CHESS & CHESS Sponsorship

Michael Crilly
Jul 20, 2017 · 2 min read

In Australian investing terms, CHESS standards for Clearing House Sub-register System. Wikipedia has this to say about it:

The Australian Clearing House Electronic Subregister System (commonly abbreviated to CHESS) is an electronic book entry register of holdings of approved securities that facilitates the transfer and settlement of share market transactions between CHESS participants (including stockbrokers on behalf of their clients, and large institutional investors on their own behalf) as well as speed up the registration of the transfer of securities. CHESS was developed by the Australian Securities Exchange (ASX) and is managed by the ASX Settlement and Transfer Corporation (ASTC), a wholly owned subsidiary of ASX.

I’ve recently started getting into investing, from an educational perspective at this point in time, and I ran across what seemed like a great stock broker: IG.com.

The good people at IG don’t have CHESS sponsorship. This means when you purchase stocks, bonds, and other assets via their system, you don’t own the underlying asset. They do. You’re simply the beneficiary and receive the benefits of the asset without the ownership of it.

This has two negative connotations attached to it from what I’ve been told:

  1. If IG go under (quite unlikely, but it has happened before) you potentially lose the assets
  2. If you wish to trade with another broker in the future, you can’t transfer the assets to the new broker and thus have to maintain two accounts

None of this is to say IG is a bad company to do business with — their model of operation might be good for some — but I believe if I’m paying money for an asset I should own it.

I’m sticking to CHESS sponsored brokers moving forward.

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Michael Crilly

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UNIX System Automation, Maintenance & Administration

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