Owner vs. Owner of Record
At What Point Do You Become The Owner Of A Stock?
Although it may sound confusing, shareholder of record does not denote current ownership of a stock. Instead, it denotes who owned the stock three business days prior.
When you buy a stock, you own it the instant the trade is made. However, you are not the owner of record until three business days later. (See the definition of T+3 Settlement Rule in the column to the left.) That's because it takes three days to settle the trade and it's not until the trade is settled that the company knows you bought it. Upon settlement (three days after the trade), you are on the company's books as being the registered owner (also known as owner of record or shareholder of record ).
Say you buy a stock on a Monday. Because of the three day settlement rule, the trade settles on Thursday. Therefore, on Thursday you become the shareholder of record. Now, you bought the stock on Monday but what happens if you sell the stock on Tuesday? That trade doesn't settle until Friday (T+3), so even though you sold the stock on Tuesday, you're still the shareholder of record on Thursday. (That's because your sale doesn't settle until Friday, so as far as the company knows, you're still the owner.)
Obviously, since you sold on Tuesday, you're not the owner on Thursday, even though you're considered to be the shareholder of record.
For a more peculiar example (but a very common one), say you buy a stock on a Monday. Because of the three day settlement rule, the trade settles on Thursday. Therefore, on Thursday you would become the shareholder of record. But what happens if you sell the stock later that same Monday? That trade also settles on Thursday. Since your sale was after your purchase (on the same day), you are not the shareholder of record on Thursday. In fact, in such a circumstance, you are never the shareholder of record!
Of course you were the owner for a short time on Monday, otherwise you wouldn't get to keep the profit (or suffer the loss) when you sold it. You simply were never the shareholder of record.
So, being the shareholder of record is not the same as owning the stock.
And owning the stock is not the same thing as being the shareholder of record.
For a quick review, there are three important things to
The two terms, owner and owner of record, are not the
You become the owner of a stock the instant your buy
order is executed.
You become the owner of record upon the settlement of
the transaction (unless you sell the stock the same day you
000001 TS @ BD +3
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A day on which the stock exchanges and the banks, agencies & depositories for securities in New York State are open for business. Any day on which the stock exchanges are open but the banks are closed is not counted as a business day for the purpose of calculating dividend ex-dates.
Conditional Dividend/Distribution A dividend or distribution conditional upon an event or circumstance that has not yet happened at the time of declaration.
Declaration Date The date a dividend is declared by the company. The amount of the dividend is also declared except in some cases of a conditional dividend.
An ex-dividend date that occurs one business day after the payment date.
The payment of cash or securities that are not part of a company's earnings.
A payment of earnings to shareholders.
A statement of money owed.
Ex-Dividend/Distribution Date The first day on which a stock trades without the right to receive the dividend/distribution.
A dividend/distribution amounting to less than 25% of a company's stock price.
The registered owner of a security on the Record Date.
The day the dividend payment
Record Date The day a buyer of a stock must be the registered owner (owner of record) to receive a dividend.
Special Dividend A dividend that is not regularly scheduled.
The requirement that securities transactions be settled in three business days. (Before June 7, 1995, securities transactions were settled in five business days.)