One of the two ways of electronically transferring securities between broker/dealers and the Depository Trust Company (DTC). The Deposit/Withdrawal at Custodian (DWAC) and Direct Registry System (DRS) methods enable investors to hold securities in registered form on the books of the transfer agent, rather than in physical form.
The primary difference between the two systems is that DWAC generally refers to new shares or paper share certificates that have to be electronically transferred, while shares in DRS have already been issued and are held electronically on the books of the transfer agent.
The DWAC and DRS processes offer a number of benefits to investors. Being electronic systems, they greatly reduce the amount of time required to transfer and deliver securities, thereby significantly accelerating the settlement process for investors. They also eliminate the risk of losing physical certificates, as well as the higher transportation and handling costs associated with such certificates.