Custody-Only Trading
A system in which shares must be registered to the holder by name and can only be traded in physical form. Investopedia Says:
The adoption of custody-only trading requires any purchases or transfers of stock to be placed through the issuing company's transfer agent.
Some companies implement custody-only trading because it protects shareholders from naked short sellers as the shares must be physically held by the seller. Related Terms:
Bearer Form
Custodian
Holder of Record
Naked Shorting
Safekeeping
Transfer Agent |