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Custody-Only Trading

What does it mean?
A system in which shares must be registered to the holder by name and can only be traded in physical form.

In Other Words...
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 Links
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Related Terms
Bearer Form | Custodian | Holder of Record | Naked Shorting | Safekeeping | Transfer Agent

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Image Financial LLC is not a registered broker-dealer, but rather works in coordination with fully licensed broker-dealers, SIPC-insured clearing firms, and private trading firms to provide licensed and non-licensed clients with access to career trading programs and direct access trading capabilities.  Our firm and our network affiliates strongly recommend that all clients fully read and acknowledge all SEC risk disclosure statements available on our site and our affiliate broker-dealer websites prior to engaging in any live trading activity, and acquire a solid understanding of the risks inherent in active "day" trading.