Shutterstock
You’ve likely heard a lot of buzz about “meme stocks” like GameStop and AMC Theaters. The amateur investors who swear by these outsider investments are a particular bunch with an aversion to anything they deem as coming from establishment investors.
Lately, retail investors are moving their shares from brokerages to an online agent called Computershare. If you’re not familiar with that name, you’re not alone. Until recently, Computershare was a relatively unknown company to most non-corporate investors.
Computershare is an online company that handles direct registration of securities. That might not sound like much that would get amateur investors excited, but the distinction between direct registration and street-name registration is enough for many meme stock investors to switch their stocks over.
Direct registration is a much more involved process than street-name registration, but it results in investors having their names recorded on physical certificates of their shares.
This is in contrast to the kinds of registration used by fee-free services like Robinhood, which are much faster but result in the investor’s name only being recorded in the brokerage’s records. As far as the SEC is concerned, the certificate of the share in question has the name of the brokerage on it—not the buyer.
Computershare allows investors to directly own their stocks. That doesn’t mean the site is user-friendly. It’s normally only used by corporate clients to register and trade their shares, not by individual retail investors. However, amateur investors in the modern era are more concerned than ever with the privacy and security of their trades.
As a case in point, look no further than the online outrage from retail investors when Robinhood disabled the ability to purchase GameStop stock in the middle of the January 2021 short squeeze. Robinhood’s move in this instance wasn’t a conspiracy; the app’s clearinghouse simply wouldn’t accept more risk by purchasing further shares of GameStop.
In spite of this perfectly reasonable explanation, many online investors took the instance to mean that institutional brokerages were against “the little guy.”
Should you move your shares to Computershare so they’re more secure and direct? Well, if you believe amateur investors on social media, you should. However, if you’re simply trying to manage your stock purchases and avoid fees on your investments, there’s still nothing wrong with fee-free apps like Robinhood.
