Home » Trading » How to Buy and Sell Stock Without a Broker
Yes, you can buy/sell stock from/to a friend, relative or acquaintance without going through a broker. Call the company, talk to their investor relations person, and ask who the Transfer Agent for the stock is. The Transfer Agent is the person who accomplishes the transfer, i.e., by issuing new certificates with the buyer’s name on them. The transfer agent is paid by the company to issue new certificates, and to keep track of who owns the company’s stock. The name of the Transfer Agent is probably printed on your stock certificates, but it might have changed, so it is best to call and check.
The back of the certificate contains a stock power, i.e., those words that say you want the shares to be transferred. Fill out the transferee portion with the desired name, address, and tax id number to be registered. Sign the stock power exactly as the certificate is registered: joint tenancy will require signatures from all the people listed, stock that was issued in maiden name must be signed as such, etc. In addition to signing, you must get your signature(s) guaranteed. The signature guarantee is an obscure ritual. It is similar to a notary public, but different. The people who can provide a signature guarantee are banks and stock brokers who are members of an exchange. Now, your stock broker might not be too happy to see you and help you when you are trying to avoid paying a commission, so I suggest you get the guarantee from your bank. It’s very easy. Someone at the bank checks your signature card to see if your signature looks right and then applies a little rubber stamp. Also, if you have the time, have the transferee fill out a W-9 form to avoid any TEFRA withholding. W-9 forms are available from any bank or broker.
Then send it all to the transfer agent. The agent will usually recommend sending securities registered mail and insuring for 2% of the total value. For safety, many people send the endorsem*nt in a separate envelope from the stock certificate, rather than using the back of the stock certificate (if you do this, include a note that says so.) SEC regulations require transfer agents to comply with a 3 business day turn-around time for 90% of the stock transfers received in good standing. In a few days, the buyer gets a stock certificate in the mail. Poof!
There is no law requiring you to use a broker to buy or sell stock, except in certain very special circ*mstances, such as restricted stock, or unregistered stock. As long as the stock being sold has been registered with the SEC (and all stock sold on the exchanges, NASDAQ, etc. has been registered by the company), then the public can buy and sell it at will. If you go out and create yourself a corporation (Brooklyn Bridge Inc), do not register your stock with the SEC, and then start selling stock in your company to a bunch of individuals, advertising it, etc, then you can easily violate many SEC regulations designed to protect the unsuspecting public. But this is very different than selling the ordinary registered stuff. If you own stock in a company that was issued prior to the time the company went public, depending on a variety of conditions in the SEC regulations, that stock may be restricted, and restricted stock requires some special procedures when it is sold.
In brief: I do not believe that the guy who offers on the net to sell people 1 share of Disney stock is violating any rules. Just for full disclosure: I’m not a lawyer.
Article Credits:
Contributed-By: Franklin Antonio, Henry Chan Desu
FAQs
Direct Stock Purchase Plans (DSPPs) allow investors to purchase shares of company stock directly from the company itself. Specifically, trades are completed through a transfer agent. That means you could buy stocks without a broker, full-service or online, to complete the transaction.
Can you buy and sell stocks without a broker? ›
Do you need a broker? The short answer is no—you don't need a living, advice-giving, fee-charging broker (although you shouldn't rule them out). You do, however, need a brokerage—the online storefront where you purchase stocks, bonds, exchange-traded funds (ETFs), and other investments.
How can I invest in stocks and shares without a broker? ›
Your first option is to buy stocks directly from the company itself, known as a direct stock purchase plan (DSPP) or direct investment plan. In other words, you will need to know precisely what companies you want to invest in and then determine the protocols for buying shares in the company through their own platform.
Can I sell shares without using a broker? ›
Yes, you can buy and sell stocks on your own without an investment bank or brokerage firm.
How do I sell stock certificates without a broker? ›
Via the transfer agent: The transfer agent is a firm responsible for managing stock transfers on behalf of a publicly traded company. To sell your old stock certificates through the transfer agent, you should get in touch with them and complete a stock transfer form.
Can I buy and sell stocks by myself? ›
To buy stocks, you'll typically need the assistance of a stockbroker since you cannot simply call up a stock exchange and ask to buy stocks directly. When you use a stockbroker, whether a human being or an online platform, you can choose the investment that you wish to buy or sell and how the trade should be handled.
Can I directly buy and sell shares? ›
You cannot purchase shares directly from the stock market, and you have to use the services of a broker. A broker is a financial intermediary, acting as the link between you and the stock market.
Why do I need a broker to trade? ›
Because securities exchanges only accept orders from individuals or firms who are members of that exchange, you need a broker to trade for you—that is, to execute buy and sell orders. Brokers provide that service and are compensated either through commissions, fees, or payment by the exchange itself.
Is direct stock purchase a good idea? ›
Promotes stronger investor relations
For the company itself, direct stock purchases can be beneficial because it promotes stronger investor relations. Since shares are purchased directly, the company can reach out to investors directly to promote and share information.
How much does a stock broker cost? ›
The standard commission for full-service brokers today is between 1% to 2% of a client's managed assets.
Executing the Transaction:
The core of the process involves selecting the specific stock you wish to buy or sell. You will need to input essential transaction details, including the quantity of shares to be bought or sold, and then place the buy or sell order on the trading platform.
Is shorting a stock illegal? ›
Though short selling has been legal for the past century, some short-selling practices have remained legally questionable. For example, in a naked short sale, the seller doesn't first track down the shares that are then borrowed and sold.
Can I directly sell shares without buying? ›
Money can be made in equities markets without actually owning any shares of stock. The method is short selling, which involves borrowing stock you do not own, selling the borrowed stock, and then buying and returning the stock only if or when the price drops. The model may not be intuitive, but it does work.
How to buy and sell stocks without a broker? ›
Direct Stock Purchase Plans (DSPPs) allow investors to purchase shares of company stock directly from the company itself. Specifically, trades are completed through a transfer agent. That means you could buy stocks without a broker, full-service or online, to complete the transaction.
How do you prove ownership of a stock? ›
Your securities held in registered ownership form can be represented by a physical certificate or can be in book-entry form at the company (also called the issuer) or its transfer agent (which is often referred to as “direct registration.”) In general, the term “book-entry” simply means that you do not receive a ...
How to sell stock immediately? ›
KEVIN: A market order is your go-to when you want to get out of a trade as quickly as possible during standard market hours. Generally, they execute immediately, but remember, the trade-off here is price. You will receive the current price, which could be different from the last bid you saw.
Do I need a broker to sell stock? ›
Yes, you can buy/sell stock from/to a friend, relative or acquaintance without going through a broker. Call the company, talk to their investor relations person, and ask who the Transfer Agent for the stock is.
How do beginners buy stocks? ›
To trade stocks, you need to set clear investment goals, determine how much you can invest, decide how much risk you can tolerate, pick an account at a broker that matches your trading style, fund your stock account, and start trading.
