If you’re a fan of investing subreddits like r/WallStreeBets, you might have read a bit about Computershare recently. The relatively unassuming Melbourne-based company might not seem like the kind of company to make a big splash in the investing world, but lately, it’s all some amateur investors can talk about.
So, what is Computershare, and why are some Reddit investors obsessed with it?
Computershare is an Australian direct securities registration company. In plain terms, it’s an old-school website portal for buying stocks and securities. The company was founded in the 1970s, and it’s quietly been a preferred tool of amateur investors for a very long time. However, the advent of fee-free apps like Robinhood drove many modern retail investors to phone-based trading platforms.
These trading platforms use a system called “payment for order flow,” which rubs some investors the wrong way. After all, with a PFOF model, your trades are seen by market makers before they’re actually posted. This is why you don’t pay a fee for trades on these apps: market makers pay the app’s owners to see the trades before they go live.
Computershare, meanwhile, allows users to directly register for securities. This means that no one sees your trades before they go live, and your name is signed to the certificate of ownership. With a “street name” registration, like the kind Robinhood and WeBull use, the company puts its own name on the registration, and your name is recorded in their ledger.
Some amateur investors are wary of this kind of registration. Some events have caused investors on Reddit to speculate that such indirect registration could lead to manipulation by the platforms that hold these fee-free transactions, though there has been no evidence of such manipulation taking place.
However, the perception that direct registration is safer is very strong among some investors online.
Computershare and other direct registration sites like it can be a bit more confusing to navigate than modern-day trading apps. Likewise, the process of directly registering for securities trading can take more time than fee-free PFOF transactions, and you’re often limited to just one or two trades per week.
For those who want to just buy shares and then hold them for a long period, however, Computershare can be a great method of investing. Just be prepared to sift through a slightly outdated interface, and be patient when it comes to making your trades!