Holding Securities

When an investor opens an account, they must decide where they want their securities to be held. The following methods are available:

  • Transfer and ship
  • Transfer and hold in safekeeping
  • Hold in street name

Transfer and Ship

Securities that are to be transferred and shipped will be registered in the customer’s name and will be sent to the customer’s address of record.

Transfer and Hold in Safekeeping

Securities that are to be transferred and held in safekeeping will be registered in the customer’s name and will be held by the brokerage firm.  The broker dealer may charge a fee for the safekeeping of the securities and the collection of dividends so long as the charges are reasonable and do not discriminate between customers. Customers may now elect to hold securities registered in their name electronically in book enter form through the Direct Registration System. The DRS system offered through the depository trust corporation will allow investors to hold their securities on the books of the issuer or the transfer agent. Investors who hold securities with the DRS will receive a statement from the issuer or transfer  agent.

Hold in Street Name

Securities that are held in street name are registered in the name of the brokerage firm as the nominal owner of the securities and the customer is the beneficial owner. Most securities are held in this manner to make transfer of ownership easier.

Also at this time, the customer will decide what they want to do with the distributions from the account.  Investors may have the distributions sent directly to them or they may have them reinvested or swept into a money market account.

The Depository Trust Company / DTC

The DTC is a centralized securities depository that acts as a national clearinghouse for the settlement of trades in DTC eligible securities. DTC transfers securities on a book entry or journal entry basis. DTC eligible securities include:

  • Corporate equity and debt securities
  • US Treasury and agency issues
  • Municipal bonds
  • Money market instruments
  • Mortgage backed bonds
TYPES OF ACCOUNTS

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