Once a new account has been set up, the customer must establish service instructions for the payment and delivery of securities and the servicing of the account.

The registered representative gives the new account owner several options:

  • Transfer and Ship: This instruction means securities are transferred into the customer's name and delivered to the customer. These securities are not recorded on the firm's records, and the customer assumes full responsibility for them and for communication with the issuer. Also referred to as"Mail Securities in Customer Name".

  • Transfer and Hold: This instruction means securities are transferred into the customer's name, but held in segregation by the broker-dealer for safekeeping. The customer's name will appear on the issuer's stockholder records, so when the issuer distributes reports, pays dividends and mails proxies, they go directly to the customer. Also known as "Hold Securities in Customer Name".

  • Hold in Street Name: This instruction means securities are registered in the broker-dealer's name and held there, with the customer as beneficial owner. This is the most common form of delivery today; in fact, many new account forms will not have this option listed, as it is assumed that securities will be held in street name unless the customer specifies otherwise.

  • Hold or Mail Payments: This instruction means that when dividends and/or interest payments for street name securities are paid out, the customer can decide whether to have them credited to the account or sent to the address of record.

  • Forward to Another Address: This instruction means securities or checks can be forwarded to another address either permanently or temporarily, depending on the customer's instructions.

  • Delivery versus Payment: DVP securities are delivered to a bank of depository and settle COD. This type of delivery and payment is used primarily for institutional accounts.


Exam Tips and Tricks
Make sure you understand the differences between the first three types of service instructions, especially holding securities in street name, as these are the most common types of services.

Maintaining Customer Accounts

Related Articles
  1. Managing Wealth

    Letter Of Instruction - Don't Leave Life Without It

    This simple document can take the guesswork and headache out of settling your estate.
  2. Personal Finance

    8 Low-Cost Ways To Transfer Money

    If cost is your primary concern, there are several cheap(er) ways to move funds.
  3. Financial Advisor

    FINRA Rule 2273: Your Recruiting Questions Answered

    An in-depth look at and Q&A on FINRA's new recruiting practices rule, which goes into effect in November.
  4. Investing

    The Importance Of Analyzing Accounts Receivable

    While investors often focus on revenues, net income, and earnings per share, they should not overlook the importance of analyzing accounts receivable.
  5. Personal Finance

    How Credit Card Balance Transfers Work

    The pros and cons of credit card balance transfers.
  6. Investing

    5 Money Transfer Tips For Foreign Workers

    If you are working in the U.S. as a foreign worker, here are some tips for sending money back home.
  7. Small Business

    In Small Business, Success Is Spelled With 5 "C"s

    Incorporating these steps will help your business thrive in a competitive market.
  8. Investing

    What Does a Transfer Agent Do?

    Transfer agents maintain the records and documents related to shareholder accounts.
  9. Small Business

    Explaining Cash On Delivery

    Cash on delivery, also referred to as COD, is a method of shipping goods to buyers who do not have credit terms with the seller.
  10. Personal Finance

    How To Break Up With Your Bank

    Whether you're moving or have just found a better no-fee plan, find out how to switch banks with ease.
Frequently Asked Questions
  1. What's considered to be a good debt-to-income (DTI) ratio?

    Your debt-to-income ratio helps lenders determine your credit worthiness. Find out how to calculate your score and how to ...
  2. What is the difference between a loan and a line of credit?

    Learn to differentiate between lines of credit and standard loans, and determine when you are likely to use each method of ...
  3. What does a Chief Financial Officer (CFO) do?

    A CFO is responsible for accurate reporting of a company's financial information, investing the company's money and identifying ...
  4. How did George Soros break the Bank of England?

    George Soros pocketed $1 billion by betting against the British pound, cementing his reputation as the premier currency speculator ...
Trading Center