News

How do I trade TraCRs through CommSec Adviser Services?

To trade TraCRs, you must be an authorised CommSec Adviser Services trading adviser; and your client must have a trading account and have read the TraCRs Product Disclosure Statement (PDS).

Will my client own the underlying US share?

When investing in TraCRs, you are buying an Australian security, which gives your client a beneficial interest in the US share, but not legal title. As such, your client gets the rights and benefits of owning the US share, subject to the terms of issue of the TraCR.

Will there be market makers?

The TraCR issue may rely upon liquidity provided by a market maker to enable retail investors to buy and sell TraCRs. For example, multiple market makers may compete with each other to offer the bid/offer prices for the local market.

Will my client be exposed to other currency prices?

Yes. The underlying US share is priced in US dollars in its home market; and consequently the Australian dollar value of a TraCR, and its dividends will be affected by the value of the underlying US share, and the US dollar relative to the Australian dollar.

Can I convert my clients’ TraCRs into the underlying US share?

TraCRs may be converted into the underlying US share at any time, directly by your client, subject to the terms of issue. You can read more in the TraCRs Product Disclosure Statement (PDS) or alternatively contact Link Market Services to facilitate this for you.

What happens if the TraCR issuer or US custodian becomes insolvent?

The underlying US share is held in trust for the benefit of the TraCR holder, off the US custodian or issuer's balance sheet and ring-fenced from insolvency risk. In the unlikely event that the issuer or custodian goes into receivership, there may be a period when you cannot trade before the holding is transferred to another custodian or converted into the underlying shares.

How much does it cost to invest in a TraCR?

Brokerage fees apply, as outlined in the Financial Service Guide (FSG). There are also other fees which are outlined in the TraCRs Product Disclosure Statement (PDS). It is important to consider the market spread as outlined in the PDS prior to investing. For more information, please refer to the TraCRs Product Disclosure Statement (PDS). 

What is the minimum investment amount?

There is a minimum AUD$500 investment amount for purchases through Chi-X.

Will Australian tax and US tax apply?

Investing in TraCRS will have tax implications for your clients. The Australian tax considerations and US tax considerations associated with acquiring, holding, disposing of, cancelling or terminating a TraCR are complex and will depend on your clients' individual circumstances. These considerations differ to those associated with investments in Australian equities. Further information regarding tax considerations is provided in the PDS. Your client should obtain independent tax advice before deciding to invest in TraCRS.

An investment in TraCRS will require investors to provide Link Market Services with a form required for US withholding tax purposes. Link Market Services will contact investors in relation to their obligations. Failure to comply with the requirements for the form could result in adverse consequences to investors.

How can my client convert a TraCR to or from the underlying holding?

Your client can convert a TraCR to or from the underlying shares held on the international trading account, as long as they’re registered in the same name as the CommSec Adviser Services share trading account. Your client can do this through Link Market Services by completing either a TraCRs Application Request Form or a TraCRs Cancellation Request Form. You can find these forms on the Chi-X TraCRs website (under Resources). For more information or assistance, please contact Link Market Services.