I didn’t want to use Reddit, so thanks for providing the other site. Direct registration does make a lot more sense, I didn’t even know there was a separate agency underwriting my stocks, but if the transfer agent at a particular company can transfer the stocks to your name, why is that not yet part of the system?
I know I’m not being super clear but that’s because I buy my stocks through a third party brokerage and don’t really understand the details.
I guess my question is why is direct registration not the norm (I’m guessing advantageous capitalism) and is direct registration a new movement?
That is the perfect question. It should be the norm for long term investments.
I don’t know when it was but the large banks/brokers lobbied and made it against the law for companies to tell (or even suggest) there investor to DRS.
The only down side I know of is that when selling, shares have to be paired with a buyer, which isn’t instant (may even take a couple days).
But the up side is they cannot lend your shares to short them against you. Also, if the price was to go brrrrrrrrr and be in the hundreds or more (cough cough millions) brokers can sell your shares for you, at any price, and say it was for your safety as the stock was volatile.
Yes! Or more accurately “lend” them to someone who will.
Even if you have a broker that promises not to there is minimal regulation to stop them and if they get caught the fine is a (small) fraction of the money they make on that transaction (which is just a cost of doing business). I believe this was shown in r/superstonk just by someone looking at the sec filing.
That’s crazy, it feels a lot like the fractional reserve scheme or also when banks can lend the money out and you get a ridiculous interest rate back on the money they’re making off of your money.
I’m going to look into shorting the stock you buy though, since I don’t know about that one yet. Thanks!
I didn’t want to use Reddit, so thanks for providing the other site. Direct registration does make a lot more sense, I didn’t even know there was a separate agency underwriting my stocks, but if the transfer agent at a particular company can transfer the stocks to your name, why is that not yet part of the system?
I know I’m not being super clear but that’s because I buy my stocks through a third party brokerage and don’t really understand the details.
I guess my question is why is direct registration not the norm (I’m guessing advantageous capitalism) and is direct registration a new movement?
That is the perfect question. It should be the norm for long term investments.
I don’t know when it was but the large banks/brokers lobbied and made it against the law for companies to tell (or even suggest) there investor to DRS.
The only down side I know of is that when selling, shares have to be paired with a buyer, which isn’t instant (may even take a couple days).
But the up side is they cannot lend your shares to short them against you. Also, if the price was to go brrrrrrrrr and be in the hundreds or more (cough cough millions) brokers can sell your shares for you, at any price, and say it was for your safety as the stock was volatile.
Wait a tick. if I buy 100 shares of Microsoft from a brokerage, the brokerage can still short those shares that I have bought?
Yes! Or more accurately “lend” them to someone who will.
Even if you have a broker that promises not to there is minimal regulation to stop them and if they get caught the fine is a (small) fraction of the money they make on that transaction (which is just a cost of doing business). I believe this was shown in r/superstonk just by someone looking at the sec filing.
That’s crazy, it feels a lot like the fractional reserve scheme or also when banks can lend the money out and you get a ridiculous interest rate back on the money they’re making off of your money.
I’m going to look into shorting the stock you buy though, since I don’t know about that one yet. Thanks!