The Dividend Investing Resource Center

Letting Dividends Do Their Work

Guidelines For Share Exchange

Bob Gibb

Please Read the Following Carefully Before Using The Exchange Board:

Getting shares through the exchange board is not risk free. The guidelines are established in an effort to help you get as good a result as possible but are not a guarantee.

Use the exchange board at your own risk.

If people step outside the guidelines please report it to the moderators. With a level playing field we all gain.

New participants are encouraged to ask about reputations or past history of those offering to deal with you.

Individuals are certainly able to set their own criteria elsewhere but here everyone is expected to stick to the guidelines for the following reasons:

  1. This forum was started in the spirit of paying forward. That is I'll help you, you help someone else, they help you or me. We do not try to profit from one another. We cooperate with our fellow members. In other words the only person we're trying to beat out of a commission is the broker.
  2. Going outside the guidelines will only lead to deterioration if one person tries to gain an advantage over others. Going outside the guidelines also leads to misunderstandings of motives and hard feelings.
  3. The moderators and long time posters have a wealth of knowledge they do not charge for either. Paying extra to someone with a profit motive is an insult to all who contribute freely here of their time and expertise! The owner of this private site does not charge for access so why should an interloper profit off his or any other member's generosity. If you do feel like paying extra consider hitting the "contribute" button above. After all, it is this site that is primarily responsible for saving you money.
  4. Cooperation encourages others to jump in and help others. They might help you.

1. how to exchange shares with someone else

When two people trade shares one person pays the difference in price only. E.g.

Person A has XYZ @ $50 Person B has ZYX @ $40

Person A sends XYZ to Person B Person B sends ZYX to Person A + $10

2. how to sell a single share certificate you have

Person A has XYZ @ $50 on Dec. 31 Person B wants it but has nothing to trade.

  1. Decide on a settlement date and price, e.g. closing price Dec. 31 which is $50. (Note: this refers to the current date or a future date not a previous date).
  2. Person B sends Person A $50 + $10 Thank you (covering parking, lunch, etc.)+ SASE (self addressed stamped envelope).
  3. Person A should wait for the payment to clear before forwarding the certificate.

Note: The $10 truly started here as a gift (originally $5) just to cover the expenses of a person doing you a favour. It is a "zero-sum" transaction if you pass the certificate on to the next person who sends you $10.

Note: Person A should disregard what they paid for the original certificate including commissions. Sometimes you're ahead sometimes you're behind, but by the time you've set up 10 DRIPs it'll all average out and you'll have saved over $800 in fees anyway. Think of it as a "starter share".

3. how to sell a share out of your DRIP account

This is very similar to number 2 except you might not get a paper certificate. Instead you end up with an account statement showing one share.

  1. Decide on a settlement date and price, e.g. closing price Dec. 31 which is $50.
  2. Person B sends Person A $50 + $10 Thank you (covering parking, lunch, etc.). An SASE might or might not be needed.
  3. Person A should wait for the payment to clear before asking the Transfer Agent to spin out a share to the new owner.

Note: If A & B are spinning out shares to each other there is no need for the $10 Thank you.

4. how to conduct a group purchase

*There is no $10 Thank you involved in a group purchase and it should never be a condition of participation.

The basic process is as follows:

  1. Person with discount brokerage account agrees to be coordinator.
  2. People indicate they wish to be part of the group.
  3. Coordinator collects names only (no money at this point), e.g. 10 people want XYZ which is purchased @ $50/share.
  4. Coordinator should publish the logon names of participants. This protects the coordinator from suspicion that they are collecting from more people than they publicly claim.
  5. Coordinator purchases 10 shares of XYZ for the following: 
    (10 x $50) + $25 commission + $50 transfer fee (+ GST if any e.g. $5)
    Total is $580/10 = $58 each + SASE (in some cases)
  6. coordinator indicates total & individual costs to group members.
  7. Members now mail $58 each to coordinator. Method of payment should be traceable to verify coordinator's identity.
  8. Coordinator waits for cheques to clear before forwarding certificates.

The coordinator pays the same as everyone else.  Yes, the coordinator does some work but benefits when someone else coordinates a group they take part in. At the same time we think it is fine for people on their own volition to add a few dollars as an appreciation. However, this should never be a condition of participation from the coordinator and should never be suggested.

We feel this policy will encourage others to help out by coordinating their own groups.

Note: Some brokers will issue individual one-share certificates immediately for $5 per certificate. This often speeds things up a bit and makes life easier for the coordinator. It is entirely acceptable for the coordinator to suggest this.

This website is maintained by George L Smyth