What are the benefits of using a custodian?
At Superhero, we could follow the legacy brokers and use the system the ASX is desperately trying to replace. Instead, we carefully selected a custodian model to serve our customers better. Here’s why:
- Low pricing and transparent fees: We’re all about keeping things affordable and our fees in plain sight. By adopting the custodian model, we strip out unnecessary ASX fees that other brokers may choose to pass onto you in one way or another. We’re committed to offering a clear and sustainable fee structure from the start.
- Reducing communication overload: We understand that frequent investors can receive an overwhelming amount of communication containing their holding details from CHESS—sometimes up to 50 letters a month! With Superhero, we manage and consolidate these communications on your behalf, giving you a hassle-free, paper-free investing experience.
- Globally recognised model: Having a custodian is the globally-accepted operating approach used by most Australian superannuation funds but also by other reputable market players like IG Markets, Interactive Brokers, Spaceship, Pearler Micro and Stake (for U.S. shares).
- Compliant with U.S. operations: U.S. shares cannot be held in your name under a “CHESS-sponsored” arrangement as CHESS is an ASX-only system. Therefore, a custodian is used to safeguard your U.S. shares while offering you the full benefits of ownership.
- Seamless participation in corporate actions: Superhero can facilitate your participation in company offers directly. If you’re an eligible shareholder, we’ll promptly deliver the offer information to your email inbox for you to participate in things like share purchase plans and entitlement offers.
What is a CHESS-sponsored trade?
The term “CHESS-sponsored trades” has been bandied around by marketing teams of various brokers but what does this term actually mean? CHESS stands for Clearing House Electronic Subregister System. Basically, it’s a computer system operated by the ASX that facilitates the buying and selling of shares listed on the exchange by managing the settlement of share transactions and recording shareholdings.
In reality, there is no such thing as a ‘CHESS-sponsored trade’ as all trades in Australia, whether through ASX or Cboe (including those placed on Superhero), are cleared and settled via CHESS.
However, when people use the term “CHESS-sponsored,” they most likely mean that your shares are held by a market participant in your name on a Holder Identification Number, usually referred to as a ‘HIN’.
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