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Main / Glossary / Street Name

Street Name

In the realm of finance, billing, accounting, and business finance, Street Name refers to the practice of holding securities and assets in the name of a brokerage firm, rather than in the name of the individual investor or entity that actually owns them. This process, known as street name registration, allows for more efficient and streamlined trading and settlement processes.

Explanation:

When it comes to investing in securities such as stocks, bonds, or mutual funds, investors have the option to hold these assets in their own names or opt for a street name registration. The street name registration is facilitated through the Depository Trust Company (DTC), a central securities depository that provides electronic clearance and settlement services in the United States.

By holding securities in street name, investors can enjoy a range of benefits. Firstly, this method simplifies the trading process by allowing investors to buy or sell securities without the need for physical transfer or re-registration. Instead, transactions can be executed electronically through the broker’s account. Additionally, street name registration simplifies the accounting and record-keeping process, as the investor’s brokerage firm takes care of all administrative tasks related to ownership and transfer of securities.

Another advantage of street name registration is the increased level of privacy and security it offers. Since the investor’s name is not publicly associated with the securities they own, they can maintain a level of anonymity. This can be particularly beneficial for high-profile individuals, corporations, or investors who prefer to keep their holdings private.

Furthermore, street name registration allows for a smoother and more efficient dividend and interest payment process. When a dividend or interest payment is made by the issuer, it goes directly to the brokerage firm holding the securities, which then distributes the funds to the respective owners. By avoiding the need for physical checks to be sent to individual investors, this method significantly reduces the risk of payment delays or lost checks.

It is important to note that holding securities in street name does not signify any change in the ownership rights of the investor. Despite the assets being registered in the name of the brokerage firm, the investor maintains full ownership and rights as if they were held in their own name. In fact, the brokerage firm is legally obligated to act in the best interests of the investor and provide accurate reporting on the assets held in street name.

In summary, street name registration is a commonly used practice in the finance industry, allowing investors to hold securities in the name of their brokerage firm rather than in their own name. This method offers various advantages, including streamlined trading processes, enhanced privacy, simplified dividend and interest payments, and efficient record-keeping. By choosing street name registration, investors can enjoy the convenience and benefits provided by their trusted brokerage firms while maintaining full ownership and control over their investments.