An ASX CHESS holder is a shareholder who owns CHESS-sponsored shares. CHESS stands for Clearing House Electronic Subregister System, which is the computer system used by the ASX to manage share transaction settlement and record shareholdings.
Market participants, including brokers, can settle trades via CHESS for themselves or on behalf of clients. CHESS-sponsored shares are registered with a stockbroker, such as your online broker. Your broker will allocate a Holding Identification Number (HIN) to CHESS-sponsored shares.
Let's take a closer look at how it works.
If your shares are sponsored
If your shares are CHESS-sponsored, the ASX has a record of you owning those shares directly. An ASX CHESS holder buys their shares directly, receives dividends directly, and can vote on important company matters directly.
The majority of ASX shares traded are CHESS-sponsored. If you buy shares via an online trading platform offered by the big banks, your shareholdings will most likely be CHESS-sponsored. Some brokers, however, operate under a custodian model, whereby they hold the shares on your behalf. Ownership of shares bought this way is less clear than CHESS-sponsored.
What does CHESS do?
CHESS manages the settlement of share transactions and records shareholdings electronically. If you buy or sell shares, you need to exchange the legal ownership and pay (or receive) the share price. This is called settlement. CHESS facilitates settlement by arranging the transfer of funds while simultaneously transferring the legal ownership of the shares.
Settlement usually takes place two business days after a trade is made.
How are my shareholdings registered?
Shareholders can choose to register their legal title to shares in two ways:
- On CHESS, which the ASX maintains
- On an issuer-sponsored subregister. ASX companies themselves manage these but they will usually engage a share registry services business like Computershare or Link Market Services to administer their subregister.
Investors holding issuer-sponsored shares are allocated a Security Holder Reference Number (SRN) by the company that issued the shares.
Investors need a sponsoring broker (ASX CHESS sponsorship) to register shares on CHESS. This is often the investor's stockbroker or an online trading platform.
The investor and ASX CHESS sponsor will have an agreement that specifies the terms under which the ASX CHESS sponsor can manage the investor's holdings on CHESS.
If an investor does not have a CHESS sponsorship or has not provided their stockbroker with their HIN, the shares will be registered on the company's issuer-sponsored subregister by default.
Registration on either subregister is done electronically. No paper certificates are issued.
What is a HIN?
A HIN is a Holder Identification Number. This is a unique number that identifies you as an ASX CHESS-sponsored shareholder with a broker. Provided your shares are held under a single account, all your CHESS-sponsored shares should be represented by a single HIN.
A HIN usually starts with the letter 'X' followed by 10 numbers. You can find your HIN on a CHESS statement, by speaking to your broker, or by checking your online trading account. If you have multiple broking accounts, you may have multiple HINs.
What is an SRN?
An SRN is a Security Holder Reference Number. This is a number that is assigned to issuer-sponsored shareholdings. If you don't have an account with a broker or have shares that are not in that account, they will be issuer sponsored by the relevant company's share registry.
Issuer-sponsored shares are assigned an SRN, which starts with an 'I' followed by 11 digits. Your SRN will be different for each company that you own shares in. You can find your SRN on a holding statement or other communications sent to you by the relevant company.
Is CHESS sponsorship important?
There are several advantages to holding CHESS-sponsored shares. These include:
- Ease of selling: If you hold your shares in an issuer-sponsored subregister and wish to sell them, your stockbroker will need to convert the shares from the issuer-sponsored subregister to CHESS in order to settle the trade. There is no need to convert shares already held on CHESS, making selling easier and more convenient
- Verification: CHESS-sponsored shares are tied to your HIN, which in turn is tied to your name and tax file number, so CHESS provides third-party verification that you own your shares
- Single subregister: Your entire portfolio can be registered under one HIN, which can make it easier to keep track of your shareholdings
- Less paperwork: CHESS issues a single statement at the end of the financial year instead of physical share certificates
- Easy updating: If you need to update your personal information (such as your address), you only have to do it once with CHESS, and the information will be applied to all your CHESS-sponsored holdings. Issuer-sponsored holdings have to be updated one by one with each individual subregister.
How do I check my CHESS holdings?
To check your CHESS holdings, you will need to locate your HIN and contact your broker. CHESS will mail you a holding statement each time you make a transaction or change any details on your CHESS holding account. Statements should be received in the month following the transaction or change, generally in the second or third week.
How do I sell my CHESS shares?
The ASX manages CHESS shares via a sponsoring broker. You can sell your CHESS shares through the same broker or online trading platform you used to buy them.
If you want to use a different broker or platform, you'll need to transfer the shares to your new account by completing a transfer request form through your new broker or platform.
