Final answer:
When securities are held in street name, they are registered in the name of the brokerage firm or financial institution. This is common in margin accounts as it allows for easier transfer of ownership and margin requirements. It also enables the firm to sell the securities without involving the customer directly.
Step-by-step explanation:
When a customer is told that the securities will be held in street name, it means that the securities will be registered in the name of the brokerage firm or financial institution instead of the customer's name.
This is a common practice in margin accounts, where the customer is borrowing funds from the brokerage firm to purchase securities. By holding the securities in street name, it allows for easier transfer of ownership and margin requirements.
For example, if the customer wants to sell the securities or if the firm needs to sell the securities to cover losses in the margin account, the brokerage firm can do so without having to involve the customer directly.