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Any whole shares or ETFs (whole securities) that you have invested in, and any cash in your EasyEquities account that is not yet invested, is protected in what is called an insolvency event. This is because all whole securities and uninvested cash are segregated (i.e. kept separate) from the assets of First World Trader (Pty) Ltd (“FWT”); the company that operates the EasyEquities Platform.
Who is FWT Nominees?
FWT Nominees is a separate ring-fenced company from EasyEquities and its sole purpose is to hold assets in its own name on behalf of EasyEquities’ clients. This means that your whole securities and your free cash are not held in any business account (a securities and/or cash account) belonging to EasyEquities and therefore do not form part of EasyEquities’ estate in the case of an insolvency event.
How does this work for whole securities?
When you buy a whole security on the EasyEquities platform, your whole security is registered in the name of FWT Nominees with you noted as the beneficial owner (ie true owner) of the whole security in its securities account held with its central securities depositary participant (CSDP) admitted as a member of Strate.
This means that the electronic securities register of the issuer of your whole security held with Strate will show FWT Nominees as the registered holder of the whole security you bought and you as the beneficial owner (ie true owner) of that whole security.
How does this work for your free cash?
When you make a deposit on the EasyEquities platform, you deposit your funds into a bank account in the name of FWT Nominees (not EasyEquities) and your cash is kept in the nominee bank account (you can think of this as a trust account) if it not being used by you for an investment. This means that your cash is not held in a bank account belonging to EasyEquities and would be safe if EasyEquities suffered an insolvency event.
What about your Fractional Shares?
Where you have been issued with a Fractional Share Right, the FWT Security SPV has issued a Guarantee in your favour, guaranteeing all of FWT’s obligations to you under that Fractional Share Right. This means that if FWT suffers an Insolvency Event, you may claim the amounts owed to you by FWT under your Fractional Security Right directly from the FWT Security SPV. If an Insolvency Event happens, FWT Security SPV will sell the FWT Equities that are ceded to the FWT Security SPV as security for any claims made by clients
For a more detailed description of the insolvency protections in place to protect EasyEquities’ clients, please refer to paragraph 27 of the EasyEquities Terms and Conditions.