Issuer Sponsored Versus CHESS

  • June 5, 2021
  • admin

Issuer Sponsored versus CHESS

Issuer Sponsored Versus CHESS –

Issuer Sponsored and CHESS are two different systems used for holding and managing shares in the Australian securities market. Here’s a brief explanation of each:

Issuer Sponsored:

In this context, the term “issuer” refers to the company or organization that initially offers and issues the securities, such as stocks or bonds, to investors.

In an issuer-sponsored system, the company itself maintains the registry of securities ownership. This means that the company keeps track of the individual shareholders and manages the transfer of ownership when buying or selling securities.

Under an issuer-sponsored system, the company typically employs a stock registry eg. Boardroom or Computershare.  The stock registry is responsible for maintaining the official records of shareholders. This stock registry ensures that the ownership details are accurate and up to date, recording changes in ownership resulting from transactions like purchases, sales, or transfers.

Investors holding securities in an issuer-sponsored system typically have their ownership information recorded on the company’s register. They may receive statements or notices directly from the company regarding dividends, voting rights, or other matters related to their investments.

SRN stands for Securityholder Reference Number:
An SRN is used to identify the owner of shares that have been issuer sponsored.

CHESS (Clearing House Electronic Subregister System):

CHESS is an electronic share registry operated by the Australian Securities Exchange (ASX). In the CHESS system, shares are held in an electronic subregister rather than directly with the issuer. When you buy shares, your broker or stock exchange participant creates an electronic record of your shareholding in the CHESS system. This allows for easier and more efficient settlement, clearing, and transfer of shares. The CHESS system also provides additional features like real-time updates, electronic messaging, and settlement automation.

HIN stands for Holder Identification Number:
A HIN is used to identify the owner of shares that are sponsored by a broker.

Key Differences:

In the Issuer Sponsored system, shares are held directly with the issuer, while in CHESS, shares are held in an electronic subregister maintained by the ASX.
In the Issuer Sponsored system, the issuer maintains your shareholding records, whereas in CHESS, the ASX maintains the electronic records.
Shares held in the Issuer Sponsored system can be transferred to another broker or stock exchange participant, but the transfer process may be more complex compared to CHESS, where transfers are relatively straightforward.

Stock Registries:
When you buy stock in a new company you will receive paperwork telling you which Stock Registry the company has employed to manage their stocks.  Unfortunately, you don’t get a choice in this.

Make sure you log on and provide the Stock Registry with your tax file number (TFN) and bank account details are recorded.  This will ensure you don’t have tax withheld on any dividends paid to you and that your dividends will be automatically credited into your nominated bank account.  You will need this information when you prepare your annual tax return.

There are several Stock Registries in Australia including:
1. Advanced Share Registry
2. Automic
3. Boardroom Limited Investor Serve
4. Computershare Investor Services
5. Link Market Services Limited
6. Security Transfer Registrars Pty Ltd

Link & Computershare are probably the biggest but not necessarily the most investor-friendly to use.

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