I was reading about the roles of clearing houses and brokers who are involved in the purchasing and selling of stocks. The brokers are authorised by an exchange to trade stocks on behalf of their client and clearing houses are middlemen that help to complete the deal in some terms.
However, I was wondering how the ownership of a stock would be tracked if the shares of a company after an IPO are sold to secondary external investors.
For instance, say Bob buys a share of TSLA when it IPO’d. If my friend Dave buys this share of TSLA, by what process is Dave’s ownership of this share of TSLA ensured i.e. how does TSLA know that Bob no longer owns this 1 share of TSLA and that it’s now transferred to Dave instead, who is now entitled to its dividend payments after each quarter and any shareholder votes (if any).
EDIT: **e**nsured, not insured.
In: 10
Good question, I’m not sure about how currently but I think there would be software and systems to help with the transferring the ownership of shares.
But in the past, there were physical paper which you own in the recognition of you actually own the shares.
Gonna need someone better
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