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?
- Book Entry
- Street Name
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.