Deposit/Withdrawal At Custodian (DWAC)

When investing in private companies, especially some of the more recent tech companies, stock certificates in physical form are often exchanged for the investments, since there is no actual trading market yet for the stock. Once the company announces its IPO and is ready to trade, one would ordinarily deposit the certificate at their brokerage firm.

However, how does the brokerage firm convert the paper certificate into an electronic record it can then put into street name for its client? There are two primary vehicles: the Direct Registry System (DRS), when the stock has already been issued electronically to the transfer agent and just needs match and conversion; and the Deposit/Withdrawal at Custodian (DWAC) method. DWAC takes the paper certificates and deploys the Fast Automated Securities Transfer (FAST) service, which instantly gets it to the transfer agent, puts it into the client account, and clears it with DTC for trading,