TraCRs (pronounced 'tracers') stands for Transferable Custody Receipts. They are an innovative new securities class exclusively quoted on the Chi-X exchange that provide Australian investors access to the benefits of owning US shares in some of the world’s biggest brands.
There are currently 10 TraCRs available (including Disney, ExxonMobil, Apple, IBM and Facebook) through Chi-X that you can invest in through your broker (providing your broker is a Chi-X Participant) with another tranche coming out soon. See latest list of available TraCRs here.
How TraCRs work
As a TraCR holder you have a beneficial interest in the underlying US share. For example if you hold one Apple Inc TraCR you will have a beneficial interest in one Apple Inc share.
The underlying US custodian (Deutsche Bank) buys and holds the underlying US shares on behalf of the TraCR issuer (also Deutsche Bank). The issuer aka market maker is then responsible for the issuing, redemption and operational management of TraCRs on the Chi-X exchange. See 'How TraCRs are structured' below .
Having a beneficial interest in the underlying share means you have access to dividends. It also means you have the right to convert your TraCR holding at any time into the underlying share (subject to the terms of issue).
How TraCRs are traded and settled?
The beauty of TraCRs is that while they're not a share or stock, you can buy and sell them during normal market hours the same way you would trade an Australian share or stock. Just like those securities, they are cleared through ASX CHESS, registered at a local share registry and settled on your CHESS HIN on T+2.
They are traded in Australian dollars with dividends paid in Australian dollars. Applicable US taxes and fees are deducted from dividends which are then converted to AUD.
With brokerage the same as what you pay for shares, TraCRs makes adding international exposure and diversifying your portfolio - with some of the best known brands - pretty convenient, transparent and cost effective (especially compared to most international share trading services provided in Australia).
Key benefits of TraCRs
- TraCRs are traded in Australian dollars
- TraCRs are traded during Australian market hours through your local broker
- You receive your dividends in Australian dollars
- TraCRs are held and settled on your existing CHESS and HIN
- TraCRs give you greater portfolio diversification of owning US shares managed through your local broker
- Protected through Australian regulation and ASIC supervision
How TraCRs are structured
The following diagram shows how TraCRs are structured, issued and settled through CHESS.
How to access TraCRs through OpenMarkets
See related article How can I invest in TraCRs?
For more check out our interview with Chi-X CEO on TraCRs