Direct registration system (DRS) transfers

DRS gives investors an alternative to holding their securities in "street" form. DRS allows investors to register their securities directly on the issuer's records in book-entry form at the issuer's transfer agent. With DRS, the investor may choose to have shares held at a transfer agent or request a physical certificate. Some issuers no longer provide physical certificates. If you need physical certificates, please check with Fidelity or the transfer agent to ensure a certificate may be requested. If shares remain at the transfer agent, then the transfer agent is responsible to deliver periodic account statements (at least annually). Other account maintenance such as dividend/interest payments, proxy materials, annual reports, etc., are mailed from the issuer or its transfer agent directly to the investor.

If you’d like to start a DRS transfer for shares in a nonretirement account, please chat with us. When prompted by the automated system, type in “DRS transfer” to be connected to the correct place.

Currently, Fidelity can only process DRS transfers from nonretirement accounts. Fidelity is the IRA custodian for brokerage assets held in a Fidelity IRA. Because of this, Fidelity must have custody or control of any fully paid security held in the IRA on the Fidelity^® Brokerage Platform, according to Securities and Exchange Commission (SEC) rules. Fidelity would not have custody or control of the assets that are held on the transfer agent’s DRS platform.

Accordingly, a Fidelity customer holding shares in a Fidelity IRA cannot transfer these shares via DRS without first distributing those shares in kind from a Fidelity IRA to a nonretirement Fidelity account. After the distribution of the shares to a nonretirement brokerage account, a customer would then be able to direct the shares to be transferred by DRS to the transfer agent for registration. However, please note that an in-kind distribution of shares from an IRA to a nonretirement account would be considered a taxable and reportable distribution to the IRA owner and, if the IRA owner is under 59½, the distribution would also be subject to a 10% early withdrawal penalty. Customers considering taking this action should carefully weigh the tax consequences involved.

You are able to request a future-dated transfer for when all shares have settled into your account. The future-dated request may be either a partial or full quantity. Please note that all shares must be settled by the date of the DRS transfer.

Shares held at Fidelity are registered in "street name." This means shares are registered as belonging to the brokerage firm for the benefit of its customers. The brokerage firm, in its records, lists the investor as the actual owner. You retain all ownership rights in the stock.

Shares purchased in a cash account, or a margin account without borrowing, are considered fully owned by the account owner. Fidelity does not lend out shares held in cash accounts or in margin accounts when no margin debit or loan exists.

It is important to understand that DRS shares are no longer held at Fidelity, and that the issuer’s transfer agent becomes responsible for dividend and interest payments, proxies, annual report mailings, account statements evidencing ownership of the security, and other recordkeeping and transactions for the security going forward. All trades occur through the transfer agent and are subject to their fees.

If your shares are not being loaned out, you’ll receive a dividend payment on the pay date of the security for the full amount. Fidelity also offers dividend reinvestment programs that will allow you to have your dividend applied toward the purchase of additional shares (including fractional shares).

When you send a DRS transfer, Fidelity does not immediately send the cost basis information with the shares. The cost basis information will follow the shares within 15 days of the transfer.