What Is DWAC (Deposit/Withdrawal at Custodian)?

What Is Deposit/Withdrawal at Custodian?

Deposit/Withdrawal at Custodian (DWAC) is a service provided by the Depository Trust Company (DTC) that allows for the electronic deposit or withdrawal of new shares or paper share certificates to and from the DTC. This service uses the Fast Automated Securities Transfer Program (FAST).

DWAC is one of two ways of transferring securities between broker/dealers and the DTC. The second is the Direct Registry System (DRS). Both systems enable investors to hold securities in registered form on the books of the transfer agent, rather than as paper certificates in their homes. When transfers are requested, they happen electronically; no certificates are physically moved.

DRS is different from DWAC in that shares have already been issued, registered to owners, and are held electronically on the books of a transfer agent.

Understanding Deposit/Withdrawal at Custodian

DWAC is an electronic process of transferring securities between a broker and a transfer agent. It offers a number of benefits to investors, including time savings, cost savings, and low risk.

As an electronic system, DWAC allows the for immediate transfer of securities to a brokerage account. No time is involved or required for the physical delivery of share certificates, so the settlement process is more efficient and faster. It also saves on costs associated with printing a physical certificate and mailing it.

Because no physical certificates are transferred, there is no risk of loss or damage that might occur when transporting and handling such certificates.

While not typically a concern of investors, there are several requirements for the DWAC. Shares must be free trading or eligible for restriction removal. The broker must be a DTC participant and the issuer must be DWAC-eligible.

What Is FAST?

FAST is a contract between DTC and transfer agents whereby FAST agents act as custodians for the DTC. It eliminates the movement of physical securities. It was established in 1975.

According to the DTC, the FAST program "facilitates the industry’s dematerialization efforts and plays a significant role in reducing the costs associated with shipping certificates to and from agents as well as those related to printing and processing certificates." Money market securities can't participate in the FAST program.

Requesting and Delivering Physical Certificates

While this process is electronic, shareholders can still withdraw their stock from their brokerage accounts and request a physical stock certificate. They must ask the broker initiate the request through the DTC or have the broker send the shares electronically to the transfer agent through the DWAC system.

There may be fees for this service. The withdrawal of shares as physical certificates generally requires a Medallion Signature Guarantee—a certification stamp that guarantees the signature on a share certificate is authentic.

Shareholders can deposit their stock into a brokerage account by either sending their actual stock certificate(s) to their broker or by having the transfer agent send the shares directly to the broker using the DWAC system.

To deposit your shares to your broker via DWAC, shareholders must provide original stock certificate(s), the DWAC deposit form, and applicable fees.

The Bottom Line

Deposit/Withdrawal at Custodian, or DWAC, is a service provided by the Depository Trust Company. It allows DTC participants—brokers and custodial banks—to request the transfer of securities using the FAST system between a transfer agent and a broker.