Sharesies Fee Changes

[Waltzing]

hopefully no loans secured against the nomiee company and that is unlikely..  surely not !!! 

"these low margin platforms seem very vulnerable to me."

the trustee could off market transfer them and its a simple process.

someone here stated they buy on the SHAZ platform and then transfers them out to a CSN.

 

[KW]

From Sharesies T & C's, parts 3 and 4:

If we become insolvent or otherwise materially default on our obligations, your Wallet and Portfolio will be protected from the claims of general creditors, including any bank holding your money and CDO for any money or Shares held in the NZX depository account.

Just note the very specific wording in that T&C - it says protected from "general creditors" which is true, owners of the shares would have equitable priority over general creditors in a distribution.  However, they do not say anything about "secured creditors", and its secured creditors who have first dibs on everything.  The devil is always in the fine print.

[KW]

I get your point about minimum shareholding - I don't know how they would handle that. But first though is they would distribute out to the owner and that minimum then became their problem. Which means brokerage might be more than shares are worth. There maybe something in fine print (that I can't be bothered looking up) that allows trustee to sell in the absence of owner instruction.

And I gather distribution is out to the owner. Who Is the shareholder. But to distribute the owner needs to have a CSN. If Raven, for example, doesn't have a CSN then no distribution until that is done. Which further delays the process and adds to trustee costs.

I don't share Ravens confidence - these low margin platforms seem very vulnerable to me.

The difficulty and cost of distributing in specie is why they would just sell everything and settle in cash to everyone's account.  I have no doubt the T&Cs allow for this.

[KW]

hopefully no loans secured against the nomiee company and that is unlikely..  surely not !!! 

Its known as hypothecation, or rehypothecation
https://www.investopedia.com/terms/r/rehypothecation.asp

The devil is in the detail - what type of account are Sharesies people trading on.  With a standard broker most people are trading on T+2 accounts - ie. you buy the shares and then 2 days later you pay for them.  You have 2 days to get funds into your account to settle the trade.   This allows people to day trade without ever spending a cent, as your broker nets out the buys and sells and covers the settlement payments.  A T+2 account is technically a margin account, even though its not how you think of margin (as in borrowing money from the broker to buy shares).  And any shares held in a margin account are automatically available to the broker to rehypothecate even if you dont have any outstanding funds owing on that account, or have bought shares that you have not borrowed against.  This is because if you fail to pay up for shares bought on T+2 terms the broker can take other shares that you own and sell them in order to settle the account.  You have basically agreed to give the broker dealing rights over your shares.  

[Sideshow Bob]

Given Sharesies claims about half a million users I suspect that their demise would actually become a political problem. As has been pointed out, the reputational damage to the market would be substantial. Obviously not the in the same league as a major trading bank collapse, but perhaps similar to one of the smaller ones going under. I wouldn't be surprised if some sort of white knight rescue package might be cobbled together to allow a more orderly wind-down before an actual collapse occurred.

If (and it is an If) there was any sort of Sharesies collapse, it would be this generation's 1987 moment - scare off a heap of mum and dad investors from the share market.

Clearly Sharesies have to do something, losses aren't sustainable.

I've mucked around with "spare change" amounts for sh1ts & giggles, but the new pricing is still workable and plans can be work for you. Maximum brokerage $5 USD for US shares or $15 AUD for Australian shares....sheesh! Not exactly over the top.

[Raven]

Its known as hypothecation, or rehypothecation
https://www.investopedia.com/terms/r/rehypothecation.asp

The devil is in the detail - what type of account are Sharesies people trading on.  With a standard broker most people are trading on T+2 accounts - ie. you buy the shares and then 2 days later you pay for them.  You have 2 days to get funds into your account to settle the trade.   This allows people to day trade without ever spending a cent, as your broker nets out the buys and sells and covers the settlement payments.  A T+2 account is technically a margin account, even though its not how you think of margin (as in borrowing money from the broker to buy shares).  And any shares held in a margin account are automatically available to the broker to rehypothecate even if you dont have any outstanding funds owing on that account, or have bought shares that you have not borrowed against.  This is because if you fail to pay up for shares bought on T+2 terms the broker can take other shares that you own and sell them in order to settle the account.  You have basically agreed to give the broker dealing rights over your shares. 

Sharesies trades are pre-paid. You have to have the money in your account before the trade can be processed.

[KW]

Sharesies trades are pre-paid. You have to have the money in your account before the trade can be processed.

Thats a good thing.  Now you just need to check that they havent inserted any nasty little dealing rights in the T&Cs hoping no one will ever read the fine print lol

[Minimoke]

The difficulty and cost of distributing in specie is why they would just sell everything and settle in cash to everyone's account.  I have no doubt the T&Cs allow for this.

A bit of digging and Sharsies say (my emphasis)

"You own all of the investments you have through Sharesies. In legal terms, you're referred to as the 'beneficial owner' of your investments—you get the benefits of owning them. In other words, you're the owner entitled to the full value of your investments, and if you make a gain, it's yours.

You control when you want to buy, sell, withdraw or participate in corporate actions made available on Sharesies. We act on your instructions. We don't make investment decisions for you."

I can't find any Sharesies Nomineee Ltd trust type document - which isn't helpful as I would have expected full disclosure would detail how your shares are treated in the event of closure.

[Waltzing]

surely they cant sell on market without disruption and it more likely off market transfer to institutions.

its doubtfuly the trust deed doesnt have extensive clauses cover everything in sundry.

doubt any loans on the parent oeprator has loans secured against the trustee.

[Basil]

Customer feedback is "interesting" to say the least and that's before they are about to make major cutbacks on staff.  https://nz.trustpilot.com/review/www.sharesies.nz
After reading quite a lot of those reviews there's no way I would invest through them.

[Minimoke]

Customer feedback is "interesting" to say the least and that's before they are about to make major cutbacks on staff.  https://nz.trustpilot.com/review/www.sharesies.nz
After reading quite a lot of those reviews there's no way I would invest through them.

Small sample size - but enough to at least cause me to dust off my barge pole.

[Raven]

Customer feedback is "interesting" to say the least and that's before they are about to make major cutbacks on staff.  https://nz.trustpilot.com/review/www.sharesies.nz
After reading quite a lot of those reviews there's no way I would invest through them.

For several years I volunteered on a large user help board for a very well known social media site. Many of those negatives feedbacks smack of the stock standard scammer trying to gain access to someone elses account with the old lost my access stuff, of trolls, etc. People saying things like share transfers take weeks. I've done quite a few on Sharesies. Some happen within an hour, never had one take longer than next day. I agree the feedback does not look good, but as an actual user I can only disagree with most of the negatives.

[Hectorplains]

 Interesting article in BusinessDesk this morning updating on Sharesies.

Key points include:

Sharesies completed an oversubscribed raise of $20 million, valuing the company at $750 million.

They have been cash flow positive ($500k/month) since March.  Annualised revenue is $71m ($28m in FY2024.)

They have 880,000+ people with accounts, including 100,000 in Australia.

Chair Jon Macdonald wants to counter the view that Sharesies is "for beginners" — they have 1,500+ investors with portfolios over $1m.

An IPO remains a "future option", but there are "no current plans."

[LaserEyeKiwi]

Interesting article in BusinessDesk this morning updating on Sharsies.

Key points include:

Sharesies completed an oversubscribed raise of $20 million, valuing the company at $750 million.

They have been cash flow positive ($500k/month) since March.
Annualised revenue is $71 ($28m in FY2024.)

They have 880,000+ people with accounts, including 100,000 in Australia.

Chair Jon Macdonald wants to counter the view that Sharesies is "for beginners" — they have 1,500+ investors with portfolios over $1m.

An IPO remains a "future option", but there are "no current plans."

Another Wellington success story there, follows in the footsteps of Weta Digital, trademe & Xero. Quite a few more recent tech startups in Wellington finding success as well: Henry, Storypark, Totora are some I have heard about recently growing pretty fast and attracting overseas investors.