SEC Proposes Major Update to Transfer Agent Regulations
The proposed rules would modernize recordkeeping for electronic and blockchain-based technologies and impose comprehensive new risk-management and compliance obligations.
The U.S. Securities and Exchange Commission has proposed the first substantive modernization of the rules governing registered transfer agents since their initial adoption. The proposed amendments aim to update the regulatory framework for an era of electronic securities and distributed ledger technology (DLT), expressly permitting transfer agents to use blockchain for their master securityholder files.
Sophisticated counsel and their clients should care because the proposal goes far beyond technology updates. It introduces significant new compliance and risk-management obligations, replacing the existing safeguarding rule with a comprehensive framework requiring written policies, procedures, and business continuity plans. New proposed rules would also mandate formal compliance programs and place a greater duty on transfer agents to ensure they do not facilitate unregistered securities transactions. These changes will impact not only registered transfer agents but also the public companies, investment funds, and broker-dealers who rely on them. The public comment period is open until November 3, 2026, and affected parties should evaluate the operational and compliance costs.