SEC Proposes to Modernize Transfer Agent Rules
The SEC has proposed the first comprehensive update to transfer agent regulations in decades, seeking to address technological advancements and impose new standards for risk management and compliance.
The U.S. Securities and Exchange Commission has proposed a comprehensive overhaul of the rules governing registered transfer agents, which have not been substantively updated in over 40 years. The proposal aims to modernize the regulatory framework to reflect significant technological advancements in securities recordkeeping, including the use of electronic communications and blockchain or distributed ledger technology. Key elements of the proposal include new requirements for transfer agents to establish and maintain written risk management and compliance policies, new standards for processing securities transfers and removing restrictive legends, and updated rules for handling inactive securityholder accounts. For public companies and other issuers, these changes could impact how their securities are transferred and serviced. The proposal will directly affect the operations of all registered transfer agents, requiring investment in new systems and compliance protocols. The SEC will accept public comments for 60 days after the proposal is published in the Federal Register.