Title: Deposit/Withdrawal at Custodian (DWAC) — What It Is and How to Use It
Key takeaways
– DWAC (Deposit/Withdrawal at Custodian) is an electronic service offered by the Depository Trust Company (DTC) to move securities between brokers/custodial banks and transfer agents without physical certificates.
– DWAC uses the FAST (Fast Automated Securities Transfer) program to speed settlement, reduce cost and eliminate risks associated with transporting paper certificates.
– DWAC is one of two common electronic transfer options; the other is DRS (Direct Registration System). DWAC moves shares between a DTC participant and a transfer agent; DRS places shares directly on the transfer agent’s books in the shareholder’s name.
– Use cases: withdrawing shares as physical certificates, depositing certificates into a broker account, or transferring electronically between a broker and a transfer agent. Requirements, fees, and timeframes depend on the broker, transfer agent and whether the shares are free-trading.
What DWAC is (simple definition)
Deposit/Withdrawal at Custodian (DWAC) is a DTC service that allows DTC participants (brokers and custodial banks) to request electronic transfers of securities to or from a company’s transfer agent using the FAST program. Because transfers are electronic, there is no physical movement of paper certificates when DWAC is used.
How DWAC works: an investor’s guide
1. The parties:
– You (shareholder or client).
– Your broker or custodian (must be a DTC participant to initiate DWAC transfers).
– The issuer’s transfer agent (must be DWAC/FAST-enabled).
– DTC (the intermediary that facilitates the electronic movement).
2. Typical flows:
– Deposit into a broker account: the shareholder either submits the original certificate to the broker or has the transfer agent send the electronic position to the broker via DWAC.
– Withdrawal to transfer agent (to get a physical certificate or to register shares on the issuer’s books): the broker initiates a DWAC request to the transfer agent to move shares off DTC into registered form (or to create a physical certificate).
– Electronic movements are processed through the FAST program and recorded on the transfer agent’s books without moving paper.
3. Key requirements:
– Shares must be free trading or eligible for restriction removal.
– Broker/custodian must be a DTC participant.
– Issuer/transfer agent must accept DWAC/FAST transfers (DWAC-eligible).
FAST program — quick facts
– FAST (Fast Automated Securities Transfer) is a DTC contract/program that enables transfer agents to act as custodians for DTC; it was established in 1975 to reduce the need to ship physical certificates.
– FAST facilitates dematerialization, saving printing, shipping and processing costs.
– Some instruments (for example, certain money market securities) do not participate in FAST.
Practical steps — how to request a DWAC transfer (common scenarios)
A. To withdraw shares to receive a physical certificate (or register shares on the books of the issuer)
1. Contact your broker and ask to withdraw shares from your brokerage account as physical certificates or to have shares registered on the issuer’s books.
2. Broker will tell you whether they can use DWAC or DRS and will provide any required authorization forms (e.g., DWAC authorization).
3. Be prepared to provide:
– Your account and security details (CUSIP, number of shares).
– Identification and any signature guarantees required.
4. Expect fees: transfer agents and brokers commonly charge fees for issuing certificates, transfers or withdrawals. Ask the broker for fee estimates.
5. Medallion Signature Guarantee: withdrawal for physical certificates often requires a Medallion Signature Guarantee to authenticate your signature (not the same as a notary).
6. Processing time: electronic DWAC transfers are faster than mailing certificates, but actual timing depends on the broker and transfer agent (same day to a few business days is common).
B. To deposit physical certificates into a brokerage account via DWAC
1. Contact your broker and ask whether they accept deposits by sending the transfer agent the shares electronically via DWAC.
2. Complete the broker’s DWAC deposit form and follow instructions for submitting original certificates (if required).
3. Provide any fees and required endorsements/signatures and obtain any signature guarantees the broker requests.
4. Broker/transfer agent uses DWAC to move the position electronically; verify when the shares will appear in your account.
C. To move shares between a broker and a transfer agent electronically (no paper)
1. Confirm both parties support DWAC/FAST.
2. Submit the broker’s authorization form or instruction to initiate DWAC movement.
3. Monitor confirmations from your broker and the transfer agent.
Differences: DWAC vs DRS (Direct Registration System)
– DWAC: electronic transfer between a DTC participant (broker/custodian) and a transfer agent. Often used to move shares into or out of the DTC system.
– DRS: places shares directly on the issuer’s transfer agent books in your name in book-entry form. There is no broker “custody” position; the transfer agent records you as the registered owner.
– Both avoid paper certificates, but DRS creates/maintains registration on the transfer agent’s books; DWAC is a mechanism for transfers involving DTC participants.
Fees, timeframes and risks
– Fees: Brokers and transfer agents typically assess fees (certificate issuance, transfer, processing, mailing). Amounts vary; always confirm before initiating.
– Timeframes: DWAC is usually faster than mailing certificates; actual timing depends on how quickly the broker and transfer agent process the DWAC request. Don’t assume instant settlement.
– Risks: Electronic transfers reduce risk of loss/damage to certificates. However, transfers can be delayed if shares are restricted, issuer/transfer agent is non-cooperative, or paperwork/signature guarantees are missing.
Is DWAC provided by DTC only?
– Yes. DWAC is a service offered through the Depository Trust Company (DTC), a subsidiary of the Depository Trust & Clearing Corporation (DTCC). Only DTC participants can initiate DWAC instructions.
What does the DTC/DTCC do?
– DTC provides settlement and custody services for U.S. equities, corporate and municipal debt, and other securities; it handles large daily settlement volumes and safekeeps securities for participants. DTCC is the parent organization that operates DTC and other clearing/settlement services.
Does my broker use DWAC?
– Possibly. If your broker is a DTC participant, it can use DWAC. Brokers often provide an authorization form and will tell you whether they will use DWAC or DRS for a given transfer. Ask your broker or check their transfer instructions to confirm support, fees and required documentation.
Requesting and receiving physical stock certificates — practical checklist
– Contact broker to request withdrawal or certificate issuance.
– Confirm whether DWAC or DRS will be used and who is responsible for fees.
– Complete any DWAC deposit/withdrawal authorization forms provided by your broker.
– Provide original certificates (for deposits) or necessary account details (for withdrawals).
– Obtain a Medallion Signature Guarantee if required (for certificate reissue/transfer).
– Track confirmations from broker and transfer agent; follow up if delays occur.
When DWAC cannot be used
– Shares that are restricted or not eligible for removal of restrictions.
– Issuer or transfer agent not enrolled in FAST/DWAC or refusing electronic transfers.
– Certain security types (e.g., some money market instruments) may not participate in FAST.
Bottom line
DWAC is a DTC electronic transfer service that makes moving securities between brokers and transfer agents faster, cheaper and safer than shipping paper certificates. It’s one of the core ways investors can deposit or withdraw shares electronically, alongside DRS. To use DWAC, confirm that your broker is a DTC participant, the issuer/transfer agent accepts DWAC, and that your shares are eligible; check the broker’s required forms, timing and fees before initiating a transfer.
Sources
– Investopedia. “Deposit/Withdrawal at Custodian (DWAC).” https://www.investopedia.com/terms/d/dwac.asp
– DTCC/DTC materials (overview of DTC services and the FAST Program). See DTCC website for “Deposit/Withdrawal at Custodian,” “FAQs: How Issuers Work With DTC,” and “The FAST Program.”
– Example broker authorization form: Merrill. “Incoming Direct Registration System/Deposit and Withdrawal at Custodian Authorization Letter.”
If you’d like, I can:
– Draft the typical DWAC authorization wording you might see and show how to fill it out, or
– Check the exact DWAC/DRS procedures and fees for a particular broker or transfer agent (if you tell me the broker/issuer).