Series 99: 1.2.5.4 Transferring Physical Certificates

1.2.5.4  Transferring Physical Certificates

Recall that today, most securities are held in book-entry so transferring ownership is easy when a security is sold. In contrast, the process for transferring ownership of securities held as physical certificates is more difficult. When physical certificate securities are sold, sellers must follow rules of good delivery. Good delivery means that a security is in proper contractual and regulatory readiness for the transfer of the title. For example, a mutilated security certificate does not constitute good delivery unless it is first authenticated by the trustee or issuer.

The person selling a security must sign the security certificate to constitute good delivery. This signature constitutes the owner’s endorsement that the owner is turning the security over to another person. Usually, the certificate is signed on the back of the security and sent to the purchaser by registered mail. Another method is to enter the name of a third p