Definition
The term street name refers to securities that are owned by an investor, but held in the name of a financial institution. At one time, holding stock in street name was important to facilitate the speedy transfer of securities following a trade.
Explanation
When securities are purchased through a broker, they are typically put into street name, which means the securities are held in the name of the brokerage house or its nominee. While the securities will not bear the name of the buyer, the broker maintains records indicating the true owner. Investors will not receive a stock certificate, but will receive monthly or quarterly statements from the broker indicating their holdings.
At one time, securities were held in street name to facilitate transfers, since it eliminates the need to physically send certificates to individual investors. Today, most securities are held in electronic form, thereby eliminating the need to physically deliver certificates to the owner. However, holding securities in street name allows for their seamless transfer when traded.
Even when held in street name, the investor retains all of the benefits associated with ownership such as the payment of dividends. While the most common arrangement is for a broker to hold securities in street name, it is possible to have them registered in the investor's name.
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