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What is Broker-Dealer Registration?

Filed in: Exam Content, Exam Prep

What follows is the transcript of the video above.

Let’s Try a Practice Question

In which form of registration is the broker-dealer identified as the normal owner of the securities?

  1. DRS
  2. Book Entry
  3. Street Name
  4. DWAC

The answer here is 3.

Who Is a Beneficial Owner?

Street name is the nominal owner, and the customer is the beneficial owner. The customer, also known as beneficial owner, gets to vote for the shares and the dividends. Then, the customer gets to decide whether and when to sell. The broker-dealer (the nominal) can endorse the certificate. This makes transferring shares easy. We put in that order to sell 100 shares of Apple, and do not have to endorse any certificate No, it’s not like that. They can grab any hundred shares that they have in the broker-dealer that are Apple shares because common stocks are all the same, and then the broker-dealer says, “Boom, it’s endorsed. Transfer.” Who do they give it to at that time? The transfer agent or the registrar? The transfer agent. The transfer agent takes the name of broker-dealer one off and puts on the name of broker-dealer two. Then the broker-dealers are each going to have their beneficial ownership that they are keeping records of. Remember that transferrers are all about transferring. Registrar keeps the registry; it is the registry of owners.

Written by Dave Meshkov

Dave's mission (and job: Managing Director of Course Design) is to make FINRA exam training engaging, approachable, and dare he even say, enjoyable. Having trained and coached over ten thousand students to exam success he knows how to present complex subjects in memorable and understandable ways. Prior to joining Knopman Marks in 2011, Dave practiced bankruptcy law at Weil, Gotshal & Manages and served as a law clerk in a the Southern District of New York Bankruptcy Court working on the General Motors and Lehman Brothers bankruptcies. Building on his legal expertise and training allows him to keep all our courses updated with the latest legislative and rule-making changes. Dave currently trains for the Securities Industry Essentials (SIE) exam and the Top-Off Series 6, 7, 24, 57, 63, 65, 66, 79, 86, 87, and 99 exams. He also delivers executive one-on-one training and shares his passion for learning outside of work as a ski instructor and yoga teacher. Dave graduated magna cum laude from Fordham Law School, and cum laude with a BA from the University of Pennsylvania.

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