Hi,
Some months ago I started to read some books and web sites about investing. I have read something about technical and fundamental analyses, stock markets, and portfolios. But what I did not understand: what happens when someone buys shares in whole that chain: company - stock market - bank (provider of brokerage services) - person who purchases shares.
What is almost clear is direct purchasing scheme: company - person that purchases shares. So, for example, John Smith wants to purchase
100 shares of Microsoft. He comes to Microsoft's investors department and buys 100 shares directly. He receives a paper-certificate: John Smith owns 100 shares of Microsoft. So John can put these shares under his desk or put it in safe place somewhere: bank, loft etc.What is not clear here: are those typically named shares certificate with John Smith on it or they are not named?
But it's clear, that then he can do different actions with this shares certificate: pass it to his girlfriend as a gift; resell it to a friend on agreed price and so on.
But what actually happens when he purchases shares in NYSE via his bank? So it's the chain: company - stock - bank- person who purchases shares.
Suppose that John purchases 100 shares of Yahoo traded at NYSE market via his Citibank. So he says to person at Citibank or uses their online trading system: I want to purchase 100 shares of Yahoo on market price. He gets the reply: order executed.
Ok, but what was actually happened? It's clear: the order is registered in bank's data base with all needed information. But who holds his stocks: bank or people at NYSE market? And on whom name?
Do people working at NYSE have some kind of registry with the record: John Smith owns 100 shares of Yahoo. Or does NYSE have the record: Citibank purchased 100 shares of Yahoo for name of Citibank.
Where does Yahoo itself keep registry of shares? Or because Yahoo is publicly traded company it means their registry is hold at NYSE? Does Yahoo know that it is John Smith purchased 100 shares?
For example, John wants to change the bank and go to Barclays. Can he say to Citibank: please transfer my portfolio to account at Barclays? Is it possible? How?
I asked serious people around (they are just usual people, non-brokers), but it seems they don't have answers.
If someone from his newsgroup has knows the answers, please, let me know. Or give me names of books or URLs of sites that clearly explain that.