What is Deposit At Custodian ?
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Deposit/withdrawal at custodian (DWAC) is a method of electronically transferring new shares or paper share certificates to and from the Depository Trust Company (DTC) using a Fast Automated Securities Transfer (FAST) service transfer agent as the distribution point. The DWAC is one of two ways of transferring between broker/dealers and the DTC, the other being the Direct Registry System (DRS) method. Both enable investors to hold securities in registered form on the books of the transfer agent, rather than in physical form. DRS is different from DWAC in that shares in DRS have already been issued and are held electronically on the books of the transfer agent.
Definition
Deposit/Withdrawal at Custodian (DWAC) is a method of electronically transferring new shares or paper stock certificates to and from the Depository Trust Company (DTC) through the Fast Automated Securities Transfer (FAST) service, using a transfer agent as the distribution point. It is one of the two ways securities are transferred between brokers/dealers and the DTC.
Origin
The concept of DWAC originated from the securities market's need for more efficient and secure stock transfers. With advancements in electronic trading and securities holding methods, DWAC became a significant transfer method, especially in the late 20th and early 21st centuries, as the trend towards electronic processes accelerated its development.
Categories and Features
DWAC primarily involves two methods: DWAC itself and the Direct Registration System (DRS). DWAC allows for the electronic transfer of new shares or paper stock certificates, while DRS involves shares that have already been issued and are electronically held on the transfer agent's books. The advantage of DWAC is its fast and efficient transfer process, whereas DRS offers higher security since the shares are already registered electronically.
Case Studies
Case 1: A technology company used DWAC to issue new shares, quickly distributing them to investors and avoiding the cumbersome process of paper certificates. Case 2: A financial firm utilized DWAC to transfer its stocks from paper to electronic form, enhancing liquidity and security.
Common Issues
Investors might encounter issues such as a lack of understanding of the electronic transfer process and confusion between DWAC and DRS. Typically, DWAC is used for new share issuances, while DRS is for shares that have already been issued.
