Sealing the Deal: Traders After Hours

by David Jenyns on October 19, 2009

The selling broker, furthermore, must arrange to receive the stock certificate, properly endorsed, from his customer, so that it can be transferred to the buyer.

It will debit Customer A’s account with the purchase price of his stock and credit Customer B with the selling price of his stock. It can also arrange the delivery of Customer B’s stock certificate to Customer A.


On balance, House X may have commitments to deliver 1,500 shares of various stocks and to receive 1,200 shares of other stocks. For 1,500 shares of stock delivered, X is due to receive $68,500. For the 1,200 shares it receives, it owes $59,400.

To obtain a certificate in the customer’s name (or in the street name for easier handling), it sends the certificate for Customer B’s 200 shares of Inland Steel to the company’s transfer agent. The transfer agent issues a new certificate in Customer A’s name, punches the proper denomination in the border if it is for less than 100 shares, countersigns it, and cancels the old certificate. The stock certificate now goes to the buyer’s broker who sends it, by registered mail, to his customer.

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