When it comes to owning shares in Australia, there are two different ways that they can be held: Issuer or broker sponsored. The most common method by far is the broker sponsored approach — also known as CHESS sponsorship, after the system ASX use to monitor broker sponsored share trades (the Clearing House Electronic Subregister System). But how can a shareholder determine if their shares are Issuer or broker sponsored? Do you have to know which stockbroker sponsors your shares before you can sell them? And what is the process for selling broker sponsored shares?
How Do You Determine If Your Shares Are Broker Sponsored?
Shareowners may at times be unsure whether or not the shares they have are broker or Issuer sponsored — this is very common if the shares were purchased a long time ago or were perhaps gifted or inherited. The easiest way to confirm whether your shares are Issuer or broker sponsored is by checking your unique identification number. All CHESS sponsored shares are identified with a HIN (Holder Identification Number), while all Issuer sponsored shares are identified with an SRN (Security Reference Number). Fortunately, it’s easy to tell the difference — an SRN will be ten or eleven digits long and will always start with an ‘I’, while a HIN is ten digits long and begins with an X. It’s important to be aware that you may have more than one HIN, as accounts held by different brokers will each have their own individual Holder Identification Number.
Do You Have to Know Which Stockbroker Sponsors Your Shares?
When it comes to CHESS sponsored shares you don’t have to know which stockbroker is currently sponsoring your HIN before you can proceed with the share sale. This is fortunate considering the frequency with which many stockbroking firms participate in takeovers or mergers. In these instances, it is not uncommon for the shares to be passed from one stockbroker to another, making it difficult to follow who is the actual sponsor of your shares. This process becomes even more confusing when the shares in question were part of a deceased estate or were purchased many years ago.
So, if you don’t know which stockbroker currently sponsors your shares, there’s no need to panic — you can still go ahead with engaging a broker to sell them. The broker will be able to determine who is sponsoring your HIN now and what needs to be done in order to move ahead with the sale process.
What Is the Process for Selling Broker Sponsored Shares?
To sell your broker sponsored shares you will need to engage the services of an ASX participant broker or one of their licensed advisors (you cannot process the sale yourself). When deciding on a broker it helps to look at cost, timing and the amount of paperwork involved. Many shareholders are making a switch to online stockbroking services as these generally offer a lower-cost service that is quick and simple to finalise.
To get started with selling your broker sponsored shares, you will first of all need a copy of the relevant Dividend or Holding statement (an older statement is fine so long as it displays the HIN). Your broker will then ask you to complete some paperwork and will likely discuss timing (how quickly you want to move ahead with the sale) and give you an overview of their fees.
From this point, your broker should be able to handle everything. They will confirm that you own the shares in question using the ASX share registry, verify your identity and determine which broker is currently sponsoring your shares. Once the sponsoring broker has released the securities to your new broker, they can then move ahead with the sale of the shares.
