Glossary
Street Name
The normal arrangement where a broker holds shares in its own name on a customer's behalf, while the customer remains the real owner.
Almost nobody's shares are registered in their own name at the company these days. The broker is recorded as the holder, and the broker's records say which customer each holding belongs to. The customer is the beneficial owner, entitled to the dividends, the votes, the proceeds and everything else that ownership carries.
The arrangement exists because it makes transfers quick. Moving shares between two customers of the same broker is a change to the broker's own records rather than a re-registration at the company, and that is part of what allows a trade to settle in a day rather than a week.
The consequences are small and mostly administrative. Company mailings and proxy votes arrive through the broker instead of directly, and perks a company offers to directly registered holders can require registering directly to claim. If the broker fails, the shares remain the customer's property, which is the situation SIPC exists to sort out.
Learn this properly
Lesson 3: How Buying a Stock Actually WorksBrokerage accounts, what happens in the seconds after you press the button, and order types explained without the jargon.
Related terms
- Brokerage AccountThe account that holds your investments and places your orders on an exchange, opened with a licensed broker.
- Settlement (T+1)The step after a trade where the shares and the cash actually change hands, which in the US now happens one business day later.
- SIPC ProtectionA program that restores customers' cash and securities up to published limits when a US brokerage fails, and never covers a fall in value.
- DividendA cash payment a company makes to its shareholders out of profits, most often once a quarter.
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