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 I buy and sell stocks without a broker? ›
While you don't need a broker to buy stocks, you'll need to work with a brokerage firm. Some brokerages will carry out trades on your behalf while others offer an automated robo-advisor.
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.
What ways can you buy shares directly from a company without going through a broker? ›
Direct Stock Plans — Some companies allow you to purchase or sell stock directly from them eliminating the need to use or pay commissions to a broker. But you may have to pay a fee for using the plan's services. Make sure to read the company's disclosure documents before you enroll.
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 invest in stocks, open an online brokerage account, add money to the account, and purchase stocks or stock-based funds from there. You can also invest in stocks through a robo-advisor or a financial advisor. If you're ready to invest in stocks yourself, this six-step process may help you get started.
Can an individual buy and sell stocks? ›
It is easy to get started buying and selling stocks, especially with the advancements in online trading since the turn of the century. If you're like the vast majority of American traders, you buy stocks from an investment firm or a brokerage firm.
Why are brokers necessary? ›
A broker is an intermediary between an investor and a securities exchange—the marketplace where financial assets are bought and sold. 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.
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.
How to buy and sell stocks for beginners? ›
Here's a step-by-step guide to start your stock investing journey.
- Open a brokerage account. First, you'll need a brokerage account to buy stock. ...
- Decide which stocks you want to buy. ...
- Decide how many shares to buy. ...
- Choose an order type. ...
- Place the stock order with your brokerage. ...
- Build your portfolio.
Log in to your online investment account: Then, find the shares you want to sell, which you can do online or via an app. Alternatively, you can sell them over the phone.
How to buy stocks independently? ›
You can open an account with an online brokerage, a full-service brokerage (a more expensive choice) or a trading app such as Robinhood or Webull. Any of these choices will allow you to buy stock in publicly traded companies. However, your bank account or other financial accounts will not allow you to purchase stocks.
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 do you cash in a stock certificate? ›
In order to cash in the stock, you need to fill out the transfer form on the back of the certificate and have it notarized. Once complete, send the notarized certificate to the transfer agent, who will register the stock to you as owner.
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.
Can I print my own stock certificates? ›
Whenever you order a certificate or print your own, there will generally be a fee that goes with it. Make sure you're aware of the fee before requesting the stock certificate. Also, keep the differences in cost in mind as you weigh the different outlets for getting a stock certificate.
Is it illegal to buy and sell stocks? ›
It is illegal to engage in insider trading, but it is legal to trade your company shares as long as you follow the guidelines set by the SEC. U.S. Securities and Exchange Commission. "Insider Trading." U.S. Securities and Exchange Comission.
Why do I need a broker to buy stocks? ›
A broker maintains your brokerage account and acts as the custodian for the securities you own in your account. It acts as an the intermediary between you and the stock market, buying and selling assets on your instructions.
How much does it cost to hire a stock broker? ›
Full-Service Brokerage Fees
If you want one of the broker's advisors to manage your portfolio and make investment decisions on your behalf, you'll typically pay a percentage of your portfolio's value each year. This fee can range from 0.20% to 1.5%, depending on the broker and type of management service.
