Behind the scenes: Sharesies’ process for US investments—Sharesies Australia
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Behind the scenes: Sharesies’ process for US investments

Explainers

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!

15 November 2021

4 min read

Behind the scenes: Sharesies’ process for US investments

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 💖

You’ve exchanged your Australian dollars for US dollars, and placed your order. Right on! Your order to buy an investment—or sell one you’ve already got—gets sent through the Sharesies platform.

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). These protections help to keep your investments safe if something happens to DriveWealth. 

Step 3: Your order goes on market ✨

DriveWealth places your order on the US market when the market is open, and in a way thatʻs designed to get you the best possible price. If you’ve placed a market order, the market will decide the price (Note: You can read our best price policy in the Sharesies app. Go to Settings > Best Price Policy). But if you’ve placed a limit order, you’ll have more control over 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 for the week ahead by going to an investment’s page in the Sharesies platform. 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 choose to cancel! If any part of your processing order isn’t filled after 30 days, it’ll be cancelled and your money will become available again in your Sharesies Wallet.

Step 4: Your order appears in Sharesies 🍍

When your order is filled, the investment (or the money from selling your investment) appears in your Portfolio straight away. 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.

But in the background, the Sharesies platform has an obligation to settle your order with DriveWealth. 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). 

This happens on a T+2 basis—the ‘T’ stands for transaction date (the day the trade takes place) and ‘+2’ means plus two working days. In practice, that means if you place an order for $100 of Spotify (SPOT) stock on a Monday, the Sharesies platform needs to deliver $100 to DriveWealth in two working days to settle the trade. But this happens entirely behind the scenes—you won’t even notice!

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 help@sharesies.com.au. 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.

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