Behind the scenes: Sharesies’ process for US investments
You’ve placed your first order for US shares. Congrats! But did you wonder what happens behind the scenes to turn your US dollars into investments in your Portfolio? Wonder no more!
We’re pulling back the curtain on what happens when you place a buy or sell order for US investments through the Sharesies platform.
In this post, we’ll cover the investment process for US companies and exchange-traded funds (ETFs). If you’re curious about what happens when you invest in Australian or NZ shares through the Sharesies platform, check out our behind-the-scenes post for Australian investments, and for NZ investments.
Step 1: You place your order 💖
Step 2: Your order goes to DriveWealth 🇺🇸
To get your order to the US share market, the Sharesies platform partnered with DriveWealth. They’re a US-based registered broker dealer who acts as the execution partner. This means they can buy and sell investments with the three US stock exchanges the platform provides access to—the New York Stock Exchange (NYSE), Nasdaq, and the Chicago Board Options Exchange (CBOE)—on the Sharesies platform’s behalf.
When your order is received, it gets queued and sent to DriveWealth to place on the market. They have the technology that allows them to connect and trade with the US exchanges. If you think about the flow between Sharesies and the US market, DriveWealth is in the middle receiving orders and executing trades. They see all of the orders from us as if they were placed by a single customer—Sharesies. We act like a buffer between you and DriveWealth, so your personal info is never shared with them.
The US Securities and Exchange Commission (SEC) regulates DriveWealth. DriveWealth is also a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC).
Step 3: Your order goes on market ✨
DriveWealth places your order on the US market when the market is open, as per its Best execution policy and in a way thatʻs designed to get you the best possible price. If you’ve placed a market order, the price the order is placed is determined by Drivewealth based on current market prices. But if you’ve placed a limit order, you’ll have set a limit for the amount you buy or sell an investment for. But remember: you can only buy and sell whole shares (and not fractional shares) when placing a limit order for US investments.
US stock exchanges are open weekdays 9:30 AM to 4 PM Eastern Time and are closed on major US holidays. You can find an exchange’s opening hours in the Sharesies platform by selecting the ‘open’ or ‘closed’ symbol in the top right-hand corner on an investment’s page. If you place your order while the US market is open, it’ll typically go straight to market. But if you place it while the US market is closed, it’ll be queued up for when the market opens again and show as ‘pending’ in your Portfolio. You can cancel a pending order, otherwise it’ll usually be placed on market within seconds of it opening.
When your order goes to market, it might be filled in a single trade straight away, or over multiple smaller ‘partial’ trades. This means that your order might be filled by partial trades at different prices. If your order (or partially filled order) is waiting to be filled, it’s called a ‘processing order’—which you can usually choose to cancel. If any part of your processing order isn’t filled after 30 days, we’ll typically cancel it and refund the money back into your Sharesies Wallet.
Step 4: Your trade appears in Sharesies (and gets settled in the background) 🍍
If your order is filled (either partially or fully), you’ll see your investments (if you’ve bought investments) or money (if you’ve sold investments) appear in Sharesies. You’ll also get a contract note (it’s like a receipt for the transaction) that gives you all the details about your order and the trade that took place.
In the background, the Sharesies platform has an obligation to settle your order with DriveWealth usually two business days after the trade date—this is known as T+2 settlement. This basically means DriveWealth needs the money for your order so you can receive the investment in return (and vice versa if you’re selling). Settlement happens when the legal ownership of the shares or money changes hands, usually two days after the transaction date.
Once the trade is settled, your investment is held in the US by DriveWealth’s custodian. They hold it under the name of Sharesies Nominee Ltd ‘on bare trust’. This means we’re holding it for you—but it remains your investment at all times! We can’t do anything with it unless you tell us to. For more info, read about how Sharesies’ custodial service works.
Like to know more? 🤔
If there’s anything else you’re curious about, let us know! Just flick us an email at firstname.lastname@example.org. We’d love to hear from you!
Ok, now for the legal bit
Investing involves risk. You aren’t guaranteed to make money, and you might lose the money you start with. We don’t provide personalised advice or recommendations. Any information we provide is general only and current at the time written. You should consider seeking independent legal, financial, taxation or other advice when considering whether an investment is appropriate for your objectives, financial situation or needs.