What are CHESS sponsored shares?

‘CHESS’ stands for Clearing House Electronic Subregister System. What this means is that it’s a computer system that facilitates the buying and selling of shares on the Australian Securities Exchange (ASX). 

CHESS-sponsored shares are recorded on this computer system to keep track of who owns the shares directly. 

When investing in shares on the ASX, you'll come across two main registration methods: CHESS-sponsored and issuer sponsored holdings. 

What are CHESS-sponsored shares?

CHESS-sponsored shares, managed through the ASX's Clearing House Electronic Subregister System, provide investors with a unique Holder Identification Number (HIN) that acts as a single identifier for all their shareholdings. 

The major advantage of CHESS sponsorship is its portability – if you switch brokers, you can easily transfer your entire portfolio by simply providing your HIN during the sign-up process.

What are issuer-sponsored shares? 

Issuer-sponsored shares are those which you haven’t bought through a stockbroker. So, issuer-sponsored shares will instead be registered through a different share registry than the ASX’s CHESS. 

Issuer-sponsored shares come with a Security Reference Number (SRN), which is similar to the aforementioned HIN, except that you’ll have a unique SRN for each shareholding.

Your ASX shares will likely be CHESS sponsored if you purchased them through a stockbroker or major trading platform, and they are registered to your HIN. You can verify this by checking your holding statements, which will display your HIN (starting with an 'X' followed by numbers). Most established Australian brokers operate under the CHESS system.

It's important to note that some share trading platforms aren't CHESS-sponsored but instead operate under a custodian model, where the platform holds the shares on your behalf. This is common with micro-investing apps and some commission-free trading platforms.

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