Deposit at Custodian (DWAC)

Deposit/Withdrawal at Custodian (DWAC)

Key takeaways

• DWAC is an electronic service from the Depository Trust Company (DTC) that moves securities between brokers/custodial banks and transfer agents without physical certificates.
• It uses the FAST (Fast Automated Securities Transfer) program to speed settlement and reduce costs and risk.
• DWAC differs from the Direct Registration System (DRS): DWAC moves newly issued or certified paper shares electronically, while DRS holds already-issued shares registered electronically on a transfer agent’s books.

What DWAC is

DWAC (Deposit/Withdrawal at Custodian) enables electronic transfers of securities between broker/dealers or custodial banks (DTC participants) and transfer agents. By eliminating the physical movement of share certificates, DWAC speeds settlement, reduces printing and shipping costs, and lowers the risk of loss or damage associated with paper certificates.

How DWAC works

• A DTC participant (broker or custodial bank) initiates a DWAC transfer request to a transfer agent.
• The transfer is processed electronically through the DTC/FAST infrastructure; no certificates change hands physically.
• The result is faster, more efficient settlement compared with handling paper certificates.

Requirements and common conditions:
* Shares must be free-trading or eligible for restriction removal.
The broker/custodian must be a DTC participant.
The issuer must permit DWAC transfers (DWAC-eligible).

The FAST program

FAST (Fast Automated Securities Transfer) is a longstanding DTC program that facilitates electronic custody and transfer of securities between DTC participants and transfer agents. Key points:
* Established to support dematerialization and reduce costs tied to printing and shipping certificates.
FAST agents act as custodians for DTC, enabling electronic settlement of certificate-based and newly issued shares.
Money market securities are excluded from FAST participation.

Requesting or receiving physical stock certificates

Although DWAC is electronic, shareholders can still request physical certificates:
* To withdraw physical certificates, instruct your broker to request the withdrawal through the DTC or have shares sent electronically to the transfer agent for issuance of certificates.
Withdrawals often incur fees and typically require a Medallion Signature Guarantee to confirm the authenticity of the signature on the certificate request.
To deposit physical certificates into a brokerage account, shareholders may send original certificates to the broker or have the transfer agent send shares directly to the broker via DWAC. Deposits commonly require the original certificates, a DWAC deposit form, and applicable fees.

Role of the DTC

The Depository Trust Company, a subsidiary of the Depository Trust & Clearing Corporation (DTCC), provides clearing, settlement, and custody services for U.S. equity and debt securities. It processes millions of settlement-related transactions daily and provides safekeeping and asset servicing for securities globally.

Does my broker use DWAC?

Many brokers and custodial banks that are DTC participants support DWAC transfers. If DWAC is an option, your broker will provide an authorization or transfer form specifying whether a DWAC or DRS transfer is appropriate based on the type and registration status of the shares.

Bottom line

DWAC is a secure, electronic method for depositing or withdrawing securities between brokers/custodians and transfer agents, reducing reliance on paper certificates and expediting settlement. It complements the Direct Registration System by handling electronic transfers of new or certified paper shares, while DRS covers already-registered electronic holdings.