Some months ago I started to read some books and web sites about investing.
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
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
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
- posted 16 years ago