Do stocks or shares physically exist ?

Question

Are you actually physically delivering stock to a broker when you decide to sell the stock , who then physically has the stock at his brokerage and he then physically gives the stock to the client who bought it from you ?

or how does it work?

Answer 1

Believe it or not, the answer is yes.

There are 3 ways to hold shares. You can have certifcates sent to you. Your brokerage can hold them "in street name". When the shares are held "in street name", the certificate lists the brokerage as the owner, and the brokerage keeps track of who actually owns them. However, more and more companies now offer the option to keep track of your shares on their computers when you buy them directly from the company.

"For example, more than 5.5 million certificates, worth more than $20 trillion, are stored in the DTC vaults. Those certificates represent 83% of all outstanding NYSE-listed shares and 72% of outstanding NASDAQ Stock Market shares."

DTCC stands for Depository Trust & Clearing Corporation. It is the company that most (if not all) brokerages use to hold and manage the certificates.

Answer 2

Yes there are actually physically stock certificates

But when many people buy or own stocks they let their brokerage firm hold the stock for them.  This stock is usually is held in safekeeping at a depository,  Depository either hold the stock electronically for the transfer agent or hold "jumbo" certificates, but the maintain records of what brokerage firm owns them   The brokerage firm also maintains records that show what clients own the stock and where it's being held.

If a client holds their own certificate and decides to sell it, they must deliver it the brokerage firm in order to receive the proceeds of the sale.

When stock is traded, the brokerage firm keeps a record of who owns and where it's being held, the depository who holds the stock keeps a record of what brokerage firm own the stock.   When there's a trade, the depository just deletes one firm and replaces it with the other firm

Answer 3

There are stock certificates - which are actual pieces of paper.

However, most shares are held in "book-entry" form. There is just a record of the ownership. There is actually a third party - "a transfer agent" that is in charge of the record keeping for the company owned. It is often a bank or similar type of entity.

If your broker holds your stock, it is said to be held in street name (your brokerage firms name), and it is not at all in any paper form.

If you walk into a brokerage firm with a physical certificate they will ask you to sign it over to them, they will then have the certificate converted to book entry.