Account Registration For Stock Trading

If you have securities in your account, your broker or transfer agent must register them. This can be done electronically through DTC's FAST transfer agents or a depository's file transfer protocol.

Your broker/transfer agent must also inform you of the credit terms of your account and the status of your share registries. This information must be provided when opening the account and annually thereafter.

Brokers and Dealers

Brokers and Dealers must register with the Securities and Exchange Commission (SEC) as well as any self-regulatory organizations of which they are members, complying with state law and SRO rules, including financial responsibility requirements.

Broker-dealers are firms that purchase and sell securities on behalf of another individual or business. Additionally, they provide investment advice as well as recommend products which could result in commission payments for them. Lastly, broker-dealers must be able to disclose information about their own securities to customers.

The Securities and Exchange Commission ("SEC") has promulgated Rules Governing Broker-Dealers Under the Securities Exchange Act of 1934 (15 U.S.C. 77a-b(b)). These rules set forth how broker-dealers must conduct business, along with their obligations regarding customer suitability. They require them to identify each customer's needs, objectives and other security holdings before making recommendations based on those findings.

Broker-dealers must guarantee each client's portfolio is adequately diversified and there is sufficient liquidity in the market to meet their needs. Furthermore, they guarantee that client investments remain safe from fraud or other illegal activities.

Furthermore, broker-dealers must maintain enough liquid assets to pay out customers' claims should the firm go out of business. The SEC has implemented minimum net capital requirements on broker-dealers based upon the type of securities activity they engage in and other factors.

Regulation AC requires brokers, dealers and persons associated with broker-dealers to disclose the amount, source and purpose of any compensation received for writing research reports. They must also include in each such report a certification that the analyst's views expressed are their own.

Regulation AC requires broker-dealers and their affiliated persons to file and maintain records of analyst certifications. Furthermore, unregistered entities cannot receive compensation on behalf of a registered representative.

Before acting in multiple capacities as both a broker-dealer and associated person, brokers or dealers must obtain the prior written consent of their employers. The employer must sign the consent letter and file it with the department; it must include original signatures, be dated, and be signed by an officer, partner or other authorized person of similar rank.

Generally, broker-dealers must have at least $250,000 in net capital to cover customer account transactions and other liabilities. The exact amount required by the SEC depends on the types of securities activities a broker-dealer engages in, such as whether or not it clears and carries customers' accounts.

Broker-dealers that engage in certain businesses may need to register with the SEC and a securities regulator in each state where they have customers. Furthermore, these authorities have the power to inspect a broker-dealer's books and records at any time for compliance with applicable financial responsibility rules.

Stock Purchase Program

The Stock Purchase Program is an incentive that allows employees to buy shares of their company's stock at a discount, with funds deducted from their paychecks. Employees often welcome this plan as it gives them the opportunity to become owners of the business.

Participating in an ESPP offers many advantages to employees. Not only does it give employees a sense of ownership, but also increases employee morale and loyalty. Furthermore, ESPPs give workers the chance to build up their retirement account through tax-favored investing.

Participating in an ESPP is a benefit that many employees can take advantage of, yet setting it up and managing it can be daunting. Fortunately, E*TRADE provides several tools to assist you with setting up and administering your ESPP.

When selecting an ESPP, make sure it is tax-qualified and features a lookback provision. These features can significantly affect the amount of gain realized when selling shares.

Many qualified ESPPs include a "lookback" feature that permits you to purchase company stock at either the start or end of the offering period, whichever is lower. This means you could buy stock for 10% below market value during the offering period or at $15 per share on purchase date.

Investors with money to spare may benefit from buying shares at a bargain and holding them for long periods. Furthermore, employees who believe in their employer's future could potentially acquire shares in the business.

When investing in an ESPP, your contributions may be deducted from your paycheck as either a percentage or flat dollar amount. These deductions accumulate until the offering period ends, at which point these funds can be used to purchase stock in the company of your choice.

Once you have purchased your company's stock, you can use these funds to buy more shares at a deeper discount from the same company. Doing this helps lock in profits and avoid having to sell at market prices.

You can then transfer these ESPP shares to a brokerage account of your choice. This is an ideal option for anyone wanting to invest in their company's stock but does not have the time or desire full control over investment decisions.

Broker-dealers who sell securities on behalf of their clients must comply with financial responsibility rules and be registered with either the SEC or one of its designated self-regulatory organizations (SROs). Furthermore, these firms must meet certain criteria for their own financial practices as well as reporting examination results to the SEC.