Intro to the Stock Market

Stock Ownership

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.
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The information and content provided in the Scottrade® Knowledge Center is for informational and/or educational purposes only. The information presented or discussed is not, and should not be considered, a recommendation or an offer of, or solicitation of an offer by, Scottrade or its affiliates to buy, sell or hold any security or other financial product or an endorsement or affirmation of any specific investment strategy. You are fully responsible for your investment decisions. Your choice to engage in a particular investment or investment strategy should be based solely on your own research and evaluation of the risks involved, your financial circumstances and your investment objectives. Scottrade, Inc. and its affiliates are not offering or providing, and will not offer or provide, any advice, opinion or recommendation of the suitability, value or profitability of any particular investment or investment strategy.