In May this year, Brewin Dolphin's execution-only business Stocktrade was acquired by Alliance Trust Savings (ATS). In September we looked at what the switch will mean for customers keen to legally own their own shares through personal Crest membership, and readers have other questions about what the move will mean for them. This week we answer two queries about whether readers will be able to trade from other countries and whether they will still be able to hold share certificates.
Our first reader says: “I am a former Stocktrade client who has transfered to ATS. I fear our relationship will be very short.
"I have a problem in that as far as I can ascertain the online execution-only services are not available to ex-pats (I live in Denmark)."
ATS says: "In September we successfully migrated over 14,000 Stocktrade customers on to the ATS platform. If any of our customers have outstanding queries regarding the new service and proposition offered, we ask them to get in touch with our customer services team on 01382 573737 so we can help with any specific queries.
"In this instance, although we are not aware as yet of this individual customer's arrangements, we can confirm that clients who live outside the UK do have full access to online services (with the exception of OEIC/ Unit trust trading)."
Our second query comes from a reader who holds paper shares. He says: "I have for many years held my shares in certificated form. My account with Stocktrade will shortly be transferred to Alliance Trust and I find myself a little confused as to whether my method of trading can continue as before. Stocktrade tells me I can continue to deal with certificates, but a previous Investors Chronicle article mentions the possibility of paper certificated being phased out. Is this legislation definitely going to happen and if so, when is it likely to take effect?"
Holding shares in certificated form is one of the four ways to hold shares. It is the most traditional way of holding stocks and means you legally own the shares you bought and appear on the register of shareholders, so are notified of annual general meetings (AGMs) and sent company reports.
ATS is allowing all former Stocktrade customers to continue dealing with certificates via its certificated dealing service. It charges a 1 per cent commission on the value of each deal with a minimum charge of £25 and the service is open to any customer wanting to deal with paper shares.
However, paper certificates are destined to be phased out as part of a regulation adopted by the European Union in July 2014. The technical term for the process is dematerialisation and it is set to have been implemented fully for the existing shares by 1 January 2025. All new shares issued after 1 January 2023 will need to be in dematerialised form, usually electronic. So for now, if you hold certificated shares, you are able to keep doing so. But it could be worth thinking about converting them to electronic shares.
To do this, you would need to contact the registrar of the company whose shares you own. You will be asked to fill out a form to convert your shares and might be charged a fee - some companies charge up to £10 per holding. After that, you could either hold your electronic shares in an account sponsored by the registrar or ask to move to another provider, like ATS, for which you might also be charged.
Usually, and in the case of ATS, converting to electronic shares will mean you have to give up legal ownership of your stocks and move into a pooled nominee account, where your investments are pooled with other customers and it is your broker named on the shareholder register. There are benefits to this - there is less administration and paperwork - but you need to be aware that you will lose some rights. However, many brokers will offer to update you of company information and send you reports if you request this service, so you can retain many of the benefits of being the legal share owner.
The only other way of remaining the legal owner of your shares is to have a personal Crest account, but it is increasingly difficult to find any brokers offering this. Stocktrade did, but ATS has said it will not offer this to Stocktrade customers moving across.
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Confused by your platform's charges? Not sure whether you are in the right investments? If you have a personal finance problem or just want to know more about something in this week's Your Money, contact Kate.Beioley@ft.com or write in to Investors Chronicle.