Is there an alternative to holding shares with Crest?
Dominic Coyle answers your personal finance questions
What guarantees are in place that brokers would send you on your shareholders meetings info/voting info, etc? If your broker is not forwarding on the info, who do you complain to?
Is there an alternative to holding your shares with Crest? If there is, can you move your shares easily from Crest to this other mechanism or back to yourself?
Mr DM, email
Your options in Ireland at the moment, to the best of my knowledge, are that you hold your shares in one of three ways – in paper form as a share certificate held by the owner of the shares or in electronic form, either by way of a stockbroker nominee account or a Crest personal member account.
All exchanges are assiduously trying to phase out paper certification, moving towards a system called dematerialisation – ie where your shareholding will be held in electronic form. Part of this is down to security. Paper certificates are easily lost or stolen. Replacing them is expensive and will require owners demonstrating that they are the beneficial owners of the stock.
As importantly, they are massively inefficient, especially in an increasingly fast-moving world of global markets. Brokers hate them. If you decide to sell your shares held in paper certificate form, it is very likely that a broker will refuse to do so until they have the actual certificate in hand.
If you are not already a customer of a broker, they will not be tripping up over each other to facilitate you on one-off deals on paper certs. And you will certainly pay more for the privilege.
In the case of either form of electronic holding – nominee or Crest personal membership – you hold your shares through a broker.
A nominee account is clearly a broker entity where shares of many investors are pooled together in a way that has significant efficiency and cost benefits for the broker.
A Crest personal account is also held through a broker who has to “sponsor” you. So no, you cannot do it yourself without going through a broker – and yes they will charge for the privilege.
Not everyone will do so. I don’t have an up-to-date list of which Irish brokers offer the Crest personal member service, but I can tell you only one of them actively advertisers their interest in doing so, and it is none of the main players. It is generally something you need to enquire of your broker.
Of course, once you have established a Crest personal member account with a particular broker, all dealings in relation to your Crest account will be processed through that intermediary. If something goes wrong with a transaction, your first port of call will be your broker and the investor compensation programme backing them.
How much does it cost? Again, this is very much down to the broker. I gather the brokers are paying about a tenner a year per personal member for the facility, but you are likely to pay far more. It is likely to be more expensive than holding your shares through a nominee account, for instance.
What guarantees are in place that brokers would send you information about upcoming shareholder meetings, votes, annual reports or dividend?
The thing with Crest is that you should not have to rely on your broker forwarding information on upcoming meetings, votes, or whatever. As your name appears on the share register, that information should be sent directly to you from the share registrar – the company managing the individual listed firm’s register of shareholders/shareholdings. These are companies such as Computershare, Capita and Equiniti.
That is one of the main attractions of Crest personal membership, especially to people more familiar with directly controlling their shares by way of paper certificates.
As long as your broker is operating the Crest personal membership facility, there should be no need to worry about a broker intervention as there is no intermediary except when you instruct your broker to buy or sell.
Is there an alternative to holding your shares with Crest? Of course, as outlined above, but not one that offers the same personal control of your shareholding and the efficiency of an electronic holding.
Can you move shares easily between Crest to a nominee account or back to yourself? If your broker offers a Crest personal member service, you should be able to transfer holdings between that and a nominee account. Technically, there is no reason yet – at least with Irish or UK shares – why you cannot transfer them back to yourself in paper form, but I wouldn’t call it easy.
Crest itself is an electronic settlement system for managing transactions in and ownership of shares in listed companies. It is operated by Euroclear, a UK company and is the central securities depositary for both the UK and Irish markets.
Central securities depositaries are regulated by the relevant authorities in each jurisdiction which, in the case of Ireland, means the Central Bank.
Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara St, D2, or email email@example.com. This column is a reader service and is not intended to replace professional advice.