What Is Deposit at Custodian (DWAC)

In today’s stock market, efficiency and speed are essential for handling securities. Deposit/Withdrawal at Custodian (DWAC) is an electronic system designed to simplify the transfer of shares between brokers, custodians, and transfer agents. Managed through the Depository Trust Company (DTC) in the United States, it eliminates the need for physical share certificates. By reducing paperwork and ensuring quicker settlements, DWAC has become a preferred method for secure and streamlined stock transfers.

DWAC, or Deposit/Withdrawal at Custodian, is a system that enables electronic transfer of securities between a company’s transfer agent and a broker’s account with a custodian. It is managed by the Depository Trust Company (DTC) in the United States and is designed to facilitate quicker and secure movement of shares electronically.

DWAC functions through electronic communication between the transfer agent, the broker, and the Depository Trust Company. Here’s how it works step by step:

1. The company’s transfer agent authorises the shares for transfer.
   

2. The broker initiates the DWAC request through the custodian.
   

3. The DTC processes the transaction electronically.
   

4. The shares are credited directly to the broker’s account.
   

For example, if an investor converts restricted stock into freely tradable shares, the transfer agent can release them electronically through DWAC into the investor’s brokerage account.

DWAC offers significant advantages in the securities transfer process:

• Faster processing of share transfers
  

• Lower dependence on physical share certificates
  

• Greater efficiency and reduced paperwork
  

• Direct electronic movement between transfer agent and broker
  

• Facilitates convenience for market participants
  

DWAC is a transfer mechanism and does not directly influence a company’s stock price. However, since it allows faster movement of shares, large-scale DWAC transactions can indirectly affect trading volumes. This may lead to price fluctuations if substantial shares become available for trading at once.

Completing a DWAC transfer usually involves these steps:

1. Contact the company’s transfer agent to verify eligibility.
   

2. The transfer agent authorises the shares for electronic transfer.
   

3. Request the broker to initiate the DWAC process.
   

4. The custodian communicates with DTC to process the request.
   

5. Shares are deposited electronically into the brokerage account.
   

This streamlined approach saves time compared to manual certificate-based transfers.

DWAC, or Deposit/Withdrawal at Custodian, has transformed the way securities are transferred by making the process faster, paperless, and more reliable. It enables brokers, custodians, and transfer agents to handle share movements seamlessly through electronic systems. Unlike physical transfers, DWAC reduces delays and simplifies record-keeping. While it does not directly impact stock prices, its efficiency supports smoother trading activity. Overall, DWAC remains an important mechanism in modern stock market operations.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.