theo wrote:They are probably pretty rare, but I believe we have the right to hold physical proof of ownership of any securities. They wouldn't be terribly liquid, but it may be an option when/if we lose faith in the major brokerage houses.
Here's an excerpt from an article that seems to address this:
http://www.financialsense.com/contribut ... patriationI just want my assets out of the electronic systemBefore I get in to the nitty-gritty of moving your assets out of the electronic system, let's cover the entities likely to be involved:
The issuer of the stock shares or bond: generally a company, a municipality, a state government, or a country. (Read more about issuers.)
The transfer agent for the stock shares or bond: a bank or trust company an issuer uses to keep track of individuals or entities that own their stocks and bonds. Sometimes issuers act as their own transfer agents. (Read more about transfer agents.)
Broker/dealer or clearing firm: entity that holds typically holds your shares in electronic format in your behalf. (Read more about broker/dealers and clearing firms.)
How Do I Find the Transfer Agent for My Bond or Stock?
If an issuer uses a transfer agent, the information generally will be listed in the "investor relations" or "investor information" area of the issuer's website, usually in the "shareholder services" or "stock information" section.
The Securities Transfer Association, Inc. offers a list of members on its website.
And let's cover what your options are for holding your investments:
As an individual investor, you have up to three choices when it comes to holding your securities:
Physical Certificate — the security is registered in your name on the issuer's books, and you receive an actual, hard copy stock or bond certificate representing your ownership of the security.
"Direct" Registration — the security is registered in your name on the issuer's books, and either the company or its transfer agent holds the security for you in book-entry form. The "Direct Registration System" (also known as "DRS") allows investors to transfer securities held this way.
"Street Name" Registration — the security is registered in the name of your brokerage firm on the issuer's books, and your brokerage firm holds the security for you in "book-entry" form. "Book-entry" simply means that you do not receive a certificate. Instead, your broker keeps a record in its books that you own that particular security.
(slightly rearranged from "Holding Your Securities—Get the Facts," U.S. Securities and Exchange Commission, 03/04/2003)
By default, most brokerage accounts hold customers' assets in "street name."
And let's be realistic about the liquidity (ease of trading) of the three above options, which would include transaction speed and size of the market available to you.
Without being reintegrated into the electronic system, physical certificates themselves are not easy to sell because they have a limited market (your neighbor, perhaps). Reintegrating into the electronic system can take several weeks, and may involve fees.
Direct registration shares (which are still electronic) are moderately liquid, as some issuers and transfer agents offer a limited internal market for certain kinds of shares. You can transfer your electronic-format shares with the transfer agent/issuer to your brokerage account fairly easily, but the transfer itself may take several days to several weeks.
Street name registration offers the broadest market for your shares—any exchange that trades that stock or bond—and thus generally the most ease in selling your shares.
Getting Physical CertificatesProcess for Getting Physical Certificates
This is pretty simple: just contact the entity currently holding your assets in electronic format (likely your broker, or, if you participate in direct registration, the issuer or transfer agent) and request delivery of your physical certificates.
Things to note:
Your broker might require this request in writing.
You might be charged a fee per certificate (usually one per company or specific bond) by your broker and/or by the transfer agent/issuer.
Your broker may only accommodate moving the shares to the transfer agent or issuer for direct registration. You would then need to contact each transfer agent or issuer directly to request delivery of your physical certificates.
It might take several weeks for the electronic assets to convert to physical certificates.
Due to the difficulties and timeframes involved with re-introducing physical certificates into the electronic trading system, your broker may no longer be willing to hold open an account that is, from their standpoint, essentially empty (just like a bank wouldn't be thrilled to keep your checking account open after you'd pulled out all your funds).
Pros of Getting Physical CertificatesYour shares can't be short-sold by any financial entity.
You may more easily be able to use your securities as collateral for a loan (per the SEC's "Holding Your Securities—Get the Facts").
Cons of Getting Physical CertificatesUnless your neighbor is willing to purchase your shares (which you'd then sign over to him or her), your physical certificates will have to re-enter the electronic system to be tradable (see process for reintegration into the electronic system below).
This process may involve opening or re-opening a brokerage account.
This process can take weeks and can involve fees.
Certain types of certificates take more effort to re-introduce into the electronic system.
If your certificate is lost or stolen, specific procedures must be followed (see steps for replacing securities certificates).
Replacement certificates usually involve a fee.
Address updates must be sent to all transfer agents or issuers for your physical certificates.
Re-registering shares (for example: from joint tenants with rights of survivorship to a trust name) could involve reaching out to each issuer/transfer agent to make this change on each certificate, which could need to be re-issued, which would likely involve a fee per certificate.
Your homeowner's or renter's insurance policy may or may not provide coverage for your certificates stored at home.
Should something happen to you, tracking down all your physical certificates could be a challenge for your heirs and beneficiaries.
If you own a stock you don't plan on selling for a long time, holding it in certificate form is probably okay. But if you hold a certificate that you'd like to sell if things got choppy in the market, this likely is not a workable option