These days, investing is easier than ever. You can buy shares or exchange-traded funds (ETFs) from your phone in minutes. But how safe is your platform?

When you invest through a platform, you're trusting it with your money, data, and long-term goals. But not all investors realise how their assets are actually held or protected.

This article clears things up. We'll walk through the role investing platforms play, how your investments are stored, and what protections are in place. We believe this is important, because feeling confident in your platform starts with knowing what’s going on behind the scenes.

What is the role of an investing platform?

An investing platform helps you buy, sell and manage investments like shares and ETFs . It acts as the link between you and the market.

But it's not the market itself. And it doesn’t issue the investments you buy.

Most shares platforms don’t directly hold your shares or money. Instead, they work with other providers behind the scenes to do that.

They give you access to markets, tools to place orders, and a way to track your portfolio . Some platforms also offer features like auto-investing , reports, or access to international markets.

But their core role stays the same – they provide the technology and access that let you invest online.

Who’s who in shares investing?

There are a few key players involved when you invest through a platform. Each one has a specific role.

• Broker : The broker places your buy and sell orders in the market. They're the one who executes your trades.
• Custodian : The custodian holds your shares or money on your behalf, unless you’re using a model where shares are in your name. We’ll cover that next.
• Asset issuer : This is the company or fund manager behind the investment, like BHP for a share or Vanguard for an ETF.

Your investing platform may act as the broker and connect with a custodian. Or, it might just offer the interface. You don’t usually deal directly with the custodian or asset issuer, but they still play an important role in holding your assets.

Understanding who does what can help you check where your investments are held – and how they’re protected.

How are your shares held?

When you invest through a platform, your shares are usually held in one of two ways: under your name, or via a custodian. Each model has its own setup and structure. Let’s explore both now.

CHESS-sponsored model

Custodian model

Your shares are registered directly to you, not to the platform. You get a HIN (Holder Identification Number). Think of it as your personal ID for your investments. You’ll receive official holding statements directly from the Australian Securities Exchange (ASX) registry, not just through the platform. If you switch platforms, you can usually bring your HIN and investments with you. This model is common among platforms that offer direct ASX trading. You’re considered the legal owner, which can give some investors extra peace of mind.

The custodian legally holds the shares for you, but you remain the beneficial owner. Your name isn’t on the official share registry. Instead, the custodian’s name appears. The platform (or a third party) tracks your holdings and sends reports to you. This model is often used for fractional investing or international shares , where direct ownership is complex or costly. It can allow lower-cost trading and access to more global markets. If the platform goes bust, your shares aren’t part of its assets, as long as they’re properly held and recorded.

With the CHESS-sponsored model, you generally have more visibility and control. But CHESS-based services can sometimes come with slightly higher fees or fewer automation options.

Under the custodian model, you generally have fewer options to transfer holdings between platforms. But the model can be efficient and flexible for many types of investors.

How regulators keep investing platforms in check

Investing platforms don’t operate unchecked. They’re regulated by the Australian Securities and Investments Commission (ASIC) . Here are a few things to know:

• ASIC licensing : Platforms must hold an Australian Financial Services License (AFSL) to legally offer investing services to retail investors. This licence comes with rules about how they treat clients and manage risk.
• Client money rules : Platforms must keep your money in a separate trust account, not mixed with their own operating funds. This is designed to protect your cash if the platform runs into financial trouble.
• Compliance and reporting : ASIC can require platforms to meet financial standards or hold minimum levels of capital. They must also report certain events, risks, or failures.
• Dispute resolution membership : Platforms must be a member of the Australian Financial Complaints Authority (AFCA) . That gives you a pathway to escalate issues if something goes wrong.

ASIC doesn’t guarantee returns or prevent all risks. But its oversight plays a key role in keeping platforms accountable.

What platforms do to protect your assets

Behind every smooth investing experience is a system working hard to keep your money and data safe.

Keeping your account secure

Most investing platforms use encryption to protect your personal information. This means your data is scrambled while moving between systems, so others can’t read it.

Many also offer two-factor authentication (2FA) to add an extra layer of protection if your password ever gets compromised. Some platforms go further with activity alerts or the option to lock your account if something doesn’t look right.

Separating your assets from theirs

Platforms don’t just protect your account, they also keep your money separate from their own. This is known as asset segregation.

Your cash and investments are placed in separate trust or custodian accounts, depending on the platform’s structure. That helps ensure your funds aren’t touched if the platform has business problems.

Regular reconciliations (checking what’s recorded against what’s actually held) are also done to keep things accurate.

Internal controls and checks

Good platforms limit who can access sensitive systems and data. This is called access control, and it helps prevent errors or fraud.

Some platforms also undergo independent audits. These reviews check whether internal processes match up with the rules they’re meant to follow.

What happens if a platform goes bust?

It’s a scenario no one wants – but it’s worth understanding. If an investing platform collapses, that doesn’t automatically mean your assets are gone. What happens next depends on how your investments are held.

CHESS-sponsored holdings

As mentioned, if your shares are CHESS-sponsored, they’re in your name under your unique HIN. This means they’re recorded independently of the platform.

Even if the platform shuts down, your holdings stay intact. You'll usually just transfer them to another provider.

Custodian model holdings

If the platform uses a custodian, your shares are held in the custodian’s name on your behalf. The custodian is a separate legal entity. This structure can help protect your investments from the platform’s financial troubles.

You remain the beneficial owner. In most cases, the custodian works with administrators to move your holdings or return your funds.

Your money, not theirs

As we’ve said, your cash should be in a separate trust account. That helps shield it from being used to pay the platform’s debts.

Transfers and delays

In a platform failure, transfers might take time. There may be legal and administrative steps to work through. It can be stressful, but regulated processes are in place to manage how assets are handled.

Are investors covered by compensation schemes in Australia?

Australia doesn’t have a government-backed investment protection scheme like the US Securities Investor Protection Corporation . That’s important to know upfront. Here’s what else you might want to know:

• No automatic safety net: If a platform fails, there’s no official scheme that guarantees to return lost investments or cover account balances. But that doesn’t mean you’re left with nothing.
• Fraud and cybercrime coverage: Some platforms offer their own fraud protection, especially for unauthorised transactions. This varies, so you might want to check the platform’s terms. Banks and insurers may also step in if money is stolen through linked accounts, but it’s case by case.
• Dispute resolution options: As mentioned earlier, most platforms are members of AFCA. AFCA can help resolve disputes between investors and platforms at no cost to the user.
• Legal protections: Investors still have legal rights. If money is mishandled, you can take action through AFCA or the courts. ASIC also has enforcement powers, but it doesn’t act for individuals or provide compensation directly.

How to check how a platform protects your investments

Not all platforms protect your assets in the same way. That’s why it’s worth taking a closer look.

Start with the documents

Look for the platform’s Product Disclosure Statement (PDS) and Financial Services Guide (FSG). These outline how your investments are held and managed.

You’ll usually find them in the footer of the platform’s website or under the “legal” section in your account.

Check the key details

When reviewing these documents, keep an eye out for:

• Whether your investments are CHESS-sponsored or held by a custodian
• Who the custodian is, if one is used
• Where your cash is stored and how it’s separated
• What security measures are in place
• Any mention of fraud protection or insurance cover
• Whether the platform is a member of AFCA and holds an AFSL

Explore support resources

Some platforms publish FAQs, help centre articles or blog posts explaining their structure in plain language. These can be easier to digest than legal documents.

If anything isn’t clear, reach out to the platform’s support team and ask specific questions about custody, security, or account protection.

Know who you’re trusting your money with

There’s more to a good investing platform than just low fees and a slick app. What happens behind the scenes matters too. While there are rules and protections in place, they’re not all the same – and they’re not automatic.

You don’t need to read every fine print paragraph. But digging into the basics can give you clarity and control.

So next time you log in to your investing account, take a moment. Check how your platform works. Trust is good – but trust with understanding is even better.