Show pageOld revisionsBacklinksBack to top This page is read only. You can view the source, but not change it. Ask your administrator if you think this is wrong. ====== Nominee ====== A Nominee (often encountered as '[[street name]]' registration) is a person or a firm that holds legal title to an asset, like stocks or bonds, on behalf of another person, the actual owner. Think of it like giving your house keys to a trusted property manager. They are listed as the contact and handle the day-to-day management, but you remain the true owner with all the rights to live in it, rent it out, or sell it. In the investment world, your [[brokerage account]] is the most common example. Your broker is the "registered owner" of the shares you buy, holding them in their name for you. You, however, are the '[[beneficial owner]]', which means you get all the economic perks—the [[dividends]], the gains if you sell, and the right to decide how the shares are voted. This system was designed to make the plumbing of the financial markets run smoothly, replacing clunky physical [[stock certificate]]s with an efficient electronic system. ===== Why Bother with a Nominee? ===== At first, the idea of someone else's name being on your hard-earned shares might sound a bit unsettling. But the nominee system is the unsung hero of modern investing, making your life vastly easier. Before this system became widespread, buying and selling stocks was a slow, paper-intensive nightmare. The modern system, where your broker acts as a nominee, is all about speed and simplicity. The vast majority of publicly traded shares in the U.S., for instance, are technically registered under one name: '[[Cede and Company]]', the nominee for the [[Depository Trust Company (DTC)]]. The DTC is a massive central clearinghouse that acts as a bookkeeper for brokers. This centralization means that when you sell a share of Apple, no paper certificates need to be mailed from your broker to the buyer's broker. Instead, it's just a simple electronic bookkeeping entry. The key benefits for you, the investor, are: * **Speed:** Trades settle in just a day or two, not weeks. This allows you to react quickly to market changes. * **Safety:** There's no risk of losing a physical stock certificate to fire, theft, or a very thorough spring cleaning. Your ownership is recorded electronically. * **Simplicity:** All your holdings are consolidated in one account, making it easy to track your portfolio, manage dividends, and handle taxes. ===== The Investor's Experience: You're the Real Boss ===== Don't worry, being the beneficial owner means you still call all the important shots. Your broker is legally obligated to act on your instructions and pass along all the benefits of ownership. Here’s what you still control: * **Dividends and Interest:** Any cash payments from your investments are collected by the nominee and deposited directly into your brokerage account. * **Voting Rights:** When a company needs shareholder approval, your broker will send you the '[[proxy voting]]' materials and is required to cast your vote according to your instructions. You still have a voice in the company's decisions. * **Corporate Communications:** You will still receive important documents like the [[annual report]], quarterly updates, and other shareholder information. * **Selling:** You have the absolute right to sell your shares at any time. Your broker is simply there to execute the trade on your behalf. ===== A Value Investor's Perspective ===== A [[value investing|value investor]] prizes transparency and control. While the nominee system is incredibly efficient, it’s worth understanding the trade-offs. Because your shares are pooled with other investors' shares at the brokerage, a layer of separation exists between you and the company you've invested in. For the vast majority of investors, this is purely academic. However, it's a reminder of the importance of choosing a stable, reputable, and well-capitalized broker. In the rare event of a brokerage firm's failure, untangling who owns what can be complex, though investor protection schemes like the [[SIPC]] in the United States provide a significant safety net. For the everyday value investor, the convenience and safety of holding shares in a nominee account far outweigh the remote risks. The core principle remains the same: //know what you own//. And in this case, that also means //know who is holding it for you//. A great business at a fair price is the goal, and a trustworthy broker is simply the secure vehicle for holding that investment.