First, let me preface this by saying that including ‘HIN’ and ‘SRN’ in your blog post does not make for a catchy title, but you’d be surprised how many people ask me about these. So if you don’t know what they are, or how they’re different, then read on.
Purchasing shares through an online broker is a popular way to buy shares these days, but people can acquire shares in other ways too, for example:
- as a gift, or an inheritance from a deceased estate
- from demutualisation – where a private, member-owned company changes its structure to become a publicly traded company owned by shareholders (e.g. AMP and NRMA)
- through an employee share scheme – where a company offers shares to its employees
- through an initial public offering (IPO) – where the shares of a private company are made available to the public for the first time. (This is also known as “floating” or “going public”.)
If any of these apply to you, you may be unclear as to where your shares are, and – when you decide you want to sell them – it can all appear rather complicated.
So let’s break it down …
The first step is to identify whether your shares are Broker Sponsored (identified with a HIN) or Issuer Sponsored (identified with an SRN).
Broker Sponsored Shares
Broker sponsored shares are managed by a securities broker using a system called the Clearing House Electronic Sub register System (CHESS).
When you buy or sell shares with a CHESS-sponsored broker (like CommSec or Asgard), your broker communicates with the ASX on your behalf.
With this system, you get a special ID called a Holder Identification Number, or HIN, that starts with an “X”. Shares that are held in this way can only be sold through the broker sponsor. All shares you buy or sell through that broker sponsor use the same HIN.
You’ll find your HIN on your CHESS holding statement.
Issuer Sponsored Shares
Unlike broker sponsored shares, issuer sponsored shares are managed directly by the company that issued them.
These kinds of shares come with a different ID, called a Security Reference Number (SRN) that starts with an “I” or a “C”. To find your SRN, check your holding statement or any other communication you’ve received from the company’s share registry.
In this system, you’ll have an SRN for each company you own shares in.
To sell issuer sponsored shares, you need to either transfer them to a broker OR place a one off trade directly with the share registry. The two main share registries are Computershare and Link Market Services (now MUFG Pension & Market Services). For standard trades the share registries provide you with the ability to sell your shares without a broker and without opening a full trading account.
Which is better?
Generally speaking, broker sponsored shares (with a HIN) can make for easier financial management if you have more than a couple of shares.
When it comes to selling shares, those with a HIN allow for faster, more efficient transactions.
It’s also easier to manage multiple shares and update your details, e.g. bank account for dividend payments.
That said, it is possible to transfer a holding from a HIN to SRN and vice versa.
Of course, if you don’t intend to buy or sell shares, it really doesn’t matter if your holding number starts with an X or and I.
What matters is that you’re taking part in owning a small fraction of a company that will hopefully give you a rewarding long-term return.
If you need help to sort out your share holdings, call me on (02) 9913 9995.
