The difference between Broker Sponsored and Issuer Sponsored.

Broker sponsored and Issuer Sponsored are two very similar ways in which shares are issued to a holder. However they do have some differences which we explain.

Broker sponsored

What is Broker sponsored?
Broker sponsored shares are issued via CHESS and are sponsored by a stockbroker.  Broker sponsored shares have a Holder Identification Number (HIN). 

What does CHESS stand for?
CHESS (Clearing House Electronic Subregister System) is the computer system used by the Australian Securities Exchange (ASX) to record shareholdings and manage the settlement of share transactions.

What is a HIN?
A Holder Identification Number (HIN) commences with the letter “X”. A HIN is simply an individual number that identifies the owner of the shares. HIN numbers are issued on Broker sponsored share issues.  To find your HIN number look at your account transaction statements. 

What is a SRN?
A (SRN) commences with the letter “I” or “C”. A SRN is simply an individual number that identifies the owner of the shares. A SRN is issued when the shares are issuer sponsored.  To find your SRN number look at your account transaction statements.

What is issuer sponsored? 
Issuer sponsored means that the share purchase and sale is managed via the issuers share registry. Issuer sponsored shares are allocated a Security Reference Number (SRN). 

What is the difference between a HIN and a SRN?
In short a HIN and SRN are the two different identification numbers offered by the differed sponsor forms of share management. A HIN occurs from a broker-sponsored transaction whilst a SRN occurs from an issuer-sponsored transaction.  Generally you will have one HIN for multiple share holdings across varies companies, whilst with a SRN you will have a SRN for each share holding you have. 

Do you have a choice between Issuer Sponsored or Broker sponsored?Yes if you own shares you can elect to either have issuer sponsored or broker sponsored. 

Why would you pick HIN over SRN?
If you want to sell your shares off in an efficient and timely manner, you would be better to hold shares under the HIN broker sponsored method. The reason this is the case is the shares under SRN have to be transferred back across to HIN before they are sold off. This can take several days to occur (3 business days). The reason they do this is the banks want to check you own the stocks that they are selling for you and this process takes time. Whereas if you just hold your shares under the HIN method you can sell your shares off instantly.  There are also advantages offered from a HIN or CHESS holding via dividend direction (see below), multiple changes to address details, and updates to TFN for multiple stocks at the same time. SRN is more of an outdated service. 

Why would you pick SRN over HIN?
Not really sure why you would!

What is Dividend direction?
A service offered through banks that allow CHESS sponsored dividends to be paid direct into a nominated account, instead of waiting for a SRN cheque in the mail. 

To conclude, having a broker sponsored (HIN) should be your default method which you choose when purchasing shares.

Disclaimer– The information on this website is for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered legal practitioner or financial or investment adviser. No material contained within this website should be construed or relied upon as providing recommendations in relation to any legal or financial product.

Want more information?

Read through on our article on generating passive income through dividend investing.

Leave a Reply

Your email address will not be published. Required fields are marked *