Securities

Frequently Asked Questions

Q: What is the Direct Registration System?
A: The Direct Registration System, or DRS, is a system that enables an investor to electronically move his or her security position held in direct registration book-entry form back and forth between the issuer and the investor's broker-dealer.

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Q: After I make my decision on how I want to hold my security, what do I do?
A: You should check with the issuer or your broker-dealer to find out if the issuer offers direct registration. If you are purchasing a security, tell your broker-dealer you want to hold your securities in direct registration. If you currently hold a certificate, you can mail or take your certificate either to the issuer or to your broker-dealer with instructions to change to direct registration. If you currently hold your security in street name registration, you can instruct your broker-dealer or the issuer to move your security position to the issuer for direct registration. In any situation, you will receive a statement of ownership from the issuer acknowledging your DRS book-entry position once the change has been made.

If you want a certificate or if you want to use street name registration, tell your broker-dealer your choice at the time of purchase. If you elect a certificate, one will be sent to you. If you choose street name registration, your broker-dealer will send you a confirmation and periodic account statements acknowledging your ownership. If you currently hold a certificate, you can deliver the certificate to your broker-dealer with instructions to change your registration to street name registration. If you currently hold in street name registration, you can tell your broker-dealer to obtain a certificate for you.

Q: What do I have to do to sell my security?
A: To sell a security held in direct registration, you can:

  1. instruct the issuer to sell your security (many issuers have programs in place to accommodate sale requests); or
  2. instruct your broker-dealer or the issuer to electronically move your security to your broker-dealer for your broker-dealer to sell; or
  3. request a physical certificate and deliver it to your broker-dealer to sell.
To sell a security held in street name registration, you can:
  1. instruct your broker-dealer to sell your security; or
  2. request a physical certificate and deliver it to another broker-dealer to sell; or
  3. instruct your broker-dealer or the issuer to electronically move your security to the issuer for the issuer to sell (many issuers have programs in place to accommodate sale requests) or to electronically move to another broker-dealer to sell.
To sell a security for which you hold a physical certificate, you can:
  1. deliver the certificate to your broker-dealer with your instructions to sell or
  2. deliver the certificate to the issuer with your instructions (a) to change the registration to DRS and move the position to your broker-dealer to sell if your security is eligible for direct registration or (b) for the issuer to sell if the issuer has a program in place to accommodate sale requests.

When selling a security through the issuer, the issuer will sell your security under the terms and conditions in place for that issue. For example, some sell orders will be executed on the day the issuer receives them, and some orders are aggregated for frequent, but not daily, execution. (Note: you should ask the issuer if it offers a selling service and what the terms and conditions are.) Proceeds from the sale will be mailed to you three business days after the date of sale.

When selling through your broker-dealer, your instructions will be acted on immediately and in accordance with the guidelines it provides to you. Proceeds from the sale will be made available to you or credited to your account three business days after the date of sale.

Q: Can I place a limit order? Market order? Stop order?
A: Only a broker-dealer can execute a limit, market, or stop order. As a result, you can place any of these types of orders only if you use a broker-dealer to execute a transaction for securities held in direct registration, street-name, or in certificate form.

Q: What about my relationship with my broker-dealer if I use direct registration?
A: You can maintain your relationship with your broker-dealer regardless of your choice of registration.

  • When you purchase a security to hold in direct registration, you can tell either your broker-dealer or the issuer to include pertinent broker-dealer information in the issuer's records.
  • If you do not have your broker-dealer information included in the issuer's records at the time of purchase and later want to or if you want to change the broker-dealer information in the issuer's records, you may do so. You should contact either your broker-dealer or the issuer to obtain information on the procedures and the documents required for such actions.

Q: If I hold certificates and there is a stock distribution, will I get a certificate for my additional shares?
A: If the issue is eligible for direct registration, you will probably receive a statement of ownership instead of an additional certificate.

Q: What are the fees associated with direct registration? With street name registration? With a certificate?
A: There are no fees charged by an issuer for direct registration. However, because broker-dealers offer differing services and plans, you should contact your broker-dealer to learn what, if any, fees it charges.

Q: If I opt for direct registration, what happens if I lose my statement of ownership?
A: If you ever need a duplicate statement of ownership, you should contact the issuer. The issuer will mail you a new statement of ownership.

Q: What happens if my physical certificate is lost or stolen?
A: Brokerage firms, banks, transfer agents, and corporations have procedures in place to help investors replace lost or stolen certificates. If your securities certificate is lost, accidentally destroyed, or stolen, you should immediately contact the transfer agent and request that a "stop transfer" be placed against the missing securities. Your broker may be able to assist you with this process.

The "stop transfer" helps to prevent someone from transferring ownership from your name to another's. The transfer agent or broker-dealer will report the certificates missing to the SEC's lost and stolen securities program. For more information please read our "Fast Answer" on Lost or Stolen Stock Certificates.

Q: How are my securities protected if I choose street name ownership?
A: Nearly all broker-dealers are members of Securities Investor Protection Corporation ("SIPC"). As a result your securities and money held at your broker-dealer are protected up to $500,000 with a $100,000 limit for cash. Many broker-dealers also carry insurance in excess of SIPC's coverage. However, SIPC does not protect you against losses caused by a decline in the market value of your securities. For more information about SIPC coverage, please read our "Fast Answer" on the Securities Investors Protection Corporation.