“In street name” is a type of share-filing system used by brokerage firms in which the firm’s name and address — instead of the investor’s name and address — are placed on a share certificate. To ensure that the firm accurately knows how many shares each investor has, all tracking is done internally. One of the main advantages of an in street name share is that it is much simpler and quicker for investors to sell. The shares are placed in the firm’s name, not the investor’s, which also makes the investor’s share number confidential.
When a share is issued, it must have the owner’s name printed on it. With in street name, all the shares are stored electronically and registered under the brokerage firm’s address, though the firm does not really own the share. The brokerage firm does not have the legal authority to claim true ownership of the share, so the firm is unable to sell the share without the owner’s permission. These shares are among the most common with investors.
To ensure that each in street name share is assigned to its proper owner, the brokerage firm uses electronic tracking. Each share has a number attached to it, and the share database links this number to the share’s true owner. By doing this, the brokerage firm is able to keep track of who owns what share, without there being any confusion.
Using an in street name share is much easier for brokerage firms and investors. If the share is listed under the true owner’s name, and not the firm’s, then extra steps have to be taken when the investor sells the share. The firm would have to find the exact paper certificate, send it out to the issuing company and wait for the company to change the name on the share from the original owner to the new owner. This extra work makes selling shares take much longer if the brokerage firm is not listed as the owner.
Another advantage to using the in street name method is confidentiality, especially for investors who purchase a high number of shares. The issuing company, or any other entity, is unable to track how many shares the individual investor has, because all the shares are listed under the firm’s name. Unless the investor willingly makes the information public, the number of shares will be held in confidence by the brokerage firm.