Thought Leadership
Industry Issues
How Investors Can Go Paperless
Convert your existing certificates
Q. Can I swap my paper stock for paperless securities?
A. Yes. It's relatively easy.
Q. How do I swap?
A. Simply call your broker or bank and ask about converting your certificates to book-entry or "street-name" registration. Your broker will also explain the periodic reporting statements you'll receive that list the shares in your account and serve as evidence of ownership. Or, if you don't have a broker or bank with which you regularly do business, call the transfer agent who sends you notices about your stock—and ask about converting your paper holdings to statement form. Many transfer agents also have web sites that can tell you how to exchange your paper certificates for electronic ownership.
Request electronic ownership
Q. How can I avoid having to accept paper certificates when I buy stock?
A. Ask whether the company whose stock you're buying participates in the Direct Registration System (DRS). If the company does, you can have your shares registered electronically directly on the company's own books or those of its transfer agent.
Q. If there's no paper certificate for me to hold, who holds the security?
There are two ways investors can hold electronic certificates. One is in "street name" with their broker or a custodian bank. The other is through direct registration with the company that issued the stock.
Q. What's direct registration?
A. After you buy shares in a company, direct registration allows you to register your ownership directly on the books of the company, or its transfer agent, without the risk, costs and delays associated with holding a physical certificate. The national program for this is called the Direct Registration System or DRS.
Q. So what's "street name" registration?
After you buy shares in a company, you hold them in an account with a brokerage firm or custodian bank in "street-name", again without the risk, costs and delays associated with holding a physical certificate. "Street name" means the broker has you on its books as the owner, but the company whose shares you bought doesn't know you're the owner. Sometimes investors don't want the company to contact them or know that they own the shares.
Q. How many companies make their shares available as paperless securities through the Direct Registration System?
A. More than 1,000, including some of the largest U.S. companies such as Coca Cola, Microsoft, Procter & Gamble, Aflac, eBay, McDonalds, Abercrombie & Fitch and the Whirlpool Corporation.
Q. How many people own paperless electronic shares?
A. There are about 38 million investor accounts that now own paperless shares through the Direct Registration System (DRS).
Q. Are there any companies whose shares are entirely paperless?
A. Oh yes. The largest company so far to issue electronic shares only is AT&T. In 2002, as part of a five-for-one stock split, AT&T redeemed 2.7 million shares of common stock and issued new shares electronically through DRS, the Direct Registration System.
Q. What if I want to leave the shares with my broker?
A. That's easy too. Tell your broker or bank you want your shares registered in "street name". That means they hold your share in a paperless form for you, with you registered as the owner on the account.