Attention All Underwriters:
Is Your Transfer Agent DRS-Eligible?
By Edward C. Kelleher
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AnnaMaria Freeman, director, Merrill Lynch & Co., and secretary of the Syndicate Operations Association
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Underwriters planning to offer new listed issues on the New York Stock Exchange, NYSE Arca, the American Stock Exchange or Nasdaq on or after January 1, 2007, must have a transfer agent that participates in DTCC’s Direct Registration System (DRS).
This is due to new exchange rules recently approved by the Securities and Exchange Commission (SEC), which specify that newly listed issues coming to market on or after the January 1 deadline must be DRS-eligible on the first day of trading. (Existing listed issues will have to become DRS-eligible by January 1, 2008.)
"Under the rule changes, if the issue has a transfer agent that is not DRS-qualified, it will violate the exchange rules," said Joseph Trezza, DTCC vice president, Asset Services. "This is why we’re urging underwriters to look at the new processing paradigm sooner rather than later."
"It was exciting news and a major advance for the industry."
- AnnaMaria Freeman, director, Merrill Lynch & Co., and secretary of the Syndicate Operations Association.
Make it FAST
DRS provides for electronic direct registration of eligible securities in a registered holder’s name on the books of a transfer agent or issuer, and allows transfer agents and brokers to transfer shares between each other electronically. DRS is just one way an investor can elect to hold assets; shares also can be held electronically in street name through a broker.
DTCC is also telling underwriters to pick a transfer agent that is a FAST agent because agents must qualify as FAST in order to become DRS-eligible. FAST is DTCC’s Fast Automated Securities Transfer service that enables agents to provide electronic custody, transfer, deposit and withdrawal services quickly and efficiently.
Spreading the word
When the SEC approved the rule changes, the response from the industry was enthusiastic. "It was exciting news and a major advance for the industry," said AnnaMaria Freeman, director, Merrill Lynch & Co., and secretary of the Syndicate Operations Association, the industry trade organization that represents underwriters.
"DRS will help streamline and bring new efficiencies to the underwriting process," she said. "Now we just have to make sure everyone is aware of the change and ready to meet the January 1, 2007, deadline."
DTCC recently sent letters to all underwriters alerting them to the rule changes and providing a list of current DRS-eligible transfer agents. Trezza said DTCC will continue to work with the Syndicate Operations Association to ensure underwriters are up to speed on what the rule changes require.
The number of issues that are DRS-eligible has grown in recent years to 1,234, and the rule changes will add more than 9,000 listed issues to the DRS program by January 1, 2008. @
[For more information on requirements related to the rule changes, contact Joseph Clemente, DTCC manager, Asset Services, at 212.855.2425 or jclemente@dtcc.com.]
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To Learn About Losing Paper, Use the Web |
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Need to get up to speed on electronic share registration? One place to get your questions answered and to tap into a reservoir of information is the appropriately named "No-More-Paper" section on DTCC's Website, www.dtcc.com/nomorepaper.
The site offers separate sections for industry professionals, issuers and investors, and provides answers to a long list of frequently asked questions (FAQs) about how to jettison paper share certificates and begin using the Direct Registration System (DRS).
Readers can also find out what it costs to issue paper certificates, which companies have already sworn off paper certificates and which countries no longer allow issuers to put out paper securities. | |