Series 7: 1.2.4 Transfer Of Common Stock

1.2.4  Transfer of Common Stock

Securities may be held in one of the three following ways:

1. 1. Physical certificate. The stock is registered in the owner’s name on the issuer’s books, and a stock certificate is delivered to the door of the owner or his broker.
2. 2. Street name registration. The security is registered on the issuer’s books in the name of the owner’s brokerage firm (thus, “street” name, referring to Wall Street), and the brokerage holds the security in book-entry form.
3. 3. Direct registration. The security is registered on the issuer’s books in the owner’s name, and either the company or its transfer agent (see the following section) holds the security in book-entry form on the owner’s behalf.

Because the physical transfer of stocks is unwieldy in a market where millions of shares are traded every day, the ownership of physical stock certificates is being phased out. Today most common stock shares are held in street name.

For those who still hold physical certificates, the transfer of ownership is done by endorsing and assigning the certificate to the new owner. The seller must fill out an assignment and power of substitution form located on the back of the certificate. This identifies the name of t