructure supports traditional transfer systems, including **ACATS** and **DTCC**-related processes. External stock transfers are **supported by the brokerage infrastructure and still being worked on** — they are **not yet active in your account**.

For now, stock **cannot** be moved to an external wallet, broker, or another platform. The only way to exit a position is to sell it back to USD inside Backpack.

</details>

***

{% hint style="info" %}
**Disclaimer.** This page is general information only and is **not** legal, tax, or investment advice. Legal protections described here operate under applicable law, and exact outcomes can depend on court proceedings and the facts of a particular event. Backpack Securities is not offered in certain jurisdictions, including the United States, the United Kingdom, the United Arab Emirates, and Japan, and is not offered on Backpack EU. Please consult your own legal, tax, and financial advisers regarding your individual circumstances.
{% endhint %}


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://support.backpack.exchange/exchange/backpack-securities/real-ownership-and-legal-framework.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.