Originally, investors received stock certificates when they bought shares of stock. The paper certificate would state the investor's name as well as the number of shares and any other important information. Because approximately three billion shares are traded every day, paper certificates have become impractical. Today, the vast majority of stock purchases are recorded electronically in book entry form. This way, when the stock changes hands, one investor's name can easily be changed for another on the electronic record.
You can register your securities in either street name or through direct registration when recording your investments in book entry form.
About 75% of all electronic registrations are done in street name, meaning the securities are registered in the name of your brokerage firm. Though you don't receive a paper certificate, you do receive periodic statements, interest and dividend payments (if the company pays dividends), annual reports and proxy statements. Furthermore, your securities are insured up to $500,000 total equities and cash, including $250,000 for most cash claims, against the possible bankruptcy of your firm through the Securities Investor Protection Corporation (SIPC). Keep in mind that only cash used for investment purposes is covered. For example, customers who use their money market as it is intended, to move money in and out of investments, would be covered by SIPC, but those who use the account like a checking account would not be covered.
With direct registration, securities are registered directly on the books of the issuer or its designated transfer agent. Very few listed securities are eligible for direct registration.