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Why are stocks held in my brokerage firm's name and not in mine?

Most stock and bond investors hold their securities certificates in the name of their brokerage firm. This is referred to as "street name".

You do not physically hold the certificates -- and your broker probably does not, either. Instead, most stock and bond certificates are held by a clearing corporation. At the end of each trading day, all purchases and sales are settled electronically without physically moving the certificates. An entry is made in the firm's book of record indicating who owns the stocks and bonds and who owes money to pay for them. Keeping your certificates in street name is a way of avoiding having them lost, stolen or destroyed in a fire, which is a risk if you keep them at home. There is also the problem of ensuring that you deliver them to your broker quickly when you want to sell. If you can not find them, or they are lost being sent to your broker, you will have to buy a replacement certificate. Street name allows fast and easy handling of certificates. That's important because Canadian regulators require transactions in most securities to settle no later than the third business day after the trade -- the "T+3" rule. You have three days to pay for a security if you're the buyer. If you're the seller, you have three days to deliver your certificate to your broker. One draw back of using street name may happen if you want to use a company's Dividend Reinvestment Plan (DRIP). DRIPs, offered by some companies, let shareholders buy more shares without paying commission. The company automatically uses your stock dividend payments to buy you more stock. Having your shares in street name may prevent or restrict your ability to take part in a DRIP. You should check with the company and your broker. If your certificates are registered in your own name rather than in street name, you possess the stock certificates and your name will be listed on them.