What to Expect
Like most industries, the stock market has developed its own jargons. For the first-time investor, we will endeavour to explain some common terminologies used.
Discussing your Investment
Your advisor will explain and discuss with you in terms of:
| Markets |
The general economic conditions in Australia, Asia, USA etc. |
| Industries or Sectors |
The prospects or otherwise of specific industries and their point in the economic cycle. |
| Companies |
Publicly listed companies registered on the Australian Stock Exchange |
| Blue Chip |
A company recognized for its quality assets, management and historical track records of dividend performance, although not all ‘blue chips’ are safe investments. |
| Industrials |
Includes all companies listed on the ASX outside the mining and oil markets. |
| Resource Sector |
Includes all the mining and oil companies. |
| Yield |
Percentage rate of return paid on the investment in the form of dvivdend and may be compared with interest derived from a bank deposit |
| SEATS |
Stock Exchange Automated Trading System. |
| CHESS |
Clearing House Electronic Sub Register System. |
| ITS |
Integrated Trading System |
Transaction Procedure
When placing an order to purchase your selected stock, be aware of the following pricing:
| At Best |
Immediate execution at the price to meet the market. |
| At Market |
The going rate on the market. Execution is at or close to current market price |
| Fixed |
This means you set the limit of the price paid / received. Securities can be purchased up to but not above, or sold down to but not below your stated price. |
Settlement Procedure
Most orders are completed on the same day of placement. Incomplete orders are held active until the end of the subsequent calendar month unless they are cancelled or amended on your instructions.
| Confirmation |
Intersuisse will send you a written statement (confirmation note) immediately after a trade is executed, confirming the stock, price, settlement date and terms. |
| Settlement |
The rules of ASX requires settlement on T+3, which translates to trade date plus 3 business days at which time shares purchased must be paid for and proof of ownership must be substantiated for sales. |
Shareholder Registration
Once you become a stockholder, you are required to make a decision on the registration options:
| Intersuisse (Broker) Sponsorship on CHESS |
You will be issued with a unique HIN (Holder Identification Number), and all shares purchased for you by Intersuisse will have the same HIN. |
| Issuer Sponsored |
The Company sponsors your holding on the registration system and issues you with a SRN (Shareholder Reference Number). You will receive a separate SRN for each company in which you invest. |
Shareholders Entitlements
When you are a registered stockholder, the company will offer you alternative dividend payment options:
| Option 1 |
Payment directly into your nominated bank account or by cheque |
| Option 2 |
Payment in the form of additional shares, sometimes at a discount to the market price. When this alternative is offered, it is referred as a Dividend Reinvestment Plan (DRP) |
Dividend Payments may be either:
| Unfranked Dividends |
This means the company has not paid any tax on earnings for that proportion of its distribution. |
| Franked Dividends |
Shareholders receiving franked dividends from a company are entitled to a credit for the Australian company tax paid on the dividend. |
Tax File Number
It is important that your TFN or exemption is provided to each company in which you hold shares to avoid being taxed at the highest marginal rate on any unfranked dividends.
Voting
As a shareholder you have the right to vote at the company’s annual General Meeting and question Directors about the company’s performance.
