Is there an alternative to holding shares with Crest?

Dominic Coyle answers your personal finance questions

Tue, Jul 8, 2014, 01:10

Who manages Crest? Is Crest regulated and, if so, by whom? Can any single individual hold shares directly with Crest or do you have to have a broker?

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.

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