Stock Record

What Is a Stock Record?

A stock record is a master list of the securities held by a brokerage firm in the interest of its customers. The rundown is refreshed with each transaction executed by the brokerage.

The stock record shows the name of the real and beneficial owner, the number of shares, and the locations of all securities held by the firm. The stock record is refreshed each time a trade is executed.

Grasping the Stock Record

A brokerage today purchases, holds, and sells shares in its own "street name," that is, the name of the brokerage as opposed to an individual client's name. In the background, the stock record records the name of the real owner.

That person is referred to in law as the beneficial owner. That is, the individual is the genuine owner of the stock even however its ownership might be recorded under another name, for example, a brokerage firm's name, for recordkeeping.

The Securities and Exchange Commission sets the rules for the creation and maintenance of the stock record.

Before automated technology showed up on Wall Street, stocks were issued to their owners as real bits of paper, called stock certificates.

The development of the stock record killed the requirement for a broker to surrender the paper securities to the customer. That significantly speeded up and simplified transactions.

The Rules

Security and Exchange Commission (SEC) Rule 17a-3 and Rule 17a-4 blueprint the base requirements for record-keeping in terms of their substance, creation, and maintenance rehearses and the period of time the records must be kept.

These rules are planned to safeguard customers and empower audits for compliance.

The Stock Record Department

All each brokerage has a stock record department that is accused of keeping up with accurate records of its transactions for the benefit of clients.

For every transaction, the stock record department must recognize the owner, the quantity of stock, and the location where the security is held or saved.

Today, most U.S. stock certificates are held at the Depository Trust Company (DTC). This New York City-based company was made in 1973 to in a real sense take custody of the business world's stock certificates.

From that time, it was presently excessive for stock certificates to be given over to their new owners. Regardless of how frequently a stock changed ownership, the certificate remained in place and the change in ownership was recorded. Today, the company keeps on working as a central record-manager for securities purchases and sales, as well as a clearinghouse for corporate and municipal securities.

The information in the brokerage stock record must match the information at the depository. The stock record departments handle reconciliations for errors on a daily, week by week, or case by case basis.

Features

• Each brokerage is required to keep a stock record.
• This is a master rundown of all transactions made for its clients and is refreshed with each transaction.
• In a period in which paper certificates are not generally issued, accurate record-keeping is essential.