# How safe are shares held in Stockbrokers' nominee accounts?



## Brendan Burgess (19 Apr 2019)

Those of us who liked holding share certificates and a Crest Personal Account through Campbell O'Connor are now reviewing our options. 

I don't like the idea of nominee accounts as the Liquidator of Murroughs was able to dip into the clients' shares to pay his fees. 

Degiro is the cheapest but I can't figure out how safe it is.
*

https://www.degiro.ie/helpcenter/faq/safety/1125*
_*
 Are my investments safe with DEGIRO?  *

At DEGIRO you can rest assured that your investments are held securely. DEGIRO uses a separate custodian entity to hold your assets, this means they are completely segregated from the assets of DEGIRO. The sole task of the custodian entity is to administer and safeguard your investments. By law it cannot perform any commercial activities. In the unlikely event that something is to happen to DEGIRO, your investments will not be treated as recoverable assets to DEGIRO's creditors, but will remain in the safeguarding of the custodian entity.

*  Is DEGIRO covered by any sort of Investor Protection Scheme?  *

The Dutch Investor Protection Scheme (Beleggerscompensatiestelsel) is applicable, as DEGIRO is a licensed investment firm authorised by the Netherlands Authority for the Financial Markets (AFM) for the provision of investment services.


This scheme protects individual clients up to €20,000. Information about the Dutch Investor Protection Scheme can be found in English on the De Nederlandsche Bank (Dutch Central Bank) website here.

*  Who regulates DEGIRO?  *

DEGIRO is a Netherlands based licensed investment firm and as such is under the financial supervision of The Netherlands Authority for the Financial Markets (AFM) and the Dutch Central Bank (DNB).


To see our license, please check the register of the AFM here.


DEGIRO performs it licensed investment services abroad from The Netherlands, under the so-called ‘MiFID passport’ or ‘MiFID-cross-border service’ regime._


Looks good to me.  I don't keep cash in my stockbroker account, so I am not worried about the Investor Protection Scheme.


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## Brendan Burgess (23 Apr 2019)

I had a weird telephone conversation with De Giro.

"Who holds the shares?"
"It's just an SPV so they are held off balance sheet"
"What is the name of the SPV?"
"We have a non-disclosure agreement and so can't tell you"
"So it's not a third party custody account?"
"Yes, it is."
"So if you go bust I won't know where my shares are?"
"You will, we will tell you then and help you to get your shares back."


I suppose that it does explain why they don't disclose the information on their website. 


Brendan


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## Brendan Burgess (23 Apr 2019)

Where are Davy's nominee shares held? 

What happens if Davy's goes bust? 

Brendan


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## Zenith63 (23 Apr 2019)

Brendan Burgess said:


> Where are Davy's nominee shares held?
> What happens if Davy's goes bust?


Some detail here - http://www.davyselect.ie/customer-services/faq-is-my-money-safe.html


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## Brendan Burgess (23 Apr 2019)

Thanks Zenith

I have read that and am none the wiser. It sounds just like DeGiro

"We keep them separately - but that is all we are telling you."


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## Brendan Burgess (23 Apr 2019)

It's a real concern. 



In the UK it was forecast that clients of Beaufort Securities might lose up to 40% of their assets to pay the fees of the Administrators - PWC. 

*Beaufort Securities’ clients in angry clashes with PwC*


_
 Some 700 clients with larger portfolios of more than £150,000 in cash and assets could lose up to 40 per cent of their ringfenced assets. Customers can claim from the UK’s Financial Services Compensation Scheme but only to a maximum value of £50,000. 

The case has concerned customers of UK brokers who believed their money could not be used in the event their broker collapsed._


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## DeeKie (23 Apr 2019)

That is a worry. It seems extraordinary that this aspect is not regulated.


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## Jim2007 (24 Apr 2019)

Brendan Burgess said:


> Where are Davy's nominee shares held?
> 
> What happens if Davy's goes bust?
> 
> Brendan



Where they are held is not of great importance, but in whose name are they registered that is the big issue. Basically if you’re broker goes bust and most of your positions are in ‘street name’ you are done for.   In such cases you will have no choice but to deal with the liquidators.  If you are the registered owner you can always request a new certificate, yes it is a bit of a hassle but not remotely close to trying to recover positions that are not registered in your name.


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## Jim2007 (24 Apr 2019)

Brendan Burgess said:


> "You will, we will tell you then and help you to get your shares back."



This is just nonsense.  Once the company is under the control of an administrator or liquidator they will not be in a position to do anything because they will have no legal authority to do so.  Hell they probably won’t even be employed there never mind having access to the records etc.


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## Brendan Burgess (24 Apr 2019)

Jim2007 said:


> most of your positions are in ‘street name’ you are done for.



Hi Jim

What does "street name" mean? 

Brendan


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## Sunny (24 Apr 2019)

Why would your shares be held in a SPV?? And what the hell does held off balance sheet mean? If that is the advice they are giving clients, they should be worried.

Nominee accounts are generally safe. You will always remain the beneficial owner and there are strict regulations with regard to reconciliations and record keeping. I don’t know too much about Beaufort above but from what I remember, the custody was with a related party that went bust as well rather than a completely separate third party. 

To be honest though, I wasn’t aware that clients were liable for the cost of getting their shares back in the event of a liquidation. Probably needs to be looked at alright. 

The alternative of everyone trading separate accounts is not straight forward either. Are people willing to pay much more transaction, custody and other fees?


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## Sunny (24 Apr 2019)

Brendan Burgess said:


> Hi Jim
> 
> What does "street name" mean?
> 
> Brendan



It means held and traded in the firm name e.g. Davy’s rather than your own.


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## Gordon Gekko (24 Apr 2019)

Can someone expand on the background to the Morrogh case and this other case?

If I buy shares through any of the brokers, a nominee company of theirs becomes the legal owner of the stock whilst at all times I remain the beneficial (i.e. actual) owner?

In a bankruptcy scenario, how can a liquidator access something that was never the company’s?

Was there something about Morrogh where the shares were held in some other way?


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## RedOnion (24 Apr 2019)

@Gordon Gekko 
Irish legislation allows for it, through use of word 'controlled'. Here is recommendations from working group on changes required as a result of this case, that explains the section.

Https://www.investorcompensation.ie/_fileupload/Documents/Publications/Morrogh_Fin_Report_2006.pdf


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## EmmDee (24 Apr 2019)

DeeKie said:


> That is a worry. It seems extraordinary that this aspect is not regulated.



It is regulated under client money and asset rules. Cases where clients have lost assets with brokers have been where the broker broke the rules and it wasn't picked up



Sunny said:


> Why would your shares be held in a SPV?? And what the hell does held off balance sheet mean?
> 
> Nominee accounts are generally safe.



The use of "SPV" is probably confusing. They are probably keeping client assets in a fully separate legal entity to ensure it's remote from bankruptcy - which I guess is a "Special Purpose Vehicle" - but is often referred to as a Nominee Company.

Off balance sheet means they are not viewed as part of the assets of the firm i.e. they are recognised as client assets and therefore not part of any bankruptcy or liquidation. "Off Balance Sheet" = Not on the balance sheet or financials of the firm 



Sunny said:


> It means held and traded in the firm name e.g. Davy’s rather than your own.



Not technically - street name would be the registration name used by Davy's to hold assets. They could have multiple street names for different purposes (proprietary trading vs client activity) though I'd hope Davy's isn't prop trading. So it would be something like "Davys' Re : client assets". Where assets are registered as "client assets" they should be "Off Balance Sheet" (see above) and therefore excluded from any liquidation or bankruptcy. Street name comes from the concept of "facing the street vs facing clients" - interacting with the other firms in the industry. 

In a bankruptcy, in theory (unless there has been some illegal activity) there should be no cost to recover your assets. It should be as straightforward as instructing as normal to move the assets to another custodian / broker


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## Brendan Burgess (24 Apr 2019)

EmmDee said:


> In a bankruptcy, in theory (unless there has been some illegal activity) there should be no cost to recover your assets. It should be as straightforward as instructing as normal to move the assets to another custodian / broker



But the theory is no good. That did not apply in Murroughs or in Beaufort. 

And whom do you instruct?  

Brendan


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## cremeegg (24 Apr 2019)

EmmDee said:


> assets are registered as "client assets" ... and therefore excluded from any liquidation or bankruptcy.



I love this. Have you ever met a liquidator, and I don't mean over a sherry.

Telling a liquidator that "these" assets are excluded is like telling a shark in a feeding frenzy that it can only eat those fish, it cannot eat these fish.

A liquidator will aggressively try every and any legal means to get his or her hands on any assets in the vicinity of a liquidation. That is their job. They are often very good at it.

How can you have confidence that the regulations are drawn tightly enough to safeguard assets in the face of a liquidators onslaught, and if the regulations are sufficient to safeguard assets that have been held correctly how sure can you be that the assets were in fact held correctly in such a way that they can avail of the regulations. That the regulatory package is watertight and that the assets have been correctly placed in the regulatory package.

The cases quoted above seem to suggest that assets are not always safe. You will never know until the tide goes out.


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## Jim2007 (24 Apr 2019)

Sunny said:


> It means held and traded in the firm name e.g. Davy’s rather than your own.



Very rarely actually.  Most times ‘street name’ means that the shares are held in some obscure name other than the brokers name.


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## Sunny (24 Apr 2019)

Brendan Burgess said:


> But the theory is no good. That did not apply in Murroughs or in Beaufort.
> 
> And whom do you instruct?
> 
> Brendan



You would have no option but to deal with the administrator. The assets in the nominee accounts are pooled in various custodians. The custodians or fund administrators have no idea who the beneficial owners are. The only people with the correct records (hopefully) to reconcile the holdings with individual investors is the defunct broker. Therefore the administrator has no option but keep staff, systems, premises etc for a period of time to reconcile and distribute the assets. The cost of doing this should be met from the liquidation of the firms other assets. The problem is when there is a shortfall and there is not enough money to cover the administrators costs. Then the beneficial owner is liable to pick up the shortfall to have their shares returned to them.


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## Sunny (24 Apr 2019)

Jim2007 said:


> Very rarely actually. Most times ‘street name’ means that the shares are held in some obscure name other than the brokers name.



It doesn't matter what the name used. Street name is the name of the entity used with dealers, custodians, transfer agents etc. I do a trade with a Davy's. They go and buy shares from Morgan Stanley. They don't do a trade between Sunny and Morgan Stanley. They do a trade between their nominee or omnibus account and Morgan Stanley. What they call it doesn't matter. The trade is still between Davy and Morgan Stanley as far as MS is concerned. MS don't care who the beneficial owner is. That is Davy's problem.


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## Jim2007 (24 Apr 2019)

cremeegg said:


> A liquidator will aggressively try every and any legal means to get his or her hands on any assets in the vicinity of a liquidation. That is their job. They are often very good at it.



And that is the point, if the shares are in some way the legal property of the brokerage, no liquidator is going to wash their hands of them since it would expose them to claims by the creditors.  In such a situation you have no documentation that identifies a particular block of shares as belonging to you, a liquidator opposing you and of course the former brokerage staff have other priorities.  

The best advice is to register significant positions for the long term in your name.


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## Jim2007 (24 Apr 2019)

Sunny said:


> It doesn't matter what the name used. Street name is the name of the entity used with dealers, custodians, transfer agents etc. I do a trade with a Davy's. They go and buy shares from Morgan Stanley. They don't do a trade between Sunny and Morgan Stanley. They do a trade between their nominee or omnibus account and Morgan Stanley. What they call it doesn't matter. The trade is still between Davy and Morgan Stanley as far as MS is concerned. MS don't care who the beneficial owner is. That is Davy's problem.



I can’t comment on Davy, but in the cases I have worked on that is not what actually happens.  If the brokerage firm has a sufficient holding with their nominees to cover your trade, then no physical transaction will take place, just a paper transaction on the books of the broker.


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## Zenith63 (24 Apr 2019)

Jim2007 said:


> In such a situation you have no documentation that identifies a particular block of shares as belonging to you, a liquidator opposing you and of course the former brokerage staff have other priorities.



I contacted CREST recently to see if there were other firms in Ireland offering Personal Member Accounts (where your own name appears on the share register of companies you buy stocks in), which is what I had with Campbell O'Connor previously.  This is about as close as you get to holding the physical share certificates yourself at the moment.  Part of their response was -
_If firms are not willing to offer you Personal Membership then please note that in the coming months (at the least by the end of the year), firms subject to new CSDR regulations, will be obliged to offer you account segregation, should you wish. This may not be in the form of the Personal Member you have now, whereby you receive your own CREST participant ID, and your name appears on the legal register. It is more likely that firms will offer this segregation as a sub-account ('Member Account') in CREST. In this model the name of the stockbroker (or nominee company) would appear on the legal register, but your shares would be segregated from those of other underlying clients of the stockbroker/nominee in CREST. _

I'm not sure if that would help with "documentation that identifies a particular block of shares as belonging to you"?



While looking around for a new broker, this is the info I found for some of the Irish brokers.  This is purely from their websites, if others have spoken to the firms and have more info it would be great to flesh this out and maybe add it to your original post @Brendan Burgess?


DeGiro - No CREST personal accounts or physical certificates offered. All shares held in a separate entity (either Stichting DEGIRO I or DEGIRO II), unclear how that entity holds the shares, but I'd guess pooled in a CREST account
Davy - No mention of CREST personal accounts.  Shares are held in a separate entity which uses one CREST account per client, presumably the new model Crest/Euroclear mentioned to me in their mail. "Our nominee company is a member of CREST and its name appears on the share registers for these assets. Our nominee company operates individually designated CREST accounts for all clients who hold CREST eligible securities through Davy. This means that there are separate accounts within CREST for each Davy client. Client accounts are segregated from each other as well as from those of the firm."
Goodbody - No clear statement on website, but there are CREST transfer forms available with "Goodbody Nominees" as the recipient entity, so looks like they use CREST to hold shares, but their name goes on the share register, so again a form of nominee account, unclear if pooled or per-investor.
InteractiveInvestor - No mention of CREST personal accounts either, appears to be a separate entity that holds the shares in a CREST account in their name.  No mention of separate CREST accounts per investor.
Merrion Capital - No mention of CREST personal accounts on their site, but their share transfer form is pre-filled to a CREST nominee entity, so looks like this is a pooled nominee account similar to many of the brokers above.

Cantor Fitzgerald - There are a number of mentions of CREST personal accounts on their site as well as a form for creating one, so looks like these guys are the closest analogue to Campbell O'Connor and that would make sense as they were the recommended option for transferring your shareholding to.

Note CREST is only relevant for UK/Irish shares, which is fine if all you're doing is buying and holding the likes of iShares ETFs.  Who knows the effect Brexit will have on it, though it is owned by a Belgium based JPMC company.


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## EmmDee (24 Apr 2019)

Brendan Burgess said:


> But the theory is no good. That did not apply in Murroughs or in Beaufort.
> 
> And whom do you instruct?
> 
> Brendan



Once an administrator or liquidator is appointed, they run the operations as normal. You would send your instruction in exactly as you do now.

I'd have to look at the two cases but I would guess that in both cases they were small operations where the "seniors" overrode the checks and balances and essentially moved client assets into company accounts. That would be illegal



cremeegg said:


> I love this. Have you ever met a liquidator, and I don't mean over a sherry.
> 
> Telling a liquidator that "these" assets are excluded is like telling a shark in a feeding frenzy that it can only eat those fish, it cannot eat these fish.
> 
> ...



Yes I have met a liquidator. I've been involved with liquidators on both sides. I'm very familiar with both large custodians and the operations of large broker dealers (not small family run shops). I currently look after about $400bn worth of client assets.

A liquidator won't touch assets designated as "client assets". It's not even a conversation. The problem occurs if client assets have been moved to firm asset accounts. That's when it gets messy (or where client assets have been pledged to the firm and therefore become property of the firm)

The regulations are pretty strict. But like anything, policing them is a problem. Generally larger firms will be a lot more stringent about it than small ones. The cases quoted seem to be small shops where pressure for liquidity or assets "persuaded" management to "borrow" from clients - not dissimilar to cases where legal firms had been found to be using client funds illegally.


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## cremeegg (24 Apr 2019)

EmmDee said:


> A liquidator won't touch assets designated as "client assets".



Good to know.



EmmDee said:


> The problem occurs if client assets have been moved to firm asset accounts.



Does that happen ?

Is it legal ?

How would a client know?



EmmDee said:


> That's when it gets messy (or where client assets have been pledged to the firm and therefore become property of the firm)



How does this process even exist?

Are clients informed?


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## EmmDee (24 Apr 2019)

cremeegg said:


> Good to know.
> 
> 
> 
> ...



The last question is easiest to answer - yes. If you are borrowing to buy stock, that stock is usually pledged back as collateral (along with extra margin). In many cases the broker is entitled to use that collateral as they wish e.g. lending it out. Though as soon as you no longer need to provide collateral it should be replaced back in segregated accounts. Similarly any assets in a margin account would be treated the same way.

On your middle question - yes it does happen (e.g. Morrogh and Custom House). In both cases, assets were moved out of client accounts to cover liabilities or commitments of the firm or the individuals involved without the knowledge or consent of the clients. Is it legal - No. How would clients know - that's a good question. In both those cases, the firms produced false client statements to hide the activity. So short of doing personal site visits (and knowing what and who to ask) I'm not sure a reasonable person would have known. I would be wary of small operations where a lot of the "mystique" is around named individuals - there is a lot of trust being placed in people rather than process 

Somebody mentioned Beaufort - that seemed to be a different case where the company was frozen by regulators because of suspicion that the firm was being used for money laundering. The cost of investigation and delay involved seemed to have eroded value in the accounts - though maybe some assets were moved - I'm not sure


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## Ravima (24 Apr 2019)

Should it not be similar to a solicitor going bust. No one would agree to a liquidator finding deeds in the safe and then selling them to pay fees????


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## joe sod (24 Apr 2019)

EmmDee said:


> I'm not sure a reasonable person would have known. I would be wary of small operations where a lot of the "mystique" is around named individuals - there is a lot of trust being placed in people rather than process



well on that basis, degiro being a very large international operator and also being faceless in that their are no "big personalities", you are lucky to even get a person on the phone, seems to pass the above test. Its not exactly seanie fitzpatrick or david drumm territory, there was alot of "mystique" around those guys before the banking crisis.


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## Jim2007 (25 Apr 2019)

EmmDee said:


> I currently look after about $400bn worth of client assets.



Right so you are responsible for an AUM equivalent to over half the AUM of DB, UBS or CS....  well having spent 31 years in the sector in mainland Europe, I have Never met any one person with responsibility remotely close to that kind of figure. Having consulted at all three and a few more, I’d say it would make a complete farce of risk management for a start.


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## EmmDee (25 Apr 2019)

Jim2007 said:


> Right so you are responsible for an AUM equivalent to over half the AUM of DB, UBS or CS....  well having spent 31 years in the sector in mainland Europe, I have Never met any one person with responsibility remotely close to that kind of figure. Having consulted at all three and a few more, I’d say it would make a complete farce of risk management for a start.



I'm not quite sure if you meant the sarcastic tone. But I'll answer your points.

I run a line of business for a large institution. I don't have sole control of client assets. There are about 300 people working in it across 4 regions. I am well aware of managing risk 

The number is actually quite small for large global custodians. You may be mixing up Assets Under Management (AUM) with Assets Under Custody (AUC). The large global custodians (BoNY, JPM, State Street) have trillions AUC. 

DB, UBS and CS may have significant asset management arms but aren't significant global custodians: DB sold their global business, UBS mainly services domestic clients and outsources it's global custody business. CS is more of a prime broker than a global custodian.


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## WaterWater (25 Apr 2019)

I recently got a letter from Link Asset Services asking me did I recently sell shares in an Irish company. That they had received an instruction to transfer shares out of my name. Their letter heading basically said "Protecting your shareholding against fraud".

Is this normal to receive a letter like this. I have held these shares for over 20 years and decided to sell them because of the Campbell O'Connor closing down situation.


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## jpd (25 Apr 2019)

It looks like the Link Asset Services were doing a good job - as the were confirming that you wanted to sell/transfer the shares


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## EmmDee (25 Apr 2019)

WaterWater said:


> I recently got a letter from Link Asset Services asking me did I recently sell shares in an Irish company. That they had received an instruction to transfer shares out of my name. Their letter heading basically said "Protecting your shareholding against fraud".
> 
> Is this normal to receive a letter like this. I have held these shares for over 20 years and decided to sell them because of the Campbell O'Connor closing down situation.



Link are the old Capita registrar business - they did the share register work for virtually all of the main companies. So if you sold shares which were in physical cert form it would go to the registrar for re-registration. It may be that it is an anti-fraud measure.

Do they ask for you to take any action or is it just a notice - a bit like the notifications you get if log into an email account from an unknown PC?


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## joe sod (25 Apr 2019)

Just a thought that crossed my mind on this topic, maybe it has been answered already, everyone is focusing on the issue of separating where shares are held away from the brokerage company in case the brokerage company goes bust. So most seem to hold shares in a separate entity or custodian. From reading another thread similar to this one it appears that most shares are held by big custodians like new York Mellon bank. But what happens if the custodian goes bust, surely that would affect shares held for many brokerage companies. I'm sure this has been answered but I haven't t picked up on it?


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## Mez! (25 Apr 2019)

Brendan Burgess said:


> I had a weird telephone conversation with De Giro.
> 
> "Who holds the shares?"
> "It's just an SPV so they are held off balance sheet"
> ...



https://www.degiro.co.uk/data/pdf/uk/Client_Agreement_Investment_Services_Terms_and_Conditions.pdf

Found the above online. From my understanding, DeGiro holds shares under custody in two of its own Special Purposes Vehicles (aka “SPV”) called Stichting Degiro and Stichting Degiro II.

Am I interpreting this correctly? Surely the SPV would normally be a third party bank?


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## Zenith63 (25 Apr 2019)

Mez! said:


> Am I interpreting this correctly? Surely the SPV would normally be a third party bank?


In the list of brokers I looked at (see a few posts up), not one appeared to use a third-party bank. So no that would not seem to be the norm for these retail brokers.


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## Andrew365 (26 Apr 2019)

I assume they hold in a SPV to remove the assets from their balance sheet to lower capital costs and make Assets / Liability management easier on their own balance sheet. The SPV would be a separate entity. SPVs have a bit of a negative connotations because of past issues during the financial crisis with asset securitisation but they are a legitimate tool. 

Regardless if they put it with a 3rd party custodian account, you are just passing the default risk onto another entity.


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## Brendan Burgess (26 Apr 2019)

A third party custodian whose only job is to hold shares is likely to be far more secure than a stockbroker.  It should also mean that if the broker goes bust I could deal directly with the custodian without engaging with the liquidators. 

That was the set up BCP used as far as I remember.  I had no worries about the nominee back then. 

Brendan


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## Andrew365 (26 Apr 2019)

Sunny said:


> It doesn't matter what the name used. Street name is the name of the entity used with dealers, custodians, transfer agents etc. I do a trade with a Davy's. They go and buy shares from Morgan Stanley. They don't do a trade between Sunny and Morgan Stanley. They do a trade between their nominee or omnibus account and Morgan Stanley. What they call it doesn't matter. The trade is still between Davy and Morgan Stanley as far as MS is concerned. MS don't care who the beneficial owner is. That is Davy's problem.



I do not agree with this 100%, in the trade flow example Sunny --> Davy --> Morgan Stanley, Davy would be acting on an Agent basis i.e. transacting on behalf of their client. Morgan Stanley would look at this differently to if Davy was doing a trade for themselves i.e to hedge their own risk. Ultimately though Morgan Stanley would view the risk differently 1 on an agent basis and 2 direct Davy exposure.


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## Drakon (26 Apr 2019)

I'm sure I'm repeating what I've said in posts on this site going back through the years, but repeat it I will.
In the early 2000s I opened an account with Goodbody for the purchase of shares.  It was a CREST account.  At the time they were really pushing this as a positive, presumably because it was.  However, that was soon forgotten when they decided to move from CREST to Nominee Accounts.

I discussed this with colleagues at the time.  I was working in a financial services institution so they were all clued in regarding finances.  I said that if Goodbody's ever went bust, my shareholding would be at risk now that the shares would be held in Nominee Account.
Oh how they laughed, those colleagues of mine.  

"Goodbody's are owned by AIB; there is absolutely nothing to fear".


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## Sunny (1 May 2019)

Andrew365 said:


> I do not agree with this 100%, in the trade flow example Sunny --> Davy --> Morgan Stanley, Davy would be acting on an Agent basis i.e. transacting on behalf of their client. Morgan Stanley would look at this differently to if Davy was doing a trade for themselves i.e to hedge their own risk. Ultimately though Morgan Stanley would view the risk differently 1 on an agent basis and 2 direct Davy exposure.



No they wouldn't. It is not an lending trade. There is no credit risk in the transaction apart from failed settlement and these trades are usually only done on a deliver versus payment basis. Morgan Stanley don't care if Davy's want to buy shares for their own account or Joe Bloggs Account. The trade will still be between Davy and Morgan Stanley. All ISDA's and all other documention that allows these entities to trade will be in those names or related entites. Morgan Stanley doesn't care who the final beneficial owner of the shares are. It has no impact on the transaction at a street level.


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## Brendan Burgess (2 May 2019)

I prefer share certificates as I hold for the long term 

There are no annual holding costs 

I deal directly with the company - very important for the banks where I attend their AGMs and get the AGM notices directly 

They are absolutely secure - I am not worried about the stockbroker I dealt with going bust. 
But across the EU, people buy and hold shares in nominee accounts via stockbrokers without any worries. 

Why is this such a worry here?  Because the Morroughs liquidator (and Beaufort's in the  UK) got their hands on the nominee accounts even though they were separate. 

I have my long-term savings in shares so the Investor Compensation Scheme is of no use to me. 

I have no idea if DeGiro or Davys is safe.  I don't know who DeGiro is? 

I sort of know who Davys is. But as someone pointed out once rock solid companies like AIB and BoI nearly went bust.  I know it's different as Davys don't lend money. But I don't know if they do proprietary trading or not. 

Brendan


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## Andrew365 (8 May 2019)

Sunny said:


> No they wouldn't. It is not an lending trade. There is no credit risk in the transaction apart from failed settlement and these trades are usually only done on a deliver versus payment basis. Morgan Stanley don't care if Davy's want to buy shares for their own account or Joe Bloggs Account. The trade will still be between Davy and Morgan Stanley. All ISDA's and all other documention that allows these entities to trade will be in those names or related entites. Morgan Stanley doesn't care who the final beneficial owner of the shares are. It has no impact on the transaction at a street level.



Davys are buying on the behalf of the client that can't access the market directly. I would imagine that under the wrapper of 'Davys' Morgan Stanley would have a number of individual client accounts relating to davys each with their own CSAs etc that segregate whether they are dealing with Davys Treasury department and or their client execution team.


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## rob67 (15 May 2019)

Some information about "street name" and how american stocks are held

https://www.sec.gov/reportspubs/investor-publications/investorpubsholdsechtm.html



https://www.computershare.com/News/21st_Century_Stock_Ownership_GCM.pdf


and how UK and Irish shares are held through Crest 
https://the-international-investor.com/investment-faq/crest-personal-account


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