Deposit at Custodian (DWAC)

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  • Post last modified:December 9, 2023
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Deposit at Custodian (DWAC) is a method of electronically transferring securities directly from the Depository Trust Company (DTC), a central securities depository in the United States, to a brokerage or another financial institution. DWAC is often used for large-scale movements of securities, such as depositing or withdrawing a significant number of shares.

Here’s how the DWAC process typically works:

1. **Initiation:**
– The process is usually initiated by an investor or entity that wants to move a large number of securities. This could be related to activities like a direct registration, an initial public offering (IPO), or a transfer of securities between institutions.

2. **Custodian:**
– The investor works with a custodian, which is a financial institution responsible for holding and safeguarding financial assets. The custodian must be a DTC participant.

3. **DTC:**
– The investor provides instructions to the DTC to move the securities through the DWAC system. The DTC acts as an intermediary in the process and ensures that the movement of securities is done accurately and securely.

4. **Transfer Agent:**
– In some cases, a transfer agent may be involved. A transfer agent is a financial institution that maintains records of the individuals or entities holding securities and facilitates the transfer of ownership.

5. **Electronic Transfer:**
– The securities are electronically transferred from the DTC to the custodian or another financial institution using the DWAC system. This electronic transfer eliminates the need for physical certificates and streamlines the process.

6. **Recordkeeping:**
– The custodian updates its records to reflect the new ownership or holdings of securities. This information is crucial for accurate recordkeeping and reporting.

DWAC offers several advantages, including efficiency, speed, and reduced paperwork. It is particularly useful when dealing with large volumes of securities or when quick and secure transfers are required. The process is commonly used in various financial activities, such as stock issuances, corporate actions, and movements of securities between institutions.

It’s important to note that DWAC is specific to the U.S. financial system and the DTC. Other countries may have similar electronic transfer systems, but the specific processes and entities involved may differ. Additionally, the use of DWAC is subject to regulatory requirements and compliance standards to ensure the security and accuracy of electronic securities transfers.