What is CHESS?

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What is CHESS?

CHESS and ASX: A Brief Overview

When diving into the Australian financial markets, it’s not uncommon to encounter the term “CHESS”. CHESS stands for Clearing House Electronic Subregister System. But what exactly is it? At its core, CHESS is the computer system used by the Australian Securities Exchange (ASX) to facilitate the settlement of share transactions and to record shareholdings.

Whenever financial products, such as shares in a listed company, are bought or sold, there is an exchange of the title or legal ownership of those products for money, known as settlement. For products traded on the ASX, this settlement process is managed by the robust computer system that is CHESS.

This system allows brokers, institutional investors, custodians, settlement agents, and other market participants to efficiently settle trades, either on their own or on behalf of clients. Trades settled through CHESS typically take 2-3 business days.

Holder Identification Number (HIN) and CHESS

Before an investor can register the ownership of shares on CHESS, they need a unique identifier known as a Holder Identification Number (HIN). This HIN is issued when an authorised participant sponsors the investor. The beauty of the CHESS system is that investors can have their entire share portfolio registered under a single HIN. This consolidates CHESS sponsored holdings and ensures shares from different companies aren’t scattered across various subregisters.

Benefits of CHESS Shareholdings

There are several compelling reasons for shareholders to use CHESS:

  • Security: The system is designed with state-of-the-art security measures.
  • Efficiency: Share trades and settlements are processed quickly.
  • Convenience: All shares can be under one HIN.
  • Seamlessness: The process is smooth, without unnecessary complications.
  • Cost-effectiveness: It offers a cost-effective way of managing shares.

Shareholders have the option of registering their shares on either the Issuer Sponsored subregister, typically run by the issuing company’s chosen share registry, or the CHESS subregister, maintained by ASX Settlement.

How Do I Check My CHESS Holdings?

This is usually done via the ASX CHESS Statements Portal. This portal enables investors to receive electronic updates about their shares. After opting in through a broker, all subsequent statements and notifications become available on the portal, eliminating the need for paper statements.

Every month, if there’s a change in your securities, the ASX will send you a CHESS holding statement. If you’ve updated details with your broker, such as name or address, you’ll receive a CHESS notification.

CHESS, under the ASX, has revolutionised the way shares are managed, traded, and recorded. With systems in place to ensure efficiency and security, it’s an invaluable asset to both individual investors and the broader Australian financial market.