SEC Updates Transfer Agent Rules for Blockchain Era

The US Securities and Exchange Commission (SEC) has proposed updating transfer agent rules to reflect modern technology and practices. These rules, largely unchanged since the late 1970s and early 1980s, govern who legally owns shares in the securities market. Transfer agents track ownership records, process dividends and mergers, and facilitate trades.

The SEC's proposal addresses registration, recordkeeping, safeguarding assets, reporting, and third-party providers. It also rescinds a 1977 exemption that let limited partnership interests and fund shares skirt some of these requirements. Agents will face heavier reporting obligations, including around restrictive legends and their use of third-party vendors.

The SEC's proposed rule changes aim to align the rules with electronic communications and blockchain technology already in use for securities offerings and share transfers. This move forms part of a broader modernisation push by the agency.

Commissioner Hester Peirce backed the proposal, saying it will keep pushing for it from outside the agency after her expected exit. Public comments are due 60 days after publication in the Federal Register.