Announcement: SelfWealth Adviser Platform Launch
This is Australia’s first percentage-fee-free non-custodial platform and heralds a new way for adviser to service their client base post the Royal Commission.
When I first got into share trading, this was something I Googled a lot and couldn’t really understand. The name itself is misleading — what does my knowledge of chess have to do with it? (Not an actual question I asked). Who is sponsoring my shares and why do they need to? I’ll get rid of the jargon to help you understand what it means and why you should care.
What is CHESS?
Put simply, CHESS Sponsored means the ASX is keeping a list of who owns what shares. If your shares are ‘CHESS Sponsored’ it means when you buy or sell shares ASX has a record of you owning those shares directly. This is the main way people buy and sell shares, you don’t need to opt into it, just be aware of it when choosing a broker. We’ll get into different arrangements later.
When you join a broker that offers CHESS Sponsored shares, you get given an ID (we’ll give you one), and the shares are attached to you, via that number. You can have multiple numbers at multiple online brokers. This number is called a HIN (Holder Identification Number) and typically starts with an X (even if the system, like ours, doesn’t display the X). You can move your ID (and the shares attached to it) from one broker to another.
Why should I care?
The most important question. If your shares are CHESS ASX Sponsored (whoever came up with the sponsored part must have wanted to confuse people intentionally), it means YOU own them directly, rather than someone else holding them on your behalf. You receive the dividends directly (profit company pays to its owners, you) and can vote.
Why would someone else ever own your shares, I hear you ask. You paid for them after all!
Some other brokers, notably IG Markets and Interactive Brokers, operate under a custodian model, meaning they hold the shares on your behalf. If either of those companies goes under, your ownership of the shares isn’t as clear as if they were CHESS Sponsored. With SelfWealth, you own them directly. We’re also the cheapest on the market — you’ll only ever pay $9.50 to buy or sell, which has earned us Money Magazine’s 2018 and 2019 award for Cheapest Online Broker.
What else should I know?
The ASX LOVES to send letters. Lots of letters. If you’re buying and selling frequently (I rebalance quarterly to the top 10 SelfWealth members) then they’re going to send you reams of paper. Can you stop this? No, even you ask nicely. ASX justify their costs by sending these out.
To add to the confusion, there is also something called a ‘share registry’. The share registry (Computershare, Boardroom, Link Market Services) works for the company you’re buying shares for and manages a few things as listed below, amongst others.
- The list of people who own shares in that company
- Communication to shareholders on behalf of the company
- Directions from you as to what you want to be done with dividends if there are any.
You’ll need an account at the share registry that manages the company’s shares you have. If you were to have shares in ANZ, you would have a Computershare account which lists those holdings and the dividend instructions you want.
You can change your settings to receive information by email instead of mail at your share registry, although some interfaces/websites (looking at you Computershare) are terrible to use and it might take you a while to get this done.
