SEC proposes transfer agent rule overhaul for U.S. market operations

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SEC transfer agent rule overhaul

Highlights

SEC proposes significant overhaul of transfer agent rules for the first time since the 1970s-1980s, targeting modernization and technology integration.
The new rules would address blockchain, electronic communications, and operations not covered by legacy regulations, aiming to improve regulatory fit in today’s market.
Public has 60 days post-Federal Register publication to comment on the proposal, which could reshape operational practices for U.S. clearance and settlement systems.

Rule update targets technology and operations

As reported by Securities and Exchange Commission, the proposal would revise the rules and forms governing registered transfer agents, whose regulations have not been substantively updated since the late 1970s and early 1980s. The agency says transfer agents now handle a broader range of functions and services that may not be fully addressed by the current framework.

The SEC says the proposal would amend existing rules and forms, rescind one rule and introduce new requirements for registered transfer agents and their activities. Chairman Paul S. Atkins says the changes would streamline and modernize the Commission's rules to reflect current processes, including the use of electronic communications and blockchain technology in securities offerings and share transfers.

Jamie Selway, director of the SEC's Division of Trading and Markets, says changing technology and a more competitive marketplace require a review of legacy rules and regulations. He describes the proposal as part of a broader effort to update the regulatory framework for the modern era.

Implications for clearance and settlement system

Transfer agents are a key part of the national clearance and settlement system, and the SEC says the proposed changes are designed to support the safe and efficient functioning of U.S. securities markets. The agency also says the update reflects the technological environment in which transfer agents operate, including widespread electronic recordkeeping and communications used in serving issuers, investors and other market intermediaries.

The proposing release is available on SEC.gov and will also be published in the Federal Register. Public comments remain open for 60 days after publication there, giving market participants a formal window to respond to the proposed overhaul.

Our earlier article covered the London Stock Exchange’s plan to work with Payward (Kraken) on tokenised versions of major UK shares for a new night-time trading venue targeted for 2027, subject to regulatory approval. We noted that these tokens would be backed one-for-one by conventional shares but offer limited shareholder rights, and that the initiative fits into a broader push toward blockchain-based trading and settlement.

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