Online Investing on the Australian Sharemarket, 5th Edition

Chapter 5Becoming an online share investor

Once you've chosen your online broker, you need to set yourself up with the broker so you can trade and invest online. In this chapter I discuss in further detail becoming an online investor and how to trade the different instruments. I also outline the various methods available for online trading, including margin loans, CFDs and SMSFs.

CHESS

When you apply to become a customer with an online broker you'll be asked if you want to be sponsored into the Clearing House Electronic Sub-register System (CHESS). In this system you're sponsored into CHESS by a broker, so it is also known as dealer (or broker) sponsorship. You'll be allocated a Holder Identification Number (HIN). This number is the same for all shares or other investment instruments you trade with this broker. You're issued a CHESS holding statement for each of the equities you own, and it's automatically updated when your holding changes for any reason, such as additional purchases, sales or issues of shares (such as those received through a dividend reinvestment plan). While there'll be some time delay before the new CHESS statement is issued, this doesn't affect your ability to trade because you don't need the statement to trade.

Issuer sponsorship

Before the CHESS system was introduced all shareholders were issuer-sponsored. When you bought shares you received a statement from the share registry with a Shareholder Reference Number (SRN). This number was the same for ...