Transfer Agent Rules

1We are also proposing to modify the CFR designations for each of the rules in this release (other than the CFR designation for Rule 17ad–7 which has already been amended) to ensure the regulatory text conforms with section 2.13 of the Document Drafting Handbook. See 1 CFR 21.11; Office of the Federal Register, Document Drafting Handbook (Aug. 2018 Edition, Revision 2.1, dated Oct. 2023), https://www.archives.gov/files/federal￾register/write/handbook/ddh.pdf. Because each of these rules contain an uppercase letter in their CFR citations, if adopted, the proposed rules would modify the CFR section designations at adoption to replace each such uppercase letter with the corresponding lowercase letter. The new rules being proposed in this release are being proposed with the appropriate lowercase letter, for example, Rule 17ad–30 is being proposed as 17 CFR 240.17ad–30 rather than 17 CFR 240.17Ad–30. 2 15 U.S.C. 78a et seq. SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 240 and 249b [Release No. 34–106246; File No. S7–2026– 30] RIN 3235–AL55 Transfer Agent Rules AGENCY: Securities and Exchange Commission. ACTION: Proposed rule. SUMMARY: The U.S. Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) is proposing to adopt new rules, amend existing rules, amend the existing form for registration with the Commission as a transfer agent (Form TA–1) and the existing form for reporting activities of transfer agents (Form TA–2), and rescind an existing rule governing registered transfer agents. The proposals are designed to modernize the rules governing registered transfer agents. DATES: This release was published in the Federal Register on September 4,
2026. Comments should be received on
or before November 3, 2026.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments

• Use the Commission’s internet
  comment form (https://www.sec.gov/ comments/s7-2026-30/transfer-agent￾rules); or
• Send an email to rule-comments@
  sec.gov. Please include File Number S7– 2026–30 on the subject line. Paper Comments
• Send paper comments to Vanessa
  A. Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number S7–2026–30. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method of submission. The Commission will post all comments on the Commission’s website (https:// www.sec.gov/rules-regulations/public￾comments/s7-2026-30). Do not include personally identifiable information in submissions; you should submit only information that you wish to make available publicly. The Commission may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. Studies, memoranda, or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on the Commission’s website. To ensure direct electronic receipt of such notifications, sign up through the ‘‘Stay Connected’’ option at www.sec.gov to receive notifications by email. A summary of the proposal of not more than 100 words is posted on the Commission’s website (https:// www.sec.gov/rules-regulations/2026/09/ s7-2026-30). FOR FURTHER INFORMATION CONTACT:
  Elizabeth Fitzgerald, Assistant Director, Tina Barry and Kevin Schopp, Senior Special Counsels, Bryant Eng, Ron Carny, or Scott Farnin, Special Counsels, Office of Clearance and Settlement at (202) 551–6706, Division of Trading and Markets, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–7010. SUPPLEMENTARY INFORMATION: The Commission is proposing to amend, rescind, or add the following rules and forms.1 Commission reference CFR citation (17 CFR) Proposal Securities Exchange Act of 1934 (‘‘Exchange Act’’ or ‘‘Act’’) 2:
  Form TA–1 ........................................................................... Referenced in 17 CFR 249b.100 ................................................ Amend. Form TA–2 ........................................................................... Referenced in 17 CFR 249b.102 ................................................ Amend. Rule 17ac2–1 ....................................................................... 17 CFR 240.17Ac2–1 ................................................................. Amend. Rule 17ac2–2 ....................................................................... 17 CFR 240.17Ac2–2 ................................................................. Amend. Rule 17ad–1 ......................................................................... 17 CFR 240.17Ad–1 ................................................................... Amend. Rule 17ad–2 ......................................................................... 17 CFR 240.17Ad–2 ................................................................... Amend. Rule 17ad–3 ......................................................................... 17 CFR 240.17Ad–3 ................................................................... Amend. Rule 17ad–4 ......................................................................... 17 CFR 240.17Ad–4 ................................................................... Rescind. Rule 17ad–6 ......................................................................... 17 CFR 240.17Ad–6 ................................................................... Amend. Rule 17ad–7 ......................................................................... 17 CFR 240.17ad–7 .................................................................... Amend. Rule 17ad–9 ......................................................................... 17 CFR 240.17Ad–9 ................................................................... Amend. Rule 17ad–10 ....................................................................... 17 CFR 240.17Ad–10 ................................................................. Amend. Rule 17ad–11 ....................................................................... 17 CFR 240.17Ad–11 ................................................................. Amend. Rule 17ad–12 ....................................................................... 17 CFR 240.17Ad–12 ................................................................. Amend. Rule 17ad–13 ....................................................................... 17 CFR 240.17Ad–13 ................................................................. Amend. Rule 17ad–17 ....................................................................... 17 CFR 240.17Ad–17 ................................................................. Amend. Rule 17ad–30 ....................................................................... 17 CFR 240.17ad–30
  .................................................................. Add. Rule 17ad–31 ....................................................................... 17 CFR 240.17ad–31 .................................................................. Add.
  Table of Contents
  I. Introduction
  A. Background Regarding Securities Ownership B. Transfer Agent Regulation
  C. Evolution of Transfer Agent Activities
  D. Overview of the Proposal
  II. Proposed Amendments to Registration and
  Annual Reporting Requirements A. Proposed Amendments to Rule 17ac2– 1 B. Proposed Amendments to Rule 17ac2– 2
  C. Proposed Amendments to Form TA–1
  D. Proposed Amendments to Form TA–2

3Exchange Act Section 3(a)(25)(A)–(E), 15 U.S.C. 78c(a)(25)(A) through (E). 4The Commission provided a detailed history of those rules, and the market developments that led to those rules, in a 2015 concept release. See Transfer Agent Regulations, Exchange Act Release No. 76743 (Dec. 22, 2015), 80 FR 81948 (Dec. 31,
2015) (‘‘2015 Concept Release’’) for an overview of
the history of the Commission’s transfer agent rules. 5See Exchange Act Section 17A(a)(1)(A), 15 U.S.C. 78q–1(a)(1)(A). 6For additional discussion of transfer agents’ role with respect to restrictive legends, see 2015 Concept Release, supra note 4, Section VI.D. 7See infra Section III.J. 8See, e.g., 2015 Concept Release, supra note 4,
Section VII.E.1, discussing the practice of voluntary
registration as transfer agents by certain third-party administrators (‘‘TPA’’). 9See Maintenance of Accurate Securityholder Files and Safeguarding of Funds and Securities by Registered Transfer Agents, Exchange Act Release No. 19142 (Oct. 15, 1982), 47 FR 47269 (Oct. 25,
1982) (‘‘17ad–9 through 13 Proposing Release’’)
(noting examples of substandard transfer agent performance presenting significant potential adverse consequences); see also Processing Requirements for Cancelled Security Certificates, Exchange Act Release No. 48931 (Dec. 16, 2003), 68 FR 74390, 74391 (Dec. 23, 2003) (noting examples of substandard transfer agent performance and significant adverse consequences).
III. Proposed Amendments to Definitions,
Processing, Recordkeeping, and Safeguarding Rules A. Amendments to Rule 17ad–1 B. Amendments to Rule 17ad–9
C. New Definitions To Be Added to Rule
17ad–9
D. Amendments to Rule 17ad–2 E. Amendments to Rule 17ad–3 F. Rescission of Rule 17ad–4 G. Amendments to Rule 17ad–6 H. Amendments to Rule 17ad–7
I. Amendments to Rule 17ad–10
J. Amendments to Rule 17ad–12 K. Amendments to Rule 17ad–17
IV. Proposed New Rules
A. Proposed Rule 17ad–30: Compliance B. Proposed Rule 17ad–31: Restrictive Legends
V. Economic Analysis
A. Introduction
B. Economic Baseline
C. Benefits and Costs
D. Efficiency, Competition, and Capital Formation E. Reasonable Alternatives F. Request for Comment
VI. Paperwork Reduction Act
A. Summary of the Collection of Information B. Amendments to Forms TA–1, TA–2 and Rules 17ac2–1, 17ac2–2, 17ad–2, 17ad– 3, 17ad–6, 17ad–7, 17ad–12, 17ad–17, 17ad–30, and 17ad–31.
C. Summary of the Estimated Burden of the
Proposed Amendments on the Collections of Information D. Initial and Ongoing Burden Estimates E. Incremental and Aggregate Burden and Cost Estimate F. Request for Comment
VII. Initial Regulatory Flexibility Act
Analysis
VIII. Congressional Review Act
IX. Other Matters
Statutory Authority
I. Introduction
Transfer agents are a key component of the national clearance and settlement system, performing critical functions related to the securities lifecycle that help protect investors and support the prompt and accurate processing of securities transactions. Their statutory functions as defined under Section 3(a)(25) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’ or ‘‘Act’’) include countersigning securities upon issuance, monitoring for overissuance, registering the transfer of securities, exchanging or converting securities, and transferring record ownership of securities by bookkeeping entry.3 Collectively, these functions help ensure that securities ownership records remain accurate and that investors and other securities markets participants can rely on the accuracy, integrity, and safety of the clearance and settlement process throughout the securities lifecycle. The Commission first adopted the majority of the federal transfer agent rules in the late 1970s and early 1980s.4 At that time, the majority of investors held their securities in certificated (i.e., paper) form. The transfer agent industry was characterized by a mix of small firms and public company issuers acting as their own transfer agent, and transfer agents primarily provided manual processing of certificates and related recordkeeping functions that some industry observers viewed as purely ministerial. Transfer agents have adapted to the complex, interconnected electronic securities markets of today in numerous ways, including by providing a broad suite of services.5 For example, in addition to facilitating the issuance, cancellation, and transfer of both paper and electronic securities and maintaining the official record of ownership of an issuer’s securities, most transfer agents also place, track, and remove restrictive legends 6 and at least one-third of them are engaged by issuers to provide administrative, recordkeeping, and processing services related to the distribution of cash and stock dividends, bond principal and interest, mutual fund redemptions, and corporate action and other payments to securityholders, what is commonly referred to as paying agent activity. Transfer agents’ paying agent activity in particular has grown significantly in the last few decades and continues to grow.7 Many transfer agents function as administrators and third-party information or technology service providers for mutual funds or direct purchase, dividend reinvestment, employee stock purchase, retirement, and other issuer-sponsored investment plans.8 In these roles, transfer agents fulfill such tasks as calculating purchase or sale prices for investors in mutual funds, aggregating and providing order routing services to handle all aspects of enrollment and ongoing account servicing, enhancing securityholder communications, and performing paying agent services specific to funds and plans. Modern transfer agents may offer other ancillary services as well, including annual meeting and
proxy services such as electronic proxy delivery, notice and access consulting, internet and phone voting, and proxy tabulation; strategic shareholder consulting services to corporations and shareholder groups working to influence corporate strategy; communication services such as promotion campaigns, loyalty programs, and communication services with brokers and fund managers; global capital markets services such as access to international markets and cross border transactions; corporate trust services; corporate restructuring and class action administration services; and corporate action consulting. A transfer agent’s failure to perform its statutory functions and related services promptly, accurately, and safely can compromise the accuracy of an issuer’s securityholder records, disrupt the channels of communication between issuers and securityholders, disenfranchise investors, and expose issuers, investors, securities intermediaries, and the securities markets as a whole to significant financial loss.9 As technology and the securities markets continue to evolve, transfer agents are increasingly operating at the frontier of rapidly developing technologies, including tokenized securities, artificial intelligence (‘‘AI’’), and other forms of digital infrastructure. For example, market participants are actively seeking to bring blockchain￾native, or ‘‘onchain’’ transfer agents into the U.S. market, with some firms developing models for blockchain-based recordkeeping, tokenized fund administration, and cross-chain interoperability that would require transfer agents to maintain issuer and securityholder records on distributed ledgers and deploy and administer smart-contract-driven processes. At the same time, rapid technological change— ranging from tokenization initiatives, to

10Egon Guttman, Modern Securities Transfers § 1:5 (4th ed. 2010). 11The Uniform Commercial Code (‘‘UCC’’) defines a ‘‘certificated security’’ as ‘‘a security that is represented by a certificate.’’ U.C.C. 8–102(a)(4). The UCC, which was first published in 1952, is a uniform act designed to standardize the law of sales and other commercial transactions in all 50 states. The UCC has the effect of law only when adopted by a state, and while it has been adopted by all 50 states, there are numerous state-by-state variations in the adopted texts. 12 Guttman § 1:5. 13 Id. 14 Guttman § 1:12. 15See U.C.C. 8–102(a)(18) (defining new term uncertificated security as ‘‘a security that is not represented by a certificate’’); see also Egon Guttman, Toward the Uncertificated Security: A Congressional Leap for States to Follow, 37 Wash. & Lee L. Rev. 717, 729–32 (1980). 16 Guttman § 6:4. 17See Exchange Act Rule 17ad–9(a)(3), 17 CFR 240.17Ad–9(a)(3) (referring to ‘‘securityholder’s registration’’); Exchange Act Rule17ad–9(a)(4), 17 CFR 240.17Ad–9(a)(4) (referring to ‘‘registered securityholder’’); Exchange Act Rule 12g5–1, 17 CFR 240.12g5–1 (‘‘securities shall be deemed to be ‘held of record’ by each person who is identified as the owner of such securities on records of security holders maintained by or on behalf of the issuer’’). 18See U.C.C. 8–102(a)(13). (‘‘ ‘Registered form,’ as applied to a certificated security, means a form in which: (i) the security certificate specifies a person entitled to the security; and (ii) a transfer of the security may be registered upon books maintained for that purpose by or on behalf of the issuer, or the security certificate so states.’’). 19U.C.C. 8–207. 20Historically, the Direct Registration System (‘‘DRS’’) operated by the Depository Trust Company (‘‘DTC’’) has been the predominant form of holding uncertificated securities in registered form, however, in recent years, other forms of registered ownership such as tokenization have become available. Regardless of the specific format that a registered securityholder’s securities take, a registered securityholder’s options for holding uncertificated securities, through DRS, tokenization, or otherwise, will be subject to the issuer’s governing documents and the law of its jurisdiction of organization, as well as to other legal requirements that may apply to the issuer, such as rules of self-regulatory organizations (‘‘SROs’’) such as DTC and national securities exchanges. 21For more information regarding beneficial ownership, see, e.g., Concept Release On The U.S. Proxy System, Exchange Act Release No. 62495 (July 14, 2010), 75 FR 42982 (July 22, 2010) (‘‘Proxy Concept Release’’); Investor Bulletin: Holding Your Securities, SEC, available at http://www.sec.gov/ investor/pubs/holdsec.htm (last visited May 22, 2026). cloud-based systems, to AI-enabled operational tools—has the potential to reshape core clearance, settlement, and transfer functions across the market ecosystem.
Transfer agents interacting with tokenized securities, distributed ledger technologies, and smart contracts must increasingly manage risks relating to blockchain data integrity, security of tokenized securities, and distributed ledger operational models, while those adopting AI or automated technologies must ensure proper controls, accurate representations of system capabilities, and effective oversight of automated processes. These developments place transfer agents in an increasingly central role in safeguarding investor records, issuing and supporting tokenized securities, and ensuring resiliency against operational and cybersecurity risks within the rapidly evolving technological landscape comprising the U.S. securities markets. Despite these developments, the Commission’s transfer agent rules have not been substantively updated since the first rules were adopted in the late 1970s and early 1980s. As a result, these rules do not sufficiently address the risks presented by the wide range of processing, recordkeeping, safeguarding, paying agent, and other services that characterize modern transfer agents’ businesses, much less the risks posed by transfer agents’ central role in the evolving blockchain-based, AI-driven landscape. For example, despite the highly sophisticated electronic and automated systems utilized by modern transfer agents, including transfer agents that are essentially enterprise software providers, the current transfer agent rules are silent with respect to information security, cybersecurity, disaster recovery, operational risk, or other requirements related to their use of connected and automated electronic systems. And although transfer agents play a critical role in placing, tracking, and removing restrictive legends to facilitate distributions, there are no Commission rules specifying transfer agents’ obligations in connection with removing restrictive legends on securities. Collectively, based on these changes the Commission concludes that there is a disconnect between the transfer agent rules that have been in place for decades and both the manner in which transfer agents perform their critical functions and the technology they use to do so. At the same time, transfer agents now perform a more diverse array of functions and services, many of which may not be adequately addressed by the transfer agent rules. As the pace of technological innovation and advancement within the securities markets continues to accelerate, the gap between the Commission’s transfer agent rules and the risks posed by transfer agents’ activities and role within the national clearance and settlement system continues to widen. In this release, the Commission is proposing a targeted set of amended and new rules to ensure that the Commission’s transfer agent rules continue to protect investors, support the public interest, and facilitate the safe and efficient functioning of the national clearance and settlement system. The Commission is soliciting
public comment on each of the proposals in this release. Public feedback and data would help the Commission ensure that any regulatory action will be in the public interest and will help protect investors, the markets, and the national clearance and settlement system. A. Background Regarding Securities Ownership Investment securities confer certain intangible rights and benefits upon the holder.10 In the past, the most common way to transfer investment securities, such as shares of stock, was to transfer a paper certificate that represents the benefits of ownership (‘‘certificated security’’).11 Certificated securities are evidence that the owner is registered on the books of the issuer (or its transfer agent) as a securityholder.12 Although the shares themselves represent an intangible right,13 the certificate is a negotiable instrument under state law, which allows the registered owner of the certificated security to transfer the bundle of intangible rights to a third party.14 The transfer of certificated securities held by registered owners was a time￾consuming manual process for transfer agents. In 1977 the concept of the ‘‘uncertificated security’’ was introduced in Article 8 of the Uniform Commercial Code (‘‘UCC’’).15 This innovation allowed issuers to issue uncertificated (i.e., certificateless) book￾entry securities, the transfer of which is greatly simplified compared to the transfer of certificated securities because transfer can be effected by simply registering the transferee’s name on the books of the issuer.16 Under the current centralized depository model in the United States, there are two types of securities owners:
(a) registered securityholders and (b) beneficial owners. Registered securityholders (who may also be referred to as ‘‘holders of record’’) 17 own and hold securities in ‘‘registered form.’’ 18 The UCC provides that an ‘‘issuer . . . may treat the registered owner as the person exclusively entitled to vote, receive notifications, and otherwise exercise all the rights and powers of an owner.’’ 19 Registered securityholders are listed directly on the records of the issuer or the issuer’s transfer agent under their own names, and can hold their securities either in certificated form or in uncertificated (i.e., book-entry) form.20 The vast majority of securityholders in the U.S. are beneficial owners rather than registered owners.21 Beneficial owners do not own the securities

22See U.C.C. 8–102(a)(7) (defining ‘‘entitlement holder’’ as a person identified in the records of a securities intermediary as the person having a security entitlement against the securities intermediary); U.C.C 8–102(a)(17) (defining ‘‘security entitlement’’); U.C.C. 8–102(a)(14) (defining ‘‘securities intermediary’’ as (i) a clearing corporation or (ii) a person, including a bank or broker, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity); U.C.C. 8–503(b) (providing that an entitlement holder’s property interest with respect to a particular financial asset under [U.C.C. 8–503(a)] is a pro rata property interest in all interests in that financial asset held by the securities intermediary). 23For securities held in ‘‘fungible bulk,’’ there are no specifically identifiable shares directly owned by DTC participants. Rather, each participant owns a pro rata interest in the aggregate number of shares of a particular issuer held at DTC. In turn, each customer, such as an individual investor of a DTC participant, owns a pro rata interest in the shares in which the DTC participant has an interest. See Processing of Tender Offers Within the National Clearance and Settlement System, Exchange Act Release No. 19678, n.5 (Apr. 15, 1983), 48 FR 17603, 17605, n.5 (Apr. 25, 1983) (describing fungible bulk); Office of Investor Education and Advocacy, Investor Bulletin: DTC Chills and Freezes, SEC (May 2012), available at https:// www.sec.gov/investor/alerts/dtcfreezes.pdf (discussing fungible bulk). 24U.C.C. 8–505, 506. 25U.C.C. 8–505(a)(1), 506(1). In the absence of an agreement covering payments and distributions, the securities intermediary must exercise due care in accordance with reasonable commercial standards. In the absence of an agreement with respect to the exercise of rights as directed by the entitlement holder, the securities intermediary either must place the entitlement holder in a position to exercise the rights directly or exercise due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder. U.C.C. 8–505(a)(2), 506(2). 26U.C.C. 8–503(c) (referring only to ‘‘securities intermediar[ies]’’ with respect to enforcement rights that may be exercised by an entitlement holder). 27SEC, Study of Unsafe and Unsound Practices of Brokers and Dealers, H.R. Doc. No. 92–231, at 38. Transfer agents that are not banks may be referred to as non-bank transfer agents. 28Securities Acts Amendments of 1975, Public Law 94–29, 89 Stat. 97 (1975); see also S. Rep. No. 75, at 7 (1975). 29Securities Industry Study, H.R. Rep. No. 92– 1519, 64 (1972). The Senate Subcommittee on Securities conducted the Securities Industry Study to determine the causes of the Paperwork Crisis and recommend solutions. The Securities Industry Study ultimately led to Congress enacting the 1975 Amendments. See 2015 Concept Release, supra note 4, at 81954. 30Section 11A of the
Exchange Act directed the Commission to facilitate the establishment of a national market system to link together the multiple individual markets that trade securities and achieve the objectives of efficient, competitive, fair, and orderly markets, that are in the public interest and protect investors. See Exchange Act Section 11A(a)(2), 15 U.S.C. 78k–1(a)(2). 31See Exchange Act Section 17A(a)(2), 15 U.S.C. 78q–1(a)(2). 32Exchange Act Section 17A(a)(2)(A)(i), 15 U.S.C. 78q–1(a)(2)(A)(i). 33Exchange Act Section 17A(e), 15 U.S.C. 78q– 1(e). 34Exchange Act Section 17(f)(1), 15 U.S.C. 78q(f)(1). 35Exchange Act Section 3(a)(25), 15 U.S.C. 78c(a)(25). Note that any insurance company or separate account which performs such functions solely with respect to variable annuity contracts or variable life policies which it issues or any registered clearing agency which performs such functions solely with respect to options contracts which it issues is excluded from the definition of ‘‘transfer agent’’ under the Exchange Act. Id. 36Exchange Act Section 17A(c)(1), 15 U.S.C. 78q– 1(c)(1). 37Exchange Act Section 17A(d)(1), 15 U.S.C. 78q–1(d)(1). directly but generally have purchased them through an intermediary, such as a broker or a bank, and determined to hold them in street name through a book-entry account with that intermediary. Securities held in street name are legally owned by and registered in the name of the depository’s nominee (most often DTC’s nominee, Cede & Co.). The individual investor’s broker (or other intermediary) who is a member or participant of the depository will be identified on the books of the depository as having a ‘‘security entitlement’’ 22 to, or an interest in, a pro rata share of the fungible bulk of that security held by the depository.23 Correspondingly, the individual investor will be identified on the books of the depository participant (i.e., the investor’s broker or other intermediary) as having a security entitlement to a pro rata share of the securities in which the participant has an interest. At each level, the intermediary will be obligated to provide the entitlement holder with payments and distributions with respect to the financial asset and to exercise rights as directed by the entitlement holder.24 A securities intermediary satisfies such duties where the intermediary acts as required by any agreement between the intermediary and entitlement holder.25 The entitlement holder will be permitted to look only to the intermediary for performance of the obligations.26 B. Transfer Agent Regulation Prior to 1975, most transfer agents were banks or trusts.27 There was no federal regulation of transfer agents and transfer agents were subject to state law, generally pursuant to UCC provisions. Transfer agents were also subject to stock exchange requirements regarding securities processing. Following the Paperwork Crisis, as discussed in more detail in the 2015 Concept Release, in 1975, Congress enacted the Securities Acts
Amendments (the ‘‘1975 Amendments’’),28 which made sweeping changes to the federal securities laws, implemented many of the principal recommendations from the Securities Industry Study,29 and established both the national market system 30 and the national clearance and settlement system as they exist today.31 Specifically, Congress directed the Commission to, among other things: (i) ‘‘facilitate the establishment of a national system for the prompt and accurate clearance and settlement of transactions in securities;’’ 32 (ii) ‘‘end the physical movement of securities certificates in connection with the settlement among brokers and dealers of transactions in securities;’’ 33 and (iii) establish a system for reporting missing, lost, counterfeit, and stolen securities.34 The 1975 Amendments gave the Commission regulatory authority for the first time over transfer agents. Section 3(a)(25) of the Exchange Act defines a ‘‘transfer agent’’ as any person who engages on behalf of an issuer of securities or on behalf of itself as an issuer of securities in:
(A) countersigning such securities upon issuance; (B) monitoring the issuance of such securities with a view to preventing unauthorized issuance (i.e., a registrar); (C) registering the transfer of such securities; (D) exchanging or converting such securities; or (E) transferring record ownership of securities by bookkeeping entry without the physical issuance of securities certificates.35
Section 17A(c)(1) of the Exchange Act
requires any person performing any of these functions with respect to any security registered pursuant to Section 12 of the Exchange Act or with respect to any security which would be required to be registered except for the exemption contained in subsection (g)(2)(B) or (g)(2)(G) of Section 12 (‘‘Qualifying Security’’) to register with the Commission or other Appropriate Regulatory Agency (‘‘ARA’’).36 With respect to any transfer agent so registered, Section 17A(d)(1) of the Exchange Act authorizes the Commission to prescribe such rules and regulations as may be necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Exchange Act.37 Beginning in the late 1970s and early 1980s, the Commission adopted a series of transfer agent rules designed to regulate the basic recordkeeping and processing functions performed by transfer agents. The rules primarily related to routine transfers of certificated equity and debt securities and generally covered three areas: (i) registration and annual reporting requirements; (ii) timing and certain

38Exchange Act Section 17A(c)(1), 15 U.S.C. 78q– 1(c)(1); Exchange Act Rule 17ac2–1, 17 CFR 240.17Ac2–1; SEC Form TA–1, 17 CFR 249b.100. Once registration has become effective, a transfer agent may be subject to censure, suspension, limitation, or revocation of its registration if the transfer agent or any person associated with the transfer agent fails to obey Commission rules or violates certain of the securities laws. Exchange Act
Section 17A(c)(3), 15 U.S.C. 78q–1(c)(3); Exchange
Act Section 17A(c)(4)(C), 15 U.S.C. 78q–1(c)(4)(C). 39Basic identification information about the registrant includes information such as name, contact person, phone number, address, email address, identification numbers including the transfer agent’s file number and Financial Industry Number Standard (‘‘FINS’’) number, and whether the transfer agent solely provides services to its own securities or those of an affiliate. See Form TA–1, 17 CFR 249b.100. 40Exchange Act Rule 17ac2–1(a), 17 CFR 240.17Ac2–1(a); SEC Form TA–1, General Instruction G, 17 CFR 249b.100. Note that the 30- day time period in Exchange Act Rule 17ac2–1(a), 17 CFR 240.17Ac2–1(a), is shorter than the Exchange Act’s 45-day time period for applications to be effective. Exchange Act Section 17A(c)(2), 15 U.S.C. 78q–1(c)(2). 41Exchange Act Rule 17ac2–1(c), 17 CFR 240.17Ac2–1(c); SEC Form TA–1, General Instruction H, 17 CFR 249b.100. For transfer agents for whom the Commission is their ARA, they must file Form TA–1 and amendments thereto electronically on the Commission’s EDGAR system and each answer provided by the transfer agent is required to be formatted in an eXtensible Markup Language (‘‘XML’’) data language. Exchange Act Rule 17ac2–1(d), 17 CFR 240.17Ac2–1(d); Electronic Filing of Transfer Agent Forms, Exchange Act Release No. 54864, 5 (Dec. 4, 2006), 71 FR 74698 (Dec. 12, 2006) (‘‘Electronic Filing of Transfer Agent Forms Release’’). 42Exchange Act Rule 17ac2–2(a), 17 CFR 240.17Ac2–2(a); SEC Form TA–2, 17 CFR 249b.102 (Form for Reporting Activities of Transfer Agents Registered Pursuant to Section 17A of the Securities Exchange Act of 1934). 43Exchange Act Rule 17ac–2–2(b), 17 CFR 240.17Ac2–2(b). 44Form TA–2 must be filed electronically on the Commission’s EDGAR system, and each answer provided by the transfer agent is required to be formatted in an XML data language. Exchange Act Rule 17ac2–2(c), 17 CFR 240.17Ac2–2(c); Electronic Filing of Transfer Agent Forms Release, supra note 41, at 5. 45See generally, Section III.A.1 for discussion of ‘‘item.’’ 46See generally, SEC Form TA–2, 17 CFR 249b.102. 47Specifically, if a registered transfer agent received fewer than 1,000 items for transfer in the reporting period and did not maintain master securityholder files for more than 1,000 individual securityholder accounts as of December 31 of the reporting period, it is only required to complete Questions 1 through 5, 11, and the signature section of Form TA–2. Exchange Act Rule 17ac2–2(a)(1), 17 CFR 240.17Ac2–2(a)(1). A named transfer agent that engaged a service company to perform all of its transfer agent functions during the reporting period is only required to complete Questions 1 through 3 and the signature section of Form TA–2. Exchange Act Rule 17ac2–2(a)(2), 17 CFR 240.17Ac2–2(a)(2). 48See Adoption of Revised Transfer Agent Forms and Related Rules, Exchange Act Release No. 23084 (Mar. 27, 1986), 51 FR 12124 (Apr. 9, 1986) (‘‘Revised Transfer Agent Forms and Related Rules’’);
Electronic Filing of Transfer Agent Forms Release, supra note 41, at 5. 49Exchange Act Rules 17ad–1 through 17ad–7, 17 CFR 240.17Ad–1 through 17 CFR 240.17Ad–7. notice and reporting requirements related to securities transaction processing (referred to as ‘‘turnaround rules’’); and (iii) recordkeeping and record retention rules and safeguarding requirements for securities and funds. Although the Commission has made modest revisions to the initial transfer agent rules and has added several new rules since the adoption of those earlier rules, the core registration, processing, recordkeeping, and safeguarding rules remain substantially unchanged, and the exemptions for mutual funds, dividend reinvestment plans (‘‘DRIPs’’), and limited partnerships have not been revisited.

1. Registration and Annual Reporting
   Requirements (Rules 17ac2–1 and Form TA–1, Rule 17ac2–2 and Form TA–2) Before a transfer agent may perform any of the statutory transfer agent functions defined in Section 3(a)(25) of the Exchange Act for a Qualifying Security, it must apply for registration by submitting Form TA–1 (Uniform Form for Registration as a Transfer Agent and for Amendment to Registration) to its ARA, and its registration as a transfer agent with its ARA must have become effective.38 Form TA–1 requires a transfer agent seeking to register to disclose certain information, including the following:
   basic information about the registrant, transfer agent service company arrangements, control persons and owners, and any investment-related criminal prosecutions, regulatory actions, or civil actions to which its control persons or affiliates have been subject.39 The registration automatically becomes effective 30 days after the Form TA–1 is filed, unless the ARA takes affirmative action to accelerate, deny, or postpone registration in accordance with the provisions of Section 17A(c) of the Exchange Act.40 A registrant must amend its Form TA–1 within 60 days following the date on which information reported therein becomes inaccurate, incomplete, or misleading.41 All registered transfer agents, regardless of their ARA, must file an annual report with the Commission using Form TA–2 (Form for Reporting Activities of Transfer Agents Registered Pursuant to Section 17A of the Securities Exchange Act of 1934).42 Form TA–2 covers a calendar year reporting period that ends on December 31 43 and must be filed by March 31 of the year following the end of the reporting period.44 Form TA–2 requires transfer agents to identify and report on the use of service companies, or other transfer agents, in connection with their transfer agent activities. It also requires transfer agents to provide annual data regarding the transfer agent’s compliance with the turnaround rules. Additionally, the form requires transfer agents to provide the Commission with updated information about their business activities, including accounts administered, items received,45 turnaround performance, total amounts of funds distributed, and lost securityholder accounts.46 Rule 17ac2–2 provides exemptions from completing certain sections of Form TA–2 for small transfer agents and for transfer agents that outsource their work completely to service companies.47 The Commission, other ARAs, their respective staff, and members of the public (including issuers and investors) use information on Forms TA–1 and TA–2. The Commission’s Electronic Data Gathering, Analysis, and Retrieval (‘‘EDGAR’’) database provides a means through which information on these forms can be searched and retrieved. The Commission uses the information on Form TA–1 to review an entity’s application for registration as a transfer agent and to maintain current information about transfer agents. The Commission uses information on Form TA–2, as well as information on Form TA–1 and amendments thereto, for several purposes, including: (i) to determine the nature of the business conducted by a transfer agent, (ii) to review transfer agent activities and to evaluate compliance with Commission rules, and (iii) to inform Commission transfer agent policymaking.48 The Commission’s Division of Examinations may use the information on Forms TA– 1 and TA–2 to help identify risks and better understand a transfer agent’s business during an examination. Commission staff may also use the information on Forms TA–1 and TA–2 to analyze industry
   trends and to provide basic census information concerning registered transfer agents. In addition, Form TA–1 and TA–2 data provide the Commission with information about securities processing issues that may need to be addressed by Commission rulemaking. Form TA–1 and TA–2 data is also used by the Commission to assist it in evaluating the costs and benefits of potential rulemaking.
2. Processing, Reporting,
   Recordkeeping, and Exemptions: Rules 17ad–1 Through 17ad–7 On June 16, 1977, the Commission adopted Rules 17ad–1 through 17ad–7 as a set of performance standards for transfer agents.49 These turnaround and processing rules were ‘‘designed to

50See Regulation of Transfer Agents, Exchange Act Release No. 13636 (June 16, 1977), 42 FR 32404, 32404 (June 24, 1977) (‘‘Rule 17ad–1 through 17ad– 7 Adopting Release’’). 51 Id. See also Exchange Act Rules 17ad–1 through 17ad–7, 17 CFR 240.17Ad–1 through 17 CFR 240.17Ad–7. 52Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50, at 32410. 53Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50, at 32407 (noting the importance of avoiding impediments to ‘‘the Commission’s efforts to provide necessary or appropriate regulations for transfer agents in the broader context of the establishment of a national system for the prompt and accurate clearance and settlement of securities transactions.’’). 54Exchange Act Rules 17ad–9 through 17ad–13, 17 CFR 240.17Ad–9 through 17 CFR 240.17Ad–13. 55See 17ad–9 through 13 Proposing Release, supra note 9. 56 Id. The Commission was particularly concerned with reducing the potential for transfer agent failure, which inevitably imposes substantial potential liabilities and costs on issuers, securities firms, and securityholders, as well as improving generally transfer agent performance, thereby reducing the broker-dealers’ costs associated with fails to settle and extended transfer delays. 57Lost Securityholders, Exchange Act Release No. 39176 (Oct. 1, 1997), 62 FR 52229 (Oct. 7, 1997) (‘‘Rule 17ad–17 Adopting Release’’). 58Lost Securityholders and Unresponsive Payees, Exchange Act Release No. 68668 (Jan. 16, 2013), 78 FR 4768 (Jan. 23, 2013). 59Exchange Act Rule 17ad–17, 17 CFR 204.17Ad–17. 60See Exchange Act Rule 17ad–9(b), 17 CFR 240.17Ad–9(b). 61See generally, e.g., Del. Code Ann. tit. 8 §§ 170, 173 (authorizing a corporation to pay cash and stock dividends under certain circumstances); Exchange Act Rule 14c–3, 17 CFR 240.14c–3 (requirement to furnish an annual report to securityholders); Del. Code Ann. tit. 8 § 212 (providing for voting rights of stockholders and permitting them to vote by proxy); Del. Code Ann. tit. 8 § 222 (requirement to send stockholder notice in advance of stockholder meeting). 62Exchange Act Rule 17ad–9(d), 17 CFR 240.17Ad–9(d). 63When monitoring for overissuance, a transfer agent may be referred to as a ‘‘registrar.’’ See Exchange Act Section 3(a)(25), 15 U.S.C. 78c(a)(25). 64Exchange Act Rule 17ad–6, 17 CFR 240.17Ad– 6. protect investors . . . and to contribute to the establishment of the national system for the prompt and accurate clearance and settlement of transactions in securities by,’’ among other things, ‘‘assuring that the transfer agent community performs its functions in a prompt, accurate and more predictable manner.’’ The rules primarily focused on establishing minimum performance and recordkeeping standards for routine transfers of certificated equity and debt securities and the prompt and accurate cancellation and issuance of certificated securities.50 The rules were also designed to provide an early warning system to alert issuers and regulatory agencies when
the performance standards are not being met, prohibit under-performing transfer agents from expanding their operations, require transfer agents to respond promptly to certain written inquiries regarding items presented for transfer, and require the maintenance and preservation of certain records necessary for regulatory authorities to examine and enforce transfer agent compliance with the turnaround rules.51 The specific processing, reporting, and retention requirements were metrics-based and, at the time, considered to be those necessary to ensure that transfer agents adequately performed their functions and that the Commission and other ARAs would be able to examine transfer agents’ compliance with the turnaround rules.52 Further, the new transfer agent rules established by the Commission were designed not only to ensure that transfer agents meet prescribed performance standards for their core recordkeeping and transfer activities, but to ensure they would be regulated appropriately in the context of the national clearance and settlement system and that any problems meeting these performance standards would not negatively impact individual investors or the clearance and settlement system as a whole.53
3. Recordkeeping and Safeguarding
Rules: Rules 17Ad–8 Through 17ad–13 and 17ad–17 On June 10, 1983, the Commission adopted Rules 17ad–9 through 17ad–13 to supplement the turnaround rules, based on its experience.54 These new rules established various requirements and exemptions designed to ensure that transfer agents maintain appropriate internal controls, meet adequate levels of service and performance, and avoid adverse operational and financial problems that could harm investors, issuers, or other securities industry participants. Most notably, the new rules established additional minimum standards for recordkeeping and codified minimum requirements for the safeguarding of funds and securities.55 The Commission believed that these additional minimum standards were critical to addressing seriously deficient transfer agent performance.56 Rule 17ad–17 was first adopted in 1997 57 and later amended at the beginning of 2013 58 and was designed to ensure that the transfer agents, brokers, dealers, and other financial intermediaries make adequate efforts to find lost securityholders.59 The rule defines ‘‘lost securityholder’’ as a securityholder for whom an item of correspondence sent to his or her last known address was ‘‘returned as undeliverable’’ and requires transfer agents, brokers, and dealers to conduct two database searches in their efforts to locate a lost securityholder.
C. Evolution of Transfer Agent Activities
This section discusses some of the core recordkeeping, transfer, and other activities that transfer agents engage in, the manner in which the existing transfer agent rules apply to those activities, and how those activities have evolved since the first transfer agent rules were adopted. Since then, the increased use and decreased cost of technology, the expansion of corporate actions to bring securities into the public market, the continued dematerialization of securities, and other changes have resulted in significant evolution and changes to the types of services transfer agents provide and the manner in which they provide them.

1. Recordkeeping
   Transfer agents have direct responsibility for maintaining on behalf of the issuer the currency and integrity of the official list of the registered owners of an issuer’s stocks and bonds, how those stocks and bonds are held, and how many shares or bonds each investor owns. This list is defined by Rule 17ad–9(b) as the master securityholder file.60 Without the master securityholder file, registered owners of an issuer’s securities cannot be assured that they are recognized as such by the issuer and that they will receive corporate distributions, communications, and the other rights of security ownership to which they are entitled.61 Transfer agents also maintain and keep current the control book which is defined by Rule 17ad–9(d) as the record of the total number of shares of equity securities or the principal dollar amount of debt securities authorized and issued by the issuer for each issue the transfer agent services.62 One of the main purposes of the control book is to allow the transfer agent to monitor the number of securities outstanding to prevent overissuance because the total number of shares reflected in the aggregate on the master securityholder file should match the number of shares authorized in the control book.63 Finally, pursuant to Rule 17ad–6, transfer agents maintain the transfer journal.64 The transfer journal can be a useful tool for transfer agents and issuers. For example, when reviewed in conjunction with the master securityholder file, the transfer journal may provide historical information

65The terms ‘‘exchange’’ and ‘‘conversion’’ are used in Exchange Act Section 3(a)(25) and in the Commission’s transfer agent rules but are not defined in the Commission’s transfer agent rules. The term ‘‘exchange’’ is commonly used to refer to the trading of specific securities for another asset, usually without an accompanying change in ownership. The term ‘‘conversion’’ is commonly used to refer to the changing into or substitution of one security for another security or asset under specific conditions, also without an accompanying change in ownership. 66Book-entry transfer may be accomplished through DTC’s DRS using DTC’s Profile Modification System. Once the transfer has been effected, the investor receives from the transfer agent a statement of ownership that acknowledges his or her new DRS position. See supra note 20. 67See 2015 Concept Release, supra note 4, at 81972–73 for a more fulsome description of the transfers of certificated securities. 68Simmons and Dalgleish, Corporate Actions: A Guide to Securities Event Management 3–5 (2006). 69See id. (categorizing major types of corporate actions). 70Exchange Act Rule 17ad–1(i)(5), 17 CFR 240.17Ad–1(i)(5). 71A large portion of specific records that transfer agents are required to maintain under Rule 17ad– 6 and to retain for different periods of time under Rule 17ad–7 relate to: (i) the classification of an item as routine or non-routine; (ii) tracking the compliance of the transfer agent with the performance standards for turnaround of routine items under Rule 17ad–2(a); and (iii) the performance standards for processing of all items pursuant to Rule 17ad–2(b). 72Exchange Act Rule 17ad–1(i), 17 CFR 240.17Ad–1(i). 73See Del. Code Ann. tit. 8, § 212 (b), (c). A full discussion of the proxy system is beyond the scope regarding the issuance and transfer of a specific security or the holdings of a specific securityholder. The transfer agent rules do not define transfer journal nor codify requirements with respect to the transfer journal.
2. Securities Transfers, Exchanges, and
Conversions
Transfer agents are integrally involved in effecting transfers of ownership of securities, as well as exchanging and converting securities.65 For uncertificated securities, transfer agents effect book-entry transfers by registering the change in ownership on the master securityholder file, which does not involve the physical issuance and cancelling of securities certificates. The term ‘‘registering’’ means an official form of recording by a person charged with that function, which is accomplished under Exchange Act Rules 17ad–9(h) and 17ad–10(a) by updating the master securityholder file, as discussed above.66 For the transfer of certificated securities, several rules apply, including Rule 17ad–19 regarding certificate cancellation and Rule 17ad-12 regarding the safeguarding of cancelled certificates.67
3. Securities Issuance
Transfer agents are also involved in the issuance of securities, which may be one of the final stages before completing a certificate transfer or could involve a primary offering of securities such as an initial public offering. Upon issuing a new security to a transferee, the transfer agent must credit the securities account of the transferee receiving the new security. Under Rule 17ad–1(d), posting the new ownership information to the master securityholder file changes the ownership information of the securities account and ‘‘completes registration of change in ownership of all or a portion of those securities.’’
4. Corporate Actions and Related
Services
A corporate action is an event in the life of a security, typically instigated by the issuer, which affects a position in that security.68 Examples of common corporate actions include changes that affect capital structure, such as a merger or acquisition, and distributions to securityholders, such as a dividend distribution or principal or interest payment on a debt security. Corporate actions may also include bankruptcy or liquidation proceedings, conversions, warrants, exchange offers, subscription rights, tender offers, and other events.69 Generally, corporate actions can be divided into two broad categories:
mandatory and voluntary (sometimes referred to as ‘‘elective’’). Mandatory corporate actions usually affect all securityholders equally and the securityholder does not have different options from which to choose; voluntary corporate actions usually allow securityholders to choose among one or more different elections they can make. Transfer agents may perform a variety of roles and provide a variety of services, depending on the type and nature of the corporate action. For example, a transfer agent may take on the role of exchange agent in a mandatory corporate action, such as a stock-for-stock merger or a cash-for￾stock merger. In such circumstances, under Rule 17ad–10, the transfer agent performing exchange agent services generally must update the master securityholder file with certificate details within five business days. But because the transfer associated with some of the most common corporate actions qualify as non-routine items under Rule 17ad–1, including transfers ‘‘in connection with a reorganization, tender offer, exchange, redemption, or liquidation,’’ 70 the general three business day deadline for turnaround of routine items under Rule 17ad–2 may not apply. However, if a transfer agent makes a determination that a transfer does fall within Rule 17ad–1(i)(5) and therefore is non-routine, Rule 17ad– 6(a)(11) requires the transfer agent to maintain records documenting the basis for this determination.71 Other aspects of the processing of the corporate action may cause the corporate action to be classified as non-routine as well.72 Voluntary corporate actions, which permit securityholders to choose among different options, may result in the need for additional tasks and systems for transfer agents to process them. For example, in addition to the ordinary recordkeeping tasks, the transfer agent may be responsible for monitoring whether elections have been made by deadlines and for tracking such elections. In addition to the examples discussed above, transfer agent roles in connection with corporate actions may also include serving as: (i) tender agent, when the transfer agent collects shares surrendered from securityholders and makes payments for the shares at a predetermined price; (ii) exchange agent, when the transfer agent collects shares surrendered from securityholders and issues, registers, and/or distributes shares of the bidding company’s securities as compensation for tendered securities of the subject company; (iii) subscription agent, when the transfer agent invites existing equity securityholders of an issuer to subscribe to a new issuance of additional debt or equity of the issuer; (iv) conversion agent, for example when the transfer agent converts debt securities into equity securities; and (v) escrow agent, when the transfer agent holds an asset on behalf of one party for delivery to another party upon specified conditions or events. Finally, transfer agents providing corporate action services may be subject to Rules
17ad–12 and 17ad– 13, regarding safeguarding requirements for funds and securities and an annual audit of internal control of safeguarding procedures.
5. Annual Meeting, Proxy-Related
Services, and Securityholder Services and Communications One of the key rights of securityholders is the right to vote their shares on important matters that affect the companies they own. Pursuant to state corporate law, registered securityholders may either attend a meeting to vote shares in person or authorize an agent to act as their ‘‘proxy’’ at the meeting to vote their shares pursuant to their voting instructions.73 Because most

of this release. For more information on the proxy system, see Proxy Concept Release, supra note 21. 74Beneficial owners holding securities in street name are not technically entitled to vote shares or grant proxy authority. Rather, the voting rights reside with Cede & Co. as the record owner of all street name shares. However, because Cede & Co.’s role is only that of nominee for DTC as custodian and it has no beneficial interest in the shares, mechanisms have been developed in order to pass the legal rights it holds as the record owner to the beneficial owners, enabling them to vote. For a more comprehensive discussion of these and other issues relating to the U.S. proxy and indirect holding systems, see Proxy Concept Release, supra note 21. 75See Proxy Concept Release, supra note 21. 76See, e.g., Del. Code Ann. tit. 8, § 222 (2001). See also Del. Code Ann. tit. 8, § 232 (2001). 77 In cases where the issuer is relying upon the notice and access model of proxy statement distribution, the proxy card must be mailed even if the proxy statement is not mailed by the issuer. See Final Rule: internet Availability of Proxy Materials, Exchange Act Release No. 55146, 10 (Jan. 22, 2007), 72 FR 4148 (Jan. 29, 2007). 78Several Commission rules address securityholder inquiries. See Exchange Act Rule 17ad–5, 17 CFR 240.17Ad–5 (written inquiries and requests); Exchange Act Rules 17ad–6, 7, 17 CFR 240.17Ad–6, 7 (recordkeeping and retention requirements regarding inquiries and requests). 79 Inquiries about the securityholder’s account may relate, for example, to matters such as dividend reinvestment or other account options. securityholders do not physically attend public company securityholder meetings, the corporate proxy is the principal means by which they exercise their voting rights. The process in the United States for distributing proxy materials and soliciting, tabulating, and verifying votes by securityholders is complex, especially with respect to beneficial securityholders.74 Most corporate issuers and securities intermediaries such as banks and brokers rely on a proxy service firm to perform these functions, which may include distributing and forwarding the proxy materials and collecting and tabulating voting instructions. Alternatively, some issuers choose to engage their transfer agents for certain parts of the proxy distribution process, such as printing and distributing proxy materials either directly to registered securityholders or to intermediaries, which will then distribute them to beneficial owners either through the mail or electronically. Providing these services may be a natural extension of a transfer agent’s core functions because most transfer agents will already possess and maintain the master securityholder file listing the issuer’s registered securityholders, will have the infrastructure in place to communicate with registered securityholders, and will be in a position to reconcile the identity of registered voters and the number
of votes against the official records of the issuer.75 Typical transfer agent proxy services might include mailing or electronically transmitting notices of meetings,76 proxy statements, and proxy cards 77 to securityholders. All transfer agents also provide some level of securityholder communications services. The level of services may depend on the type or size of the issuer, but at a minimum, most transfer agents facilitate the mailing of quarterly and annual statements with details of holdings, transaction confirmations, and letters or communications confirming other transactions, such as address￾change confirmations. Many transfer agents also provide tax reporting services, including sending tax forms such as W–9, W–8BEN, 1099–DIV, and 1099–B. Most transfer agents also receive and respond to inquiries and requests by securityholders and non￾securityholders.78 Requests may involve a transfer (for example, a gift of fund shares from one family member to another) or a change in the securityholder’s account, such as an address change or different election regarding dividend reinvestment. For transfer agents to open-end mutual funds, transfers may involve a purchase (i.e., a ‘‘subscription’’) or sale (i.e., a ‘‘redemption’’) of the fund’s shares. Transfer agents may receive inquiries as well, which may not require processing a transaction or account change, but may involve merely answering questions about the securityholder’s account or regarding the issuer generally.79 Requests and inquiries are transmitted to transfer agents through various methods, including by telephone, mail, facsimile, email, internet, mobile communication device, and in-person. The predominance of telephone and other forms of electronic communication as favored methods for securityholders to communicate with issuers and their transfer agents, including the use of standardized protocols over the internet, means that managing sizable call centers and other customer service departments, with many representatives fielding calls and other message-traffic, has become a critical aspect of the transfer agent￾issuer relationship. One aspect of these securityholder services is lost certificate replacement. If a securityholder loses a certificate, the old certificate must be cancelled and new shares issued, either in certificated or book-entry form. Transfer agents facilitate this process by processing the request and replacing the lost or missing certificate. Generally, the securityholder will be required to fill out a declaration, affidavit, or other form with identifying information and a description of the circumstances giving rise to the loss and pay a fee to the transfer agent for processing the request. Most transfer agents will also require a surety bond to indemnify the issuer and transfer agent against any potential losses in connection with the missing or replacement certificate in the event it is later presented for transfer or conversion. The transfer agent will then
report the lost or missing certificate to the Lost and Stolen Securities Program operator pursuant to Rule 17f–1. D. Overview of the Proposal Based on the Commission’s experience regulating and supervising registered transfer agents, the Commission is proposing to update the transfer agent rules to address the way in which modern transfer agents carry out their transfer agent activities and the risks posed by those activities to investors, the national clearance and settlement system, and the U.S. securities markets as a whole. Accordingly, as summarized below in
Table 1, the Commission is proposing to
update Forms TA–1 and TA–2, amend several existing rules, rescind one rule, and add two new rules.
TABLE 1—OVERVIEW OF PROPOSED CHANGES
Overview of Proposed Changes Amendments to Forms ............................................................. Form TA–1. Form TA–2. Amendments to Existing Rules ................................................ 17ac2–1—Registration. 17ac2–2—Annual Reporting. 17ad–1 and 17ad–9—Definitions. 17ad–2—Turnaround. 17ad–3—Limitations on Expansion.

80Exchange Act Section 17A(c)(2), 15 U.S.C. 78q– 1(c)(2). 81See Exchange Act Section 17A(a)(1)(A), 15 U.S.C. 78q–1(a)(1)(A). 82Exchange Act Section 17A(d)(1), 15 U.S.C. 78q–1(d)(1). 83For a detailed and comprehensive overview of the existing registration, reporting, and disclosure requirements applicable to registered transfer agents, see 2015 Concept Release, supra note 4. 84See Transfer Agent Data Sets, https:// www.sec.gov/data-research/sec-markets-data/ transfer-agent-data-sets.
TABLE 1—OVERVIEW OF PROPOSED CHANGES—Continued
17ad–6—Recordkeeping
17ad–7—Record Retention.
17ad–10—Prompt Posting.
17ad–11—Reports (title only).
17ad–12—Safeguarding.
17ad–17—Lost Securityholders.
Rescission of Existing Rule ...................................................... 17ad–4—Applicability of Rules 17ad–2, 17ad–3, and 17ad–6(a)(1) through (7) and (11). New Rules ................................................................................ Rule 17ad–30—Compliance Program. Rule 17ad–31—Restrictive Legends.
II. Proposed Amendments to
Registration and Annual Reporting Requirements Exchange Act Section 17A(c)(2) provides that a transfer agent may be registered by filing an application in such form and containing such information and documents concerning the transfer agent and any persons associated with the transfer agent as the ARA may prescribe as necessary or appropriate in furtherance of the purposes of the Exchange Act.80 As explained above, those purposes include, among other things, protecting investors, facilitating the prompt and accurate clearance and settlement of securities transactions, and the safeguarding of funds and securities.81 Exchange Act Section 17A(d)(1) empowers the Commission with authority to prescribe for registered transfer agents engaging in any activity as transfer agents such rules and regulations as necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Exchange Act.82 As discussed above, pursuant to that authority, transfer agents are required to file a Form TA–1 to register as a transfer agent, a Form TA–2 each year to provide annual disclosures, and a Form TA–W when they withdraw from registration.83 The Commission uses the information on Forms TA–1 and TA–2 to fulfill its statutory duties, including its duty to protect investors, facilitate the establishment of the national market system and the national clearance and settlement system, and advance the public interest. For example, Form TA– 1 and Form TA–2 are necessary for the Commission to gather sufficient information to understand the nature and scope of the business conducted by the transfer agent, the specific activities engaged in by the transfer agent, and identify and collect the disciplinary history of the persons who may exercise direct or indirect control over the transfer agent. This information is necessary for the Commission to identify transfer agents, review and assess an entity’s registration application, determine whether there are statutory grounds to deny, suspend, or revoke the entity’s registration, and identify and assess the risks the transfer agent and its activities may pose to the securities markets, the national clearance and settlement system, investors, and the public interest. Once a transfer agent is registered, Commission staff use the information on Form TA–2 to maintain current information about individual registered transfer agents, review and identify trends in transfer agent activities both with respect to individual transfer agents and across the industry as a whole, evaluate individual transfer agents’ compliance with Commission rules, identify compliance issues and trends that may require policy interventions, compliance examinations, or enforcement actions, and develop and evaluate appropriate regulatory standards for transfer agents, including evaluating the costs and benefits of potential rulemaking. As noted above, the Commission’s Division of Examinations may use the
information on Forms TA–1 and TA–2 to help identify risks and better understand a transfer agent’s business during an examination. Similarly, the Commission’s Division of Economic and Risk Analysis (‘‘DERA’’) uses the information on Forms TA–1 and TA–2 to analyze the potential economic effects of Commission rulemaking and other Commission actions, and to develop reports, analytics, and other information to support the Commission’s policy initiatives, examination function, and enforcement actions.84 The Commission has observed over time that, as the nature and scope of transfer agents’ activities within the securities markets and the national clearance and settlement system have changed and expanded, the limited information disclosed on Forms TA–1 and TA–2 is no longer sufficient in supporting the Commission to meet its statutory duties under the Exchange Act. For example, the risk profile of a transfer agent that is part of a multi￾national conglomerate and provides dozens of loosely-related services across multiple markets all under a single registered transfer agent will differ from a small corporation or limited liability company that primarily provides transfer and recordkeeping services for small- and mid-cap equity issuers. Yet because Forms TA–1 and TA–2 were created at a time when nearly all non￾bank transfer agents had a straightforward corporate organization and primarily engaged in traditional transfer and related activities, the limited information on the forms does not permit the Commission to distinguish between them without issuing a regulatory document request, conducting a formal examination, or otherwise seeking additional information not already disclosed on the forms. Similarly, the risks to investors, the markets, and the national clearance and settlement system posed by the specific activities engaged in by a person or entity that registers as a transfer agent because, for example, it engages in wallet whitelisting (i.e., determining whether a wallet address meets the credentialing requirements required for certain activities, such as holding tokenized securities or other crypto assets) and incorporates distributed ledger technology as a component of its master securityholder file will differ from the risks posed by the activities engaged in by a mutual fund transfer agent that processes purchases and redemptions, calculates net asset value, and whose transaction processing in general may be more complex or involve additional responsibilities as compared to a

85See 2015 Concept Release, supra note 4, at
Section VII.C.2. For a detailed discussion of transfer
agents to mutual funds, see 2015 Concept Release, supra note 4, at Section VII.C. 86Exchange Act Rule 17ac2–1(a), 17 CFR 240.17Ac2–1(a); SEC Form TA–1, General Instruction G, 17 CFR 249b.100. 87Exchange Act Section 17A(c)(2), 15 U.S.C. 78q– 1(c)(2). 88Exchange Act Section 17A(c)(3), 15 U.S.C. 78q– 1(c)(3). 89See Exchange Act Rule 17ac2–2(a), 17 CFR 240.17Ac2–2(a). 90Exchange Act Rule 17ac2–1(c), 17 CFR 240.17Ac2–1(c). transfer agent for an operating company.85 Yet, again, the information on the forms does not permit the Commission to identify and understand the full scope of those activities, much less the risks they pose because the forms were developed and adopted at a time when certain technologies did not exist and transfer agent activities were carried out in a significantly more limited way than they are today. To ensure that Forms TA–1 and TA– 2 continue to support the Commission’s ability to fulfill its statutory duties, especially in consideration of the expanded scope of transfer agents’ activities as discussed throughout this release, the Commission is proposing amendments to Forms TA–1 and TA–2. We discuss the specific proposed amendments to each form and related Commission rule in turn below. A. Proposed Amendments to Rule 17ac2–1 As noted above, under existing Rule 17ac2–1, a transfer agent’s registration automatically becomes effective 30 days after the Form TA–1 is filed, unless the ARA takes affirmative action to accelerate, deny, or postpone registration in accordance with the provisions of Section 17A(c) of the Exchange Act.86 However, Section 17A(c)(2) of the Exchange Act specifies that a transfer agent’s registration shall become effective 45 days after receipt of the Form TA–1 application, or within such shorter period of time as the ARA may determine.87 The Commission has observed over time that 30 days is often insufficient to determine whether to accelerate, deny, or postpone a registration application, which often requires additional research into the entity and its control persons, outreach to the applicant for additional information or clarification of the application, and consultation and coordination among Commission staff in multiple divisions and offices related to legal, regulatory, and other issues. Accordingly, the Commission is proposing to amend paragraphs (a) and (b) of Rule 17ac2–1 to specify that an application for registration would become effective 45 days after filing of the application for registration, or any amendment to a pending application for registration, rather than 30 days which the existing rule specifies. This would provide the Commission with additional time to determine whether to act on a registration application, as required by the Exchange Act, and would enhance consistency between the rule and statutory provision.88 B. Proposed Amendments to Rule 17ac2–2 The Commission is proposing to amend Rule 17ac2–2 to require that, if a transfer agent discovers that any of the information reported
on Form TA–2 was materially inaccurate, misleading, or incomplete at the time of filing, the transfer agent shall correct the information by filing an amendment to Form TA–2 pursuant to the instructions on the form to correct such information within 60 days following the date on which the transfer agent discovered that such information was materially inaccurate, misleading, or incomplete. The existing rule provides that a transfer agent may file an amendment to Form TA–2 to correct information that has become inaccurate, incomplete or misleading; it does not require filing of the amendment, nor does it specify a time period in which such corrections should be made.89 The proposed amendment differs from the existing requirement to amend Form TA–1 if information becomes materially inaccurate, misleading, or incomplete. Unlike Form TA–1, Form TA–2 is used to report transfer agent activities from the prior year reporting period and is required to be filed annually and therefore the information disclosed on Form TA–2 would not become inaccurate, incomplete, or misleading before the next year’s Form TA–2 is required to be filed. Instead, a transfer agent may discover that the information on its Form TA–2 was inaccurate, incomplete, or misleading at the time of filing and therefore the transfer agent may need or want to amend its filing with corrected information. Commission staff have received questions from transfer agents regarding whether they should file a Form TA–2 amendment after discovering that certain information on their form was inaccurate at the time of filing. This proposed amendment would address these issues by specifying that, if the information on its Form TA–2 was materially inaccurate, incomplete, or misleading at the time of filing, under the proposed rule, the transfer agent would be required to amend its Form TA–2 to correct such information, within 60 days of discovering such deficiency. The amendment would align the time frame of 60 days for filing required amendments in Rule 17ac2–2 with Rule 17ac2–1, which requires transfer agents to file required amendments to Form TA–1 within 60 days.90
C. Proposed Amendments to Form TA–
1
The Commission is proposing to amend the instructions for Form TA–1 to improve the quality of information provided in connection with several existing questions, add new questions that would provide additional information that ensures the form continues to support its intended purpose, and remove two questions that are duplicative of information required to be reported and updated annually on Form TA–2. Table 2 below provides an overview of the proposed amendments to Form TA–1.
TABLE 2—COMPARISON OF EXISTING FORM TA–1 REQUIREMENTS WITH THE PROPOSED AMENDMENTS
Existing Form TA–1 requirement Proposed TA–1 requirement
1(a). Filer CIK .................................
1(b). CCC ........................................
Form Instructions would be updated to provide full terms for abbreviations CIK and CCC. 1(f)(i–iii). Contact Name, Phone Number, Email Address. Form and Form Instructions would be updated to require that the individual listed as the contact be author￾ized to receive all compliance communications for the registrant and have responsibility for dissemi￾nating them as appropriate within the registrant’s organization. 3(a). Full Name of Registrant ......... Form Instructions would be updated to state that complete and accurate legal name is required.
6. Service companies (transfer
agents) engaged by Registrant.
Existing Question 6 would be removed; similar information disclosed on Form TA–2.

91For more information on Form ID, see Rule 10 of Regulation S–T, 17 CFR 232.10; Edgar Filer Manual Vol. I Section 3. 92Revised Transfer Agent Forms and Related Rules, Exchange Act Release No. 21950 (Apr. 17, 1985), 50 FR 15912 (Apr. 23, 1985), 15913. When this information was first proposed to be added to Form TA–1 in 1985, it paralleled similar questions then being added to a revised version of Form BD and the Uniform Application for Broker-Dealer Registration and related Form U–4 utilized by what was then known as the National Association of Securities Dealers (now FINRA). Id.
TABLE 2—COMPARISON OF EXISTING FORM TA–1 REQUIREMENTS WITH THE PROPOSED AMENDMENTS—Continued
Existing Form TA–1 requirement Proposed TA–1 requirement
7. Registrant engagements to act
as a service company.
Existing Question 7 would be removed; similar information disclosed on Form TA–2.
8. Form of business organization ... Checkboxes would be added for ‘‘Limited Liability Company’’ and ‘‘Trust.’’
8(a). Section for Reporting Addi￾tional Persons (Disclosure of owners, control persons). Form and Form Instructions would be updated to specify the individuals that must be disclosed in re￾sponse to Question 8. 11(a–d). Signature Block ................ Form would be updated to include language regarding the Commission’s authority to examine all records of registered transfer agents.
12. Attachments .............................. Attachment would be required of organizational diagram depicting relationship between the transfer agent
and its control affiliates.
None ................................................ New Question 3(f) would require disclosure of registrant’s website address. None ................................................ New Question 6(a) would require disclosure of registrant’s other SEC registrations, if any. New Question 6(b) would require disclosure of registrant’s other federal, state, or foreign registrations, if any. None ................................................ New Question 7 would require disclosure of any control affiliate of the registrant, and any federal, state or foreign registration of such affiliate and the registration number. Technical Amendments:
In Question 2, the checkbox for Office of Thrift Supervision would be removed. In Question 10, references to 8(b) and 8(c) in definition of control affiliate would be removed. In Signature Block, references to SEC supplement and Schedules B–D would be removed. In Instructions ‘‘Who Must File,’’ threshold for Section 12(g)(1) would be removed. The proposed changes to Form TA–1 are discussed more fully below.

1. Proposed Changes to Form TA–1
   Instructions
   The Commission is proposing to amend the instructions for use of Form TA–1 for the questions discussed below to promote clarity regarding the required information and to improve the quality, consistency, and comparability of the information provided in response. Form TA–1 Questions 1(a) and 1(b) (filer CIK and CCC, respectively) would not change, but the form instructions would be updated to state that ‘‘CIK’’ is an abbreviation for ‘‘Central Index Key,’’ which is the unique number the Commission assigns to each filer to distinguish it from other filers, including those with similar names. Similarly, the form instructions would be updated to note that ‘‘CCC’’ is an abbreviation for ‘‘CIK Confirmation Code,’’ which is a unique code that each filer needs to make filings, and to retrieve and edit the filer’s data on EDGAR. Commission staff routinely receive questions from prospective registrants regarding the meaning and importance of these terms. Providing these clarifications would provide that information uniformly to all potential registrants and help improve the clarity and transparency of the form. Form TA–1 Question 1(f) (contact name, phone number, and email address) would not change, but the form instructions would be updated to require that the contact listed in response to Question 1(f) must be an individual authorized to receive all compliance communications for the registrant with responsibility to disseminate them as appropriate within the registrant’s organization. In Commission staff’s experience, the contact information provided in response to Question 1(f) is not always an individual with knowledge of the registration application or the authority to speak to Commission staff regarding the application. This can hinder the Commission staff reviewing the application from conveying important information to the potential registrant and obtaining information or responses necessary to continue processing the application, and otherwise frustrate, delay, or prevent the application review process. This proposed change is in the public interest and would help ensure that transfer agents complete the form consistently and accurately, and that Commission staff are able to follow up effectively with the registrant regarding any questions on the content of the filing or other supervisory matters, both while the registration application is pending and on a going forward basis for as long as the transfer agent remains registered. However, because this information contains personally identifiable information, it is not made publicly available on EDGAR and is only available to the Commission and its staff. Form TA–1 Question 3 (full name of registrant) would not change, but the form instructions would be updated to specify that registrants must provide the complete and accurate legal name of the entity that is registering as a transfer agent. Because the field for Question 3 is auto-populated based on the applicant’s Form ID, applicants should ensure
   that they use the complete and accurate legal name of the entity that is registering when completing the Form ID.91 This information is necessary for the Commission’s review of the application to ensure that, if the application is approved, the correct legal entity is registered, and to ensure that investors and other members of the public are able to identify the correct legal entity acting as a transfer agent. In Commission staff’s experience, however, prospective registrants do not always provide this information consistently or completely, so updating the instructions would help remind filers of this responsibility. Form TA–1 Questions 8–10 require disclosure of background information for the owners and other control persons of independent, non-issuer transfer agents, ‘‘with a particular emphasis on whether offenses have been committed by these persons, and therefore, whether the transfer agent’s association with a particular individual would have an impact on the transfer agent’s ability to perform its functions properly.’’ 92 When the proposed changes were adopted in 1986, the final amended Form TA–1 included a ‘‘Supplement to Form TA–1’’ that required disclosure of

93See Revised Transfer Agent Forms and Related Rules, supra note 48. 94See Electronic Filing of Transfer Agent Forms Release, supra note 41, at 5; EDGAR Filer Manual, Volume II (June 2025) at 8–185. 95The proposed definition of ‘‘person’’ is consistent with the definition of ‘‘person’’ used for broker-dealers required to register on Form BD, investment advisers required to register on Form ADV, municipal advisors required to register on Form MA, and funding portals required to register on Form Funding Portal. See 17 CFR 249.501, 17 CFR 279.1, 17 CFR 249.1300, and 17 CFR 249.2000. 96See Revised Transfer Agent Forms and Related Rules, supra note 48. 97See id. 98Section 17(b) of the Exchange Act provides that ‘‘All records of persons described in subsection (a) of this section [i.e., transfer agents] are subject at any time, or from time to time, to such reasonable, periodic, special, or other examinations by representatives of the Commission and the [appropriate ARA] as the Commission [or the appropriate ARA] deems necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this chapter.’’ owner and control person information for different entity types on difference schedules (i.e., corporations, partnerships, etc.), and the form instructions provided a definition of ‘‘control’’ (e.g., C-suite executives, general partners, etc.) for each entity type and specified that a 25 percent or higher ownership stake qualified as control.93 When electronic filing was mandated in 2006, the schedules were replaced by drop down menu items and the detailed instructions defining control persons and level of ownership were truncated and moved to the EDGAR Filer Manual.94 In the Commission’s experience since 2006, however, without detailed instructions specifying who must be disclosed in response to Question 8, filers do not apply a consistent definition or approach to responding to the question, which hinders the Commission in obtaining and evaluating this important information. Accordingly, while Form TA–1 Question 8(a) (section for reporting additional persons) would not change, the form instructions would be updated to reintroduce the instructions from prior iterations of the form that define control persons for corporations and partnerships and add comparable instructions for trusts and limited liability companies to account for other common types of business entities that modern transfer agents choose to take. Specifically, the instructions would specify that registrants must provide the full names of the following owners, executive officers, or other control persons in response to Question 8(a):

• Each Chief Executive Officer, Chief
  Financial Officer, Chief Operations Officer, Chief Legal Officer, Chief Compliance Officer, director, and any other persons with similar status or functions.
• If the registrant is organized as a
  corporation, each person that is a direct or indirect beneficial owner of 5% or more of any class of the registrant’s equity securities.
• If the registrant is organized as a
  partnership, all general partners and each limited and special partner that have contributed 5% or more of the registrant’s capital.
• In the case of a trust, (i) a person
  that directly owns 5% or more of a class of the registrant’s voting securities, or that has the right to receive upon dissolution, or has contributed, 5% or more of the registrant’s capital, (ii) the trust, and (iii) each trustee.
• If the transfer agent is organized as
  a limited liability company (‘‘LLC’’), (i) each member that has the right to receive upon dissolution, or has contributed, 5% or more of the registrant’s capital, and (ii) if managed by elected managers, all elected managers. In addition, the form instructions would be updated to provide definitions for ‘‘person’’ and ‘‘control’’ to assist registrants in responding to Question 8(a). For purposes of Form TA–1, the term ‘‘person’’ would be defined as an individual, partnership, corporation, trust, or other organization, consistent with the definition of person used in other Commission registration forms.95 The term ‘‘control’’ would be defined as the power to direct, or cause the direction of, the management or policies of a person, whether through ownership, by contract, or otherwise, consistent with the definition of control in the prior iteration of Form TA–1.96 In addition, any person that is a director, partner, or officer exercising executive responsibility (or having similar status or functions) or that directly or indirectly has the right to vote 25% or more of the voting securities or is entitled to 25% or more of the profits would be presumed to be a control person, as indicated in the prior iteration of Form TA–1.97 This information would help to inform the Commission’s understanding of the ownership structure of the transfer agent and in identifying who ultimately controls the transfer agent and its policies and procedures. The information requested would also inform the Commission about any future changes in control of the transfer agent, given the requirement to amend Form TA–1 whenever any reported information becomes inaccurate, misleading, or incomplete. This information is critical, both to the Commission’s assessment of the registration application, and to its ongoing supervision of the registered transfer agent for the duration of the transfer agent’s registration, because it will allow the Commission to better understand, for example, potential conflicts, concentration in the industry, and the potential disciplinary history of control persons. Form TA–1 Question 11 (signature block) would not change, but the form would be updated with a statement regarding the Commission’s authority to examine all records of registered transfer agents pursuant to Section 17(b) of the Exchange Act.98 In the Commission’s experience, certain transfer agents are unaware of their obligation to permit examination of the transfer agent’s records pursuant to
  Section 17(b) of the Exchange Act, and
  therefore refuse to produce records requested in connection with an examination or attempt to limit the records they produce in response to records requests from Commission staff. A transfer agent’s refusal to permit examination of records clearly within the scope of Section 17(b) of the Exchange Act frustrates and delays examinations and hinders the Commission’s ability to carry out its regulatory and oversight responsibilities. Including language on the Form TA–1 reminding transfer agents of their statutory obligation to permit examination of their records should help ensure that transfer agents are aware of their statutory obligations and could help reduce instances of non￾compliance. Accordingly, the proposed statement preceding a registrant’s signature would be as follows:
  ‘‘Pursuant to Section 17(b) of the Securities Exchange Act of 1934, all records of registered transfer agents are subject to examination by SEC staff. If a registered transfer agent does not comply with Section 17(b), the Commission may seek all available relief against that transfer agent in district court and/or an administrative proceeding. Such relief includes, but is not limited to, an injunction, denial, suspension, and/or revocation of registration, and civil penalties. The registrant submitting this Form, and the person signing the Form, acknowledge that they understand and will comply with the requirement to make records available for examination. If, at any point, the firm believes it is unable to comply with its obligations to provide its records to SEC staff for examination, the firm should consider whether it needs to withdraw from registration.’’

99Exchange Act Rule 17ac2–1(c), 17 CFR 240.17Ac2–1(c). 100See Question 2 on Form TA–2 (Form for Reporting Activities of Transfer Agents Registered Pursuant to Section 17A of the Securities Exchange Act of 1934), 17 CFR 249b.102. 101SEC Form TA–1, Question 10, 17 CFR 249b.100. 102For example, there could be a slight variation in the entity’s or an individual’s name across different registration applications that could hinder a manual search or call the results into question. 103A Form TA–1 registration automatically becomes effective 30 days after filing unless the Commission takes affirmative action to accelerate, deny, or postpone the registration in accordance with the provisions of Section 17A(c) of the Act. Exchange Act Rule 17Ac2–1(a), 17 CFR 240.17Ac2– 1(a). As noted, we are proposing to amend Rule 17Ac2–1(a) to specify that registration would become effective 45 days after filing. See supra
Section II.A.
104See, e.g., Form MA and Form Funding Portal, 17 CFR 249.1300 and 17 CFR 249.2000. With this language on the form, each time an officer of the transfer agent signs Form TA–1 (either the initial filing or an amendment), they would be acknowledging that they understand, and will comply with, the obligation of the registered transfer agent to provide records to the Commission upon request.
2. Proposed Changes to Form TA–1
Reporting Requirements The Commission is proposing to amend Form TA–1 to remove two existing questions regarding service company arrangements and to add questions requiring registrants to report additional information, as described more fully below. Form TA–1 would be amended to remove existing Questions 6 and 7 regarding registrant service company arrangements as this information is duplicative of information that is required to be disclosed and updated annually in response to Question 2 on Form TA–2. The corresponding instructions related to existing Questions 6 and 7 would also be removed. As a result, a transfer agent’s service company arrangements would not be disclosed on Form TA–1 (but would be disclosed and updated annually on Form TA–2). Given the requirement in Rule 17ac2–1(c) for transfer agents to file an amendment within 60 days if any information on Form TA–1 becomes inaccurate, misleading, or incomplete,99 the Commission also would no longer be informed within 60 days of each change in a transfer agent’s service company arrangements. However, because Form TA–2 requires registered transfer agents to report all service company arrangements from each prior calendar year reporting period,100 the Commission will receive an annual summary of these arrangements on Form TA–2 by the filing deadline each year. Therefore, this proposed change would not materially impact the Commission’s oversight of transfer agent operations with respect to service company arrangements. Form TA–1 would be amended to add new Question 3(f), which would require disclosure of the registrant’s website address. A website address would assist the Commission in evaluating applications for registration and in overseeing registered transfer agents. Form TA–1 would also be amended to add new Question 6(a) regarding the applicant’s other registrations with the Commission, new Question 6(b) regarding the applicant’s other federal, state, or foreign registrations, and new Question 7 regarding the applicant’s control affiliates. Existing Questions 8 and 9 require disclosure of the applicant’s control persons, and Question 10 requires the applicant to disclose whether it or any of its control persons or control affiliates has been subject to investment-related criminal prosecutions, regulatory actions, or civil actions. The definition of control affiliate is broad and includes, among other things, an individual or firm that is under common control with the applicant.101 As a result, the disciplinary history for transfer agents that are part of a larger corporate family of registered entities can include information related to multiple entities that are registered with the Commission or other regulators in different capacities. For example, if a transfer agent’s parent company also controls a bank, a broker-dealer, and an investment adviser, the transfer agent’s Form TA–1 needs to include the disciplinary history for the affiliated bank, broker-dealer, and investment adviser
in response to Question 10. However, in the Commission’s experience, transfer agent applicants do not always provide full and complete information regarding control person and control affiliate disciplinary history when completing the Form TA–1. This then requires the Commission staff reviewing the application to either manually search for other registrations—a laborious undertaking 102—or risk processing the application with incomplete or inaccurate information. This could be addressed by including information on the Form TA–1 regarding the registrant’s additional registrations and registration numbers, which would allow the Commission staff reviewing an application to cross-reference the applicant’s other registrations without either relying on the registrant to accurately and timely update or complete its other registrations, or conduct a laborious and time￾consuming manual search. This in turn would facilitate the Commission’s ability to evaluate and act on transfer agent registration applications within the limited time permitted under the Exchange Act.103 Accordingly, the Commission is proposing to amend Form TA–1 to add new Question 6(a), which would require applicants to disclose any other SEC registrations they hold, along with the corresponding SEC registration number. Similarly, new Question 6(b) would require registrants to disclose any other federal, state, or foreign registrations of the registrant, along with the associated registration number, if any. This information is similar to registration information requested of other Commission registrants,104 should be readily available to the registrant and easily listed on the Form TA–1 and would allow the Commission to cross￾reference those entities applying for registration as transfer agents with those that are already registered in another capacity with the Commission or another regulator without conducting a laborious and potentially inaccurate manual search for such registrations. This, in turn, would help ensure that the Commission has accurate and complete information to develop a comprehensive assessment of the applicant’s control person and control affiliate disciplinary history across the full range of its regulated activities, which is necessary for the Commission to understand and assess the risks to investors, the securities markets, and the national clearance and settlement system posed by those persons, affiliates, and activities, which is consistent with promoting investor protection. It also would facilitate more efficient and effective examinations of transfer agents that are also registered in other capacities and develop a more comprehensive understanding of both individual transfer agents and the transfer agent industry as a whole. Likewise, requiring the applicant to affirmatively identify its control affiliates in new Question 7 (as opposed to simply asking for the disciplinary history of its control affiliates) would allow the Commission to cross-check and
validate applicant’s disciplinary disclosures provided in response to Question 10 without relying exclusively on the applicant to provide a complete and accurate list of its control affiliates’

105 Dodd-Frank Wall Street Reform and Consumer Protection Act., Public Law 111–203, 313, 124 Stat. 1376, 1523 (2010). disciplinary history, which would have the same benefits as new Questions 6(a) and 6(b) discussed above, including facilitating the Commission’s ability to evaluate and act on transfer agent registration applications within the limited time permitted under the Exchange Act. Accordingly, the Commission is proposing to add new Question 7 to Form TA–1, which would supplement the existing requirement to disclose the disciplinary history for the applicant’s control affiliates by requiring applicants to disclose in new
Schedule A the name of any control
affiliate, and any federal, state, or foreign registration of such control affiliate and the associated registration number. In addition, Form TA–1 Question 12 would be amended to require a registrant to file an attachment to Form TA–1 containing a diagram depicting the relationship between the transfer agent and the control affiliates in its organizational structure. Transfer agents should be able to prepare an organizational chart suited to their operational structure, and limiting the chart to control affiliates would ensure the chart includes only the most relevant individuals or firms that would aid the Commission in understanding the nature of a transfer agent’s regulated business operations and overall organizational control structure. This would enhance the Commission’s ability to evaluate applications for registration as transfer agents, facilitate more efficient and effective examinations of transfer agents, and develop a more comprehensive understanding of both individual transfer agents and the transfer agent industry as a whole. In the Commission’s experience, an accurate organization chart is often necessary to understand the structure of an organization and its affiliates, especially large organizations with many affiliates. This information will help to ensure that the Commission has accurate and complete information regarding a transfer agent’s control structure, which would help the Commission understand and assess the risks to investors, the securities markets, and the national clearance and settlement system posed by the transfer agent and its control persons and affiliates, consistent with investor protection. Form TA–1 Question 8 (form of organization) would be amended to provide checkboxes for two additional organization types: trusts and limited liability companies. Currently Question 8 provides the following checkboxes:
Corporation, Partnership, Sole Proprietorship, Other, and Not Applicable. The Commission has observed that many transfer agents are organized as trusts or limited liability companies and adding these additional checkboxes to Form TA–1 would aid registrants in responding to Question 8.
3. Technical Amendments to Form TA–
1
The Commission is also proposing to make several technical amendments to Form TA–1 to remove information that is no longer necessary or accurate. Specifically, the option to select the Office of Thrift Supervision in Question 2 as an appropriate regulatory agency would be removed, as this agency has been abolished.105 The definition of control affiliate in Question 10 would be amended to remove references to Questions 8(b) and 8(c), as those questions do not exist on Form TA–1. Similarly, the reference to the SEC supplement and Schedules B–D preceding the Form TA–1’s signature block would be removed, as those items are no longer part of Form TA–1. Finally, the Form TA–1 instructions would be amended to remove outdated asset and holder thresholds under
Section 12(g)(1) of the Exchange Act for
exempt equity securities.
4. Request for Comment
The Commission requests comments on all aspects of the proposed amendments to Form TA–1. In particular, the Commission requests comments on the following:

1. Should the proposed 45 day
   effectiveness period apply uniformly to all transfer agent applications for registration regardless of size, complexity, or type of activities engaged in?
2. Should the Commission require
   less information to be disclosed on Form TA–1? Are there any specific questions or categories of information on the existing form that registrants believe are no longer necessary or useful to the Commission?
3. Should the Commission require
   transfer agents to designate more than one contact person on Form TA–1 to ensure continuity of compliance communications in the event the primary contact is unavailable?
4. Should the Commission require
   transfer agents to update their contact information more frequently than currently required, given the importance of maintaining current and accurate contact information for compliance communications? If so, what update frequency should be appropriate?
5. Does the service company
   information required to be disclosed on Form TA–2 provide the Commission with sufficient information regarding service company arrangements? Is there any additional information the Commission should require transfer agents to disclose on Form TA–1 or Form TA–2 regarding service company arrangements?
6. While registrants must disclose on
   Form TA–1 whether they or any of their control affiliates have been subject to criminal prosecution for investment related crimes, should this requirement be expanded to cover other types of criminal activity, such as theft or fraud outside of an investment context?
7. Should the Commission require all
   registrants to provide an attachment to their Form TA–1 with a diagram depicting the control affiliates in their organizational structure, or should the Commission provide an exemption from this requirement for small or less organizationally complex transfer agents? If so, what types of transfer agents should be exempt from the requirement to provide an organizational diagram?
8. More generally, does the proposed
   requirement to provide an attachment to the Form TA–1 with a diagram depicting their organizational structure impose a burden on any particular types of transfer agents?
9. Are the proposed checkboxes for
   ‘‘Limited Liability Company’’ and ‘‘Trust’’ as additional organization types in Question 8 sufficient to capture the full range of organizational structures used by transfer agents? Are there other organizational structures that should be added to the list of checkboxes?
10. Do the proposed definitions for
    ‘‘control’’ and ‘‘person’’ adequately cover the appropriate individuals and entities that should be disclosed on Form TA–1, or are the proposed definitions either too expansive or, conversely, too limited? Should the Commission consider alternative definitions or thresholds for determining who qualifies as a control person for purposes of Form TA–1?
11. Is any information that would be
    required by the proposed changes to Form TA–1 difficult for a transfer agent to provide? If so, why? Are there alternative approaches to collecting the same information that would be less burdensome for transfer agents, such as providing this information upon request, while still providing the Commission with the information it needs?
12. Should any information that
    would be required by the proposed changes to Form TA–1 (other than the

106See 15 U.S.C. 78q–1(a)(2). personal name and contact information in Question 1(f)) not be publicly disclosed? D. Proposed Amendments to Form TA– 2 The Commission is proposing to update the form instructions for several questions on Form TA–2 to further explain the required information. Additionally, the Commission is proposing to introduce new requirements to provide additional information that the Commission considers important for determining the nature of the business conducted by transfer agents, monitoring their activities, evaluating compliance with Commission rules, informing Commission transfer agent policymaking, and supporting the Commission’s statutory duty to facilitate the establishment of a national clearance and settlement system for the prompt and accurate clearance and settlement of transactions in securities.106 The Commission is also proposing to eliminate questions that would no longer be necessary if the proposed changes to Form TA–2 are adopted. Table 3 provides an overview of the proposed amendments to Form TA–2.
TABLE 3—COMPARISON OF EXISTING FORM TA–2 REQUIREMENTS WITH THE PROPOSED AMENDMENTS
Existing Form TA–2 requirements Proposed Form TA–2 requirements
1(a). Filer CIK .............................................................................................
1(b). Filer CCC.
Form Instructions would be updated to provide full terms for abbreviations CIK and CCC. 1(f)(i–iii). Contact Name, Contact Phone Number, Contact Email Address Form and Form Instructions would be updated to require that the individual listed as the contact employee be authorized to receive all compliance communications for the reg￾istrant and have responsibility for disseminating them as appropriate within the reg￾istrant’s organization. 4(b). Number of individual securityholder accounts for which the TA maintained master securityholder files. Form Instructions would be updated with information regarding how to count the number of individual securityholder accounts. 5(a). Total number of individual securityholder accounts, including ac￾counts in the DRS, dividend reinvestment plans, and/or direct pur￾chase plans as of December 31. Existing Question 5 would be removed. New Question 4(c) would require registrant to provide the total number of individual securityholder accounts by security type in a new table. 5(b). Number of individual securityholder dividend reinvestment plan, and/or direct purchase plan accounts as of December 31. 5(c). Number of individual securityholder DRS accounts as of December 31. 5(d). Approximate percentage of individual securityholder accounts from subsection (a) in the following categories as of December 31: 5(d)(i– vi).
6. Number of securities issues for which Registrant acted in the following
capacities, as of December 31:.
Existing Question 6 would be removed. New Question 6(a) would require registrant to provide similar data in a new table. 6(a). Receives items for transfer and maintains master securityholder files. 6(b). Receives items for transfer but does not maintain the master securityholder files. 6(c). Does not receive items for transfer but maintains master securityholder files. 7(a). Number of issues for which dividend reinvestment plan, and/or di￾rect purchase plan services were provided, as of December 31. Existing Question 7(a) and 7(b) would be incorporated into new Question 6(a). 7(b). Number of issues for which DRS services were provided, as of De￾cember 31. 7(c). Dividend disbursement and interest paying agent activities con￾ducted during the reporting period:.

• Number of issues (Question 7(c)(i)).
• Amount (in dollars) (Question 7(c)(ii)).
  Registrant would be required to report the number of issues for which paying agent serv￾ices were provided as of December 31 in new Question 6(a). New Question 7 would require registrant to report all fund movements to/from securityholders as well as in-kind distributions to securityholders (not just dividend and interest disbursements).
  9(a)(i–ii). Turnaround Compliance ..............................................................
• Number of months during the reporting period Registrant was not in
  compliance with the turnaround time for routine items (Question 9(a)(i)).
• Number of written notices Registrant filed during the reporting period
  to report its noncompliance with the turnaround time for routine items (Question 9(a)(ii)). Question 9 would be revised to conform to Proposed Rule 17ad–2. Registrant would be required to report the total number of routine items it received during the reporting period and the number of routine items it failed to turn around or process within the shorter of one business day or the time period specified by Rule 15c6–1(a) of the Exchange Act for each month of the reporting period. 13(a–e). Related Documents/Attachments ................................................. Attachment would be required for a list of all issues serviced by registrant. None ........................................................................................................... New Questions 4(d) and (e) would require registrant to report on usage of physical certifi￾cates and distributed ledger technology during the reporting period. None ........................................................................................................... New Question 5(a) would require registrant to report the number of employees engaged in transfer agent functions or activities incidental thereto during the reporting period. None ........................................................................................................... New Question 5(b) would require registrant to report certain service providers used during the reporting period. None ........................................................................................................... New Question 6(b) would require registrant to report the number of issues, by tokenization model, serviced by the registrant as of December 31. The proposed changes to Form TA–2 are discussed more fully below.

1. Proposed Changes to Form TA–2
   Instructions
   The Commission is proposing to amend the instructions for use of Form TA–2 for the questions discussed below to provide specificity regarding the required information and to improve the quality, consistency, and comparability of the information provided in response. Form TA–2 Questions 1(a) and 1(b) (filer CIK and CCC, respectively) would not change, but the form instructions would be updated to state that ‘‘CIK’’ is an abbreviation for ‘‘Central Index Key.’’ Similarly, the form instructions would be updated to note that ‘‘CCC’’ is an abbreviation for ‘‘CIK Confirmation Code.’’ As with Form TA–1 described above, Commission staff routinely receive questions from registrants regarding the meaning and importance

107Exchange Act Section 17A(a)(2)(A), 15 U.S.C. 78q–1(a)(2)(A). of these terms. Providing these clarifications would provide that information uniformly to all registrants. It would also help improve the clarity and transparency of the form, thereby decreasing the amount of time it takes for registrants to complete the form. Form TA–2 Question 1(f) (contact name, phone number, and email address) would not change, but the form instructions would be updated to require that the contact listed in response to Question 1(f) must be an individual authorized to receive all compliance communications for the registrant with responsibility to disseminate them as appropriate within the registrant’s organization. As with Form TA–1, in Commission staff’s experience, the contact information provided in response to Question 1(f) is not always an individual with knowledge of the annual report or the authority to speak to Commission staff regarding the annual report. This can hinder the Commission staff reviewing the annual report from conveying important information to the registrant or obtaining information in response to questions regarding the annual report. This proposed change would help ensure that transfer agents complete the form consistently and accurately, and that Commission staff are able to follow up effectively with the registrant regarding any questions on the content of the annual report or other supervisory matters that arise while the transfer agent remains registered. Moreover, not having up-to-date contact information for an appropriately authorized individual could impede the Commission in carrying out its regulatory and oversight responsibilities with respect to transfer agents. However, because this information contains personally identifiable information, it is not made publicly available on EDGAR and is only available to the Commission and its staff. Form TA–2 Question 4(b) (number of individual securityholder accounts for which the transfer agent maintained master securityholder files) would not change, but the form instructions would be updated to provide instructions regarding how to calculate the number of individual securityholder accounts. Based on the Commission’s supervisory experience, the Commission understands that there is variability in the way registered transfer agents calculate the number of individual securityholder accounts reported in response to Question 4(b), which hinders the Commission’s ability to gather and analyze accurate and comparable information. This proposed change to the form instructions would help ensure consistently accurate reporting of the number of individual securityholder accounts, based upon the same calculation methodology, which should, in turn, support investor protection and market integrity by ensuring that the Commission has an accurate understanding of the market. Therefore, the Commission proposes to provide instructions for transfer agents regarding the calculation methodology that
considers both the number of securities issues as well as the number of securityholders for the issue. For purposes of Question 4(b), the number of individual securityholder accounts for each securities issue should be determined separately and then added together to arrive at the number reported in response to Question 4(b). For example, if the transfer agent maintains the master securityholder file for two securities, one with five individual securityholders and the other with the same five securityholders, the transfer agent should report 10 in response to Question 4(b). Any identical securityholders for the two securities should be counted separately for each issue for purposes of responding to Question 4(b).
2. Proposed Changes to Form TA–2
Reporting Requirements The Commission is proposing to amend Form TA–2 in several ways that would provide the Commission with information regarding a transfer agent’s staffing, securityholders, service providers, recordkeeping, and handling of funds. These proposed changes, as described below, would further support the Commission’s statutory mandate to protect investors, promote the prompt and accurate clearance and settlement of securities transactions, and promote the safeguarding of funds and securities by enhancing oversight of a transfer agent’s operational capacity, operational risks, recordkeeping practices, and outsourcing risks.107 a. Number of Individual Securityholder Accounts Accurate and relevant data regarding the specific types and volume of securities accounts serviced by a transfer agent is critical to the Commission’s assessment and oversight of a transfer agent’s operational capacity, recordkeeping practices, operational risks, and safeguarding practices. Existing Form TA–2 Questions 5(a)—(d) require disclosure of the total number of individual securityholder accounts, individual securityholder DRS accounts, individual securityholder dividend reinvestment plan and/or direct purchase plan accounts, and approximate percentages of individual securityholder accounts in various security type categories, as of December 31. To ensure that the data provided on Form TA–2 is relevant to the types and volume of securities accounts serviced by modern transfer agents and therefore continues to support the Commission’s statutory duties related to the oversight of registered transfer agents, Questions 5(a)–(d) would be removed along with the corresponding form instructions and replaced with proposed new Question 4(c). As depicted in Figure 1 below, proposed new Question 4(c) would require registrants to report the total number of individual securityholder accounts, by security type, as of December 31. Proposed Question 4(c) is similar to existing Question 5(d), but proposed Question 4(c) would require the total number of individual securityholder accounts by security type, as opposed to the approximate percentage of individual securityholder accounts by security type, which should be more readily available and would avoid the need for registrants to perform a percentage calculation. In addition, proposed Question 4(c) would provide more granular security types than existing Question 5(d) by including categories for corporate equity securities at two different market capitalization levels, exchange traded funds, and closed end investment company securities, as transfer agent activities, operational risks, recordkeeping practices, and safeguarding activities may vary depending on the type of security being serviced. The security types provided in the
table would include corporate equity
securities with market capitalization less than or equal to $300 million, corporate equity securities with market capitalization greater than $300 million, corporate debt securities, non-exchange traded open-end investment company securities, exchange-traded funds, closed end investment company securities, limited partnership securities, municipal debt securities, and other securities. The number of individual securityholder accounts in DRS, dividend reinvestment plans, or direct purchase plans required by Questions 5(b) and (c) are proposed to be deleted and would no longer be required. As subsets of the total number of individual securityholder accounts, those subcategories are not necessary given the requirement in Form TA–2 to

report the number of issues for which DRS, dividend reinvestment plan, or direct purchase plan services were provided in existing Question 7.
Figure 1: Proposed Question 4(c)
Regarding Individual Securityholder Accounts 4(c). Provide the total number of individual securityholder accounts, by security type, as of December 31:
Security type
Total number of individual securityholder accounts (as of December 31) Corporate Equity Securities (market cap <=$300 million). Corporate Equity Securities (market cap >$300 million). Corporate Debt Securities. Non-Exchange Traded Open End Investment Company Securities. Exchange-Traded Funds. Closed End Investment Company Securities. Limited Partnership Securities. Municipal Debt Securities. Other Securities. Total. b. Number of Issues by Activity Type Existing Form TA–2 Question 6 (number of securities issues for which Registrant received items and/or maintained the master securityholder files, broken down by various security types) would be removed and replaced with proposed new Question 6(a) which would request similar information but would also incorporate the transfer agent activity types from Question 7 and include more granular security types than existing Question 6. Proposed Question 6(a) would add security type categories for corporate equity securities at two different market capitalization levels, exchange-traded funds, and closed end investment company securities, as transfer agent activities, operational risks, recordkeeping practices, and safeguarding activities may vary depending on the type of security being serviced. Specifically, as depicted in Figure 2 below, registrants would be required to report the following data as of December 31 in a new table categorized by security type:
the number of securities issues for which the transfer agent (i) received items for transfer, (ii) maintained the master securityholder file(s), (iii) provided DRS services, (iv) provided direct purchase plan services, (v) provided dividend reinvestment plan services, and (vi) provided paying agent services. The security types provided in the table include corporate equity securities with market capitalization less than or equal to $300 million, corporate equity securities with market capitalization greater than $300 million, corporate debt securities, non-exchange traded open-end investment company securities, exchange-traded funds, closed end investment company securities, limited partnership securities, municipal debt securities, and other securities. These proposed revisions to Question 6 would incorporate the content of Question 7(a) regarding the number of issues for which dividend reinvestment plan and/ or direct purchase plan services were provided as of December 31, Question 7(b) regarding the number of issues for which DRS services were provided as of December 31, and Question 7(c)(i) regarding the number of issues for which dividend disbursement and interest paying agent activities were conducted during the reporting period and thus, those questions would be removed. Dividend disbursement and interest paying agent activities would be included with other paying agent services in a single column in proposed Question 6(a).
Figure 2: Table for Proposed Question
6(a)
Security type
Number of issues for which registrant provided the following services (as of December 31) Received items for transfer Maintained master securityholder file(s) Provided Direct Registration System (DRS) services Provided Direct Purchase Plan (DPP) services Provided dividend reinvestment services Provided paying agent services Corporate Equity Securities (market cap <=$300 million). Corporate Equity Securities (market cap >$300 million). Corporate Debt Securities. Non-Exchange Traded Open End Investment Company Securities. Exchange-Traded Funds. Closed End Investment Company Securities. Limited Partnership Securities. Municipal Debt Securities. Other Securities. Total.

108The existing instructions for Form TA–2 Question 7.c. direct registrants to exclude coupon payments and transfers of record ownership as a result of corporate actions. 109 17 CFR 249b.102.
c. Handling of Securityholder Funds
and Securities
Form TA–2 Question 7(c)(ii) (amount in dollars of dividend disbursement and interest paying agent activities conducted during the reporting period) would be replaced by proposed new Question 7 which is designed to capture all money movement through a transfer agent to or from securityholders, not just dividend disbursements and interest payments as required by existing Question 7(c)(ii), as well as any in-kind distribution activity. Specifically, registrants would be required to report the amount (in dollars) of dividend disbursements, interest or coupon payments, principal payments, disbursements in connection with corporate actions, open-end investment company purchases and redemptions, stock purchases, and any other monetary inflows or disbursements, as well as the amount (in units) of any in￾kind distributions to securityholders during the reporting period. These proposed changes would contradict the form’s existing instructions for answering Question 7(c),108 so those instructions would be removed. Requiring transfer agents to report more detailed information regarding the nature and extent of their handling of securityholder funds would provide the Commission with data relevant to assess safeguarding risks across the transfer agent population as a whole and at individual transfer agents. This information would further support the Commission’s statutory mandate to protect investors, promote the prompt and accurate clearance and settlement of securities transactions, and promote the safeguarding of funds and securities. d. Turnaround Performance Form TA–2 Question 9 (turnaround compliance) would be removed in its entirety due to the proposed changes to Rule 17ad–2 discussed in Section III.D. Existing Form TA–2 Question 9(a)(i) requires a registrant to report the number of months during the reporting period it was not in compliance with the turnaround time for routine items according to Rule 17ad–2, while existing Question 9(a)(ii) requires a registrant to report the number of written notices filed during the reporting period with the SEC and with its ARA regarding noncompliance with the turnaround time for routine items according to Rule 17ad–2.109 Instead, proposed new Question 9(a) would require registrants to report the total number of routine items received during the reporting period, and proposed new Question 9(b) would require registrants to report the number of routine items that were not turned around or processed within the shorter of one business day or the time period specified by Rule 15c6–1(a) of the Exchange Act for each month of the reporting period. These proposed new questions would align the reporting requirements on Form TA–2 with the proposed changes to Rule 17ad–2 regarding turnaround and processing performance.
3. Proposed Additions to Form TA–2
Reporting Requirements New Questions would be added to Form TA–2 to require registrants to report the following information, as accurate data in these areas is important for the Commission’s assessment and oversight of a transfer agent’s operational capacity, recordkeeping practices, operational risks, and safeguarding practices:

• The number of issues serviced by
  the registrant for which physical certificates were in use during the reporting period in new Question 4(d);
• The number of issues for which the
  registrant maintained the master securityholder file using distributed ledger technology during the reporting period in new Question 4(e);
• The number of employees engaged
  in transfer agent functions or activities incidental thereto during the reporting period in new Question 5(a);
• The types of service providers used
  by the registrant during the reporting period using a check-the-box format along with the name of the service provider(s) that directly supports the performance of transfer agent functions using a fill-in-the-blank format in new Question 5(b);
• The number of issues, by
  tokenization model, serviced by the registrant as of December 31 in new Question 6(b); and
• A list of issues serviced by the
  registrant as of December 31 of the reporting period. a. Certificates and Distributed Ledger Technology The Commission is proposing to add new Question 4(d) to the Form TA–2 to require registered transfer agents to report the number of issues for which physical certificates were in use during the reporting period and new Question 4(e) to require registered transfer agents to report the number of issues for which distributed ledger technology was used to maintain the master securityholder file during the reporting period. The risks associated with safeguarding physical securities certificates are vastly different than the risks associated with safeguarding book-entry securities or tokenized securities, and accurate data in this area is important for the Commission’s assessment and oversight of a transfer agent’s recordkeeping practices, operational risks, and safeguarding practices. b. Staffing Information The Commission is proposing to add a new question to the Form TA–2 to require registered transfer agents to report the number of employees engaged in transfer agent functions (as defined in
  section 3(a)(25) of the Exchange Act) or
  activities incidental thereto during the reporting period. The individuals engaging in transfer agent functions or activities incidental thereto are subject to Exchange Act Rule 17f–2 regarding fingerprinting of securities industry personnel, cannot claim the exemption to the fingerprinting requirement in Rule 17f–2(a)(1)(ii), and are often responsible for interfacing with securityholders, handling sensitive securityholder information, completing transfers of securities, and processing various types of payments from issuers to securityholders. Accurate transfer agent staffing data will help to ensure that the information provided on Form TA–2 is relevant to the operational capacity and operational risks of modern transfer agents, would be comparable across the transfer agent population and therefore would continue to support the Commission’s statutory duties related to the oversight of transfer agents. This information would further support the Commission’s statutory mandate to protect investors, promote the prompt and accurate clearance and settlement of securities transactions, and promote the safeguarding of funds and securities.
  c. Service Providers
  Based upon its supervisory experience, the Commission has observed that transfer agents have used service providers to help ensure the prompt and accurate clearance and settlement of securities transactions. The range of corporate structures and functions performed by a registered transfer agent means that service providers can perform a wide variety of functions. Requiring a transfer agent to provide information about certain service providers on Form TA–2, as described further below, would allow the Commission to better understand the potential operational risks faced by

110See Statement on Tokenized Securities, Division of Corporation Finance, Division of Investment Management, Division of Trading and Markets (Jan. 28, 2026), available at https:// www.sec.gov/newsroom/speeches-statements/corp￾fin-statement-tokenized-securities-012826- statement-tokenized-securities (stating that, with respect to third-party sponsored tokenized securities, the models that third parties are using to tokenize securities vary, and the rights, obligations, and benefits associated with the crypto asset may or may not be materially different from those of the underlying security, the crypto asset may or may not represent an ownership interest in or contractual obligation of the issuer of the underlying security, and holders of the crypto asset may be exposed to risks with respect to the third party, such as bankruptcy, to which a holder of the underlying security would not necessarily be exposed). That statement and any other staff statement referenced in this release is not a rule, regulation, guidance, or statement of the Commission, and the Commission has neither approved nor disapproved its content. Staff statements have no legal force or effect: they do not alter or amend applicable law, and they create no new or additional obligations for any person. transfer agents in performing their transfer agent functions. For example, based upon its supervisory experience, the Commission understands that transfer agents may use third parties to provide recordkeeping functions. In such cases, failure of the service provider to perform its obligations due to, for example, an outage or a systems error, would pose significant operational risks and have critical effects on the transfer agent’s ability to perform its transfer agent functions and as such could hinder the prompt and accurate clearance and settlement of securities transactions which the Commission is authorized to facilitate. Therefore, the Commission is proposing to require registered transfer agents to identify, by name and type, on Form TA–2 certain service providers that directly support the performance of transfer agent functions, however this information would not be made publicly available on EDGAR. Identification by name would allow the Commission to assess potential operational risk across the national system of clearance and settlement; for example, if a particular recordkeeping service provider suffers an outage or is otherwise unable to provide services, knowing how many transfer agents rely on that provider would help the Commission assess the impact on the national system for the settlement of securities transactions, and the market generally. Identification by type would provide the Commission with better comparability across the transfer agents that help make up the national system of clearance and settlement, which should help inform its oversight and responsibility for the prompt and accurate clearance and settlement of securities transactions. As depicted in
Figure 3 below, proposed Question 5(b) would include checkboxes for the following types of service providers that directly support the registrant in carrying out transfer agent activities: (1) banks, (2) escrow agents, (3) recordkeeping system providers, (4) lost securityholder search providers, (5) printing and mailing services, (6) call center providers, (7) tokenization agents, and (8) distributed ledger technology platforms. Following each entry is a space for registrants to fill-in-the-blank with the name of the service provider(s).
Figure 3: Proposed Question 5(b)
Regarding Service Providers Registrant used the following Service Providers during the Reporting Period. Check all that apply and provide name of service provider(s) that directly supports the performance of transfer agent functions:
b Bank(s): ____________________________________ b Escrow Agent(s): ________________________________ b Recordkeeping System Provider(s): _________________________________________ b Lost Securityholder Search Provider(s): ________________________________________ b Printing and Mailing Service Provider(s): ______________________________________ b Call Center Provider(s): ________________________________________ b Tokenization Agent(s): _____________________________________________ b Distributed Ledger Technology Platform(s): __________________________________________ d. Tokenized Securities As discussed above, some transfer agents play a role in developing, issuing, and administering tokenized securities, which may present different operational requirements and risks, recordkeeping systems, and safeguarding controls than traditional certificated and uncertificated securities. To ensure that the data provided on Form TA–2 is relevant to the types and volume of securities serviced by modern transfer agents, and therefore continues to support the Commission’s statutory duties related to oversight of transfer agents to protect investors, promote the prompt and accurate clearance and settlement of securities transactions, and promote the safeguarding of funds and securities, as depicted in Figure 4 below, proposed new question 6(b) would require registrants to report the number of issues, by tokenization model and security type, serviced by the registrant as of December 31. The tokenization models provided in the table would include issuer-sponsored and third￾party sponsored, as the risks to investors differ depending on the tokenization model.110 The security types provided in the table would include corporate equity securities with market capitalization less than or equal to $300 million, corporate equity securities with market capitalization greater than $300 million, corporate debt securities, non￾exchange traded open-end investment company securities, exchange-traded funds, closed end investment company securities, limited partnership securities, municipal debt securities, and other securities.
Figure 4: Proposed Question 6(b)
Regarding Tokenized Securities Security type Number of issues serviced by the registrant by tokenized security model (as of December 31) Issuer-sponsored tokenized securities Third-party-sponsored tokenized securities Corporate Equity Securities (market cap <=$300 million).

Security type
Number of issues serviced by the registrant by tokenized security model (as of December 31) Issuer-sponsored tokenized securities Third-party-sponsored tokenized securities Corporate Equity Securities (market cap >$300 million). Corporate Debt Securities. Non-Exchange Traded Open End Investment Company Securities. Exchange-Traded Funds. Closed End Investment Company Securities. Limited Partnership Securities. Municipal Debt Securities. Other Securities. Total. e. List of Issues Serviced To ensure that the data provided on Form TA–2 is relevant to the types and volume of securities serviced by modern transfer agents, and therefore continues to support the Commission’s statutory duties related to the oversight of transfer agents, Form TA–2 Question 13 (related documents/attachments) would be amended to require registrants to provide an attachment to their Form TA–2 with a list of issues serviced as of December 31 of the reporting period. The list should include, for each issue serviced, both the name of the issue and its identification number from the master securityholder file. Under the existing rules, the Commission does not know which transfer agent services a particular security. Having this information on the Form TA–2 would address this gap and enable the Commission to more efficiently address investor questions or concerns related to their interactions with transfer agents to further support the Commission’s statutory mandate to protect investors, promote the prompt and accurate clearance and settlement of securities transactions, and promote the safeguarding of funds and securities.
4. Request for Comment
The Commission requests comments on all aspects of the proposed amendments to Form TA–2. In particular, the Commission requests comments on the following:
13. Should the Commission amend
Rule 17ac2–2 to require registered transfer agents to file an amendment to Form TA–2 if they discover that any of the information reported on Form TA– 2 was materially inaccurate, misleading, or incomplete at the time of filing? Should the Commission provide a definition or examples of what would be ‘‘materially inaccurate, misleading, or incomplete’’ in this context? How soon after a transfer agent discovers that information reported on Form TA–2 was materially inaccurate, misleading, or incomplete at the time of filing should a transfer agent be required to file an amendment? Is within 60 days a sufficient amount of time, or should the Commission consider a shorter or longer period of time?
14. Should the Commission require
registered transfer agents to report all fund movements to or from securityholders on Form TA–2 in proposed new Question 7, rather than just dividend disbursements and interest payments as required by the existing form? Would this broader reporting requirement provide more useful information to the Commission in understanding a transfer agent’s operational risks related to the safeguarding of securityholder funds?
15. Should the Commission require
registered transfer agents to report staffing information on Form TA–2, including the number of employees engaged in transfer agent functions or activities incidental thereto during the reporting period in new Question 5(a)? Would this requirement fit the purpose of the Form? Or, would other data be more appropriate to require on the Form such as volume of transactions processed and error rates during the reporting period?
16. What additional information
should the Commission require to be reported on Form TA–2 regarding a transfer agent’s recordkeeping practices?
17. Are the specific security types and
categories in proposed Questions 4(c), 6(a), and 6(b) appropriate and sufficient to capture the full range of securities for which transfer agents maintain securityholder accounts? Should any security types or categories be added, removed, or modified?
18. Is the proposed methodology for
calculating the number of individual securityholder accounts in response to Question 4(b) clear and operationally feasible for transfer agents? Are there alternative methodologies that would be more accurate or easier for transfer agents to implement?
19. Are there additional types of
service providers routinely used by transfer agents that should be included in the list of service providers in Question 5(b)? Alternatively, should any service providers included in the proposed list in Question 5(b) not be included? To what extent is the information that would be reported in response to Question 5(b) duplicative of information that would be provided in response to other questions, such as Question 4(e)?
20. Should the Commission require
transfer agents to provide more detailed information about their service provider arrangements, such as the specific services provided or the oversight and monitoring procedures used to manage associated risks? Alternatively, should the Commission require disclosure of service provider arrangement information at all, or less detailed information about their service provider arrangements?
21. Should the Commission require
transfer agents to report on the number of issues, by tokenization model and security type, serviced by the registrant as of December 31 in new Question 6(b)? Are the specific tokenization models proposed appropriate, clear, operationally feasible, and sufficient to capture the full range of tokenization models used in connection with transfer agent activities? Should any tokenization models be added, removed, or modified? Should the Form TA–2 instead seek identification only of tokenized securities more generally, as opposed to breaking the information out by tokenization model? Would tokenized equity-linked notes be difficult for transfer agents to categorize as issuer-sponsored or third-party sponsored in the proposed table? If so, should the requirements of Question 6(b) be modified or clarified? Should the Commission provide a sunset date for

111See, e.g., Depository Shipment Control List Transfer Instructions; Definition of Item, Exchange Act Release No. 23677 (Oct. 2, 1986), 51 FR 36547 (Oct. 14, 1986); see also Maintenance of Accurate Securityholder Files and Safeguarding of Funds and Securities by Registered Transfer Agents, Exchange Act Release No. 19860 (June 10, 1983), 48 FR 28231 (June 21, 1983) (‘‘17ad–9 through 13 Adopting Release’’); Prompt Transfer of Securities; Transfer Agent Turnaround Performance Time Frame, Exchange Act Release No. 21375 (Oct. 5 1984), 49 FR 40573 (Oct. 17, 1984). 112See Exchange Act Section 3(a)(25), 15 U.S.C. 78(c)(a)(25). 113See Section 17A(a)(2)(A) of the Exchange Act, 15 U.S.C. 78q–1(a)(2)(A). 114See Rule 17Ad–1 through 17Ad–7 Adopting Release, supra note 50. 115 ‘‘Transfer’’ of a certificated security (where an outside registrar is not involved) is the completion of all acts necessary to cancel the certificate, issue a new one, and make it available to the presentor, and ‘‘turnaround’’ for an item (where an outside registrar is not involved) is completed when transfer is accomplished. Exchange Act Rule 17ad– 1(d), (e), 17 CFR 240.17Ad–1(d), (e). The term ‘‘outside registrar’’ with respect to a transfer item means a transfer agent which performs only the registrar function for the certificate or certificates presented for transfer and includes the persons performing similar functions with respect to debt issues. Exchange Act Rule 17ad–1(b), 17 CFR 240.17Ad–1(b). 116Exchange Act Rule 17ad–1(a)(1), 17 CFR 240.17Ad–1(a)(1). 117See proposed Rule 17ad–1(a)(1). 118See Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50. proposed Question 6(b) and if so, what should be the trigger for such sunset date?
22. Is any information that would be
required by the proposed changes to Form TA–2 difficult for a transfer agent to provide? If so, why? Are there alternative approaches to collecting the same information, such as providing this information upon request, that would be less burdensome for transfer agents while still providing the Commission with the information it needs to fulfill its regulatory and oversight responsibilities?
23. Should any information not be
publicly disclosed that would be required by the proposed changes to Form TA–2?
24. Is there any additional
information that the Commission should require to be disclosed on Form TA–2, or conversely, should the Commission require less information to be disclosed?
III. Proposed Amendments to
Definitions, Processing, Recordkeeping, and Safeguarding Rules The Commission is proposing amendments to the definitions in Rules 17Ad–1 and 17Ad–9 to modernize the foundational terminology that governs the processing, turnaround, recordkeeping, safeguarding, and compliance obligations of registered transfer agents. When the Commission originally adopted these definitions, the securities markets operated chiefly through the transfer of securities represented by physical certificates, and the transfer of certificated securities was a complicated, time-intensive, manual process completed over the course of multiple days and involving numerous in-person deliveries to and from multiple parties. Definitions such as item, receipt, certificate detail, deposit shipment control list, and control book were grounded in this physical environment and designed to reflect and address the technological and operational needs and limitations of manual processing, paper certificates, in-person deliveries, and mail-based communication.111 Today, however, the technological and operational environment in which transfer agents operate has changed. The Commission understands that nearly all transactions are electronic; most securities are held in immobilized or uncertificated form; and transfer agents receive, validate, and process instructions through automated systems, electronic platforms, and digital communication channels. In addition, new and rapidly developing technologies, such as tokenized securities and distributed ledger technology, continue to modify the environment in which transfer agents operate, even as they present both new benefits and challenges. The prompt and accurate clearance and settlement of securities transactions is a matter of public interest, and clearly defined terms that accurately reflect the current operational and technological environment in which registered transfer agents operate are necessary to give practical effect to the Commission’s oversight of registered transfer agents and the national clearance and settlement system.112 As the securities markets and transfer agent operations continue to evolve, definitions that are both grounded in statutory authority and responsive to technological and operational change would help the Commission to carry out its statutory responsibilities under Section 17A of the Act, including its responsibility to protect investors, to safeguard securities and funds, and to facilitate the prompt and accurate clearance and settlement of securities transactions in a manner that keeps pace with the markets the Commission is charged with overseeing.113 As discussed below, each of the proposed changes discussed in this section seeks to ensure that the defined terms used in the Commission’s transfer agent rules accurately reflect the current operational and technical environment in which transfer agents operate, including the transition from a manual, paper-based environment to an automated, electronic
environment and beyond. A. Amendments to Rule 17ad–1 Rule 17ad–1 defines relevant terms used throughout the rules. A fundamental term used in the rules is ‘‘item,’’ which is the basic unit for which the turnaround and other processing requirements apply.114 Other key definitions in Rule 17ad–1 are ‘‘transfer’’ and ‘‘turnaround.’’ 115 The Commission is proposing amendments to the definitions of the terms ‘‘item,’’ ‘‘receipt,’’ and ‘‘routine.’’

1. Item
   Existing Rule 17ad–1(a)(1) defines the term item as: (i) A certificate or certificates of the same issue of securities covered by one ticket (or, if there is no ticket, presented by one presentor) presented for transfer, or an instruction to a transfer agent which holds securities registered in the name of the presentor to transfer or to make available all or a portion of those securities; (ii) Each line on a ‘‘deposit shipment control list’’ or a ‘‘withdrawal shipment control list’’ submitted by a registered clearing agency; or (iii) In the case of an outside registrar, each certificate to be countersigned.116 The Commission proposes to amend the definition of ‘‘item’’ to include two additional subsections within the definition: ‘‘(iv) A transfer instruction submitted to the transfer agent through a deposit or withdrawal at custodian or functionally similar service operated by a central securities depository; and (v) Any other transfer instruction submitted to the transfer agent, or to an electronic system controlled, operated, or enabled by the transfer agent, to be accomplished without the physical issuance of certificates.’’ 117 As noted, item is the basic unit for which the turnaround and other processing requirements apply,118 and is an essential term used throughout the transfer agent rules, including in other definitions discussed in this release. The Commission is proposing to amend the definition of item to clearly and unambiguously include instructions relating to uncertificated securities and capture new technologies and means of transmitting information to ensure that the technology, platforms, and communication channels utilized by modern transfer agents are both contemplated and permitted under the rules.

119See UCC §§ 8–107 and 8–401. 120 17 CFR 240.17ad–1(g). 121Exchange Act Rule 17ad–2(a), 17 CFR 240.17ad–2(a). Rule 17ad–2(b) includes an identical provision for items received by transfer agents acting as an outside registrar. 122See proposed Rule 17ad–1(g). 123 Id. 124 17 CFR 240.17ad–1(i). 125See proposed Rule 17ad–1(i). 126 17 CFR 240.17Ad–9. 127See 17ad-9 through 13 Proposing Release, supra note 9. 128 17 CFR 240.17Ad–10(a)(1). These amendments would include transfer instructions submitted through DTC’s Deposit/Withdrawal at Custodian (‘‘DWAC’’) service and other electronic systems, which the Commission understands are now the predominant means by which securities are transferred. The proposed amendments are also designed to capture new and novel methods by which transfer agents may receive instructions from presentors pursuant to the UCC.119 Finally, the phrase ‘‘an electronic system controlled, operated, or enabled by the transfer agent’’ will ensure that instructions transmitted by or through both existing technologies, such as blockchains and other distributed ledger-based platforms and new, as yet unforeseen technologies, are captured by the definition as proposed to be amended. These amendments would help ensure that Rule 17ad–2’s turnaround and processing requirements apply uniformly to certificated and uncertificated securities, regardless of the specific technology used to issue, transfer, or custody the securities, and that new and potential future communication channels through which transfer instructions are or could be initiated, are contemplated under the rule.
2. Receipt
Existing Rule 17ad–1(g) provides that ‘‘[t]he receipt of an item or a written inquiry or request occurs when the item or written inquiry or request arrives at the premises at which the transfer agent performs transfer agent functions, as defined in Section 3(a)(25) of the Act.’’ 120 While the term ‘‘arrive’’ applies to both physical and electronic items, it reflects a focus on physical items received by transfer agents—the transfer bundles from a bygone era discussed above—and is out of step with the electronic instructions that constitute most items received by modern transfer agents. Similarly, existing Rule 17ad–2(a) specifies that ‘‘items received at or before noon on a business day shall be deemed to have been received at noon on that day, and items received after noon on a business day or received on a day not a business day shall be deemed to have been received at noon on the next business day.’’ 121 Thus, for many years transfer agents have set up their processing and recordkeeping systems to bifurcate each business day for purposes of determining when items have been received and starting the clock for turnaround. While this provision also applies with equal force to physical and electronic items, it too reflects a focus on physical items received by transfer agents—the transfer bundles that, once received at a mailbox or window, needed to be picked up, processed, and physically delivered to an appropriate workspace on the transfer agent’s premises where the various confirmations, examinations, and checks could be conducted. Accordingly, this provision is out of step with the electronic instructions that constitute most items received by modern transfer agents, which are transmitted at the speed of light and can be accessed from virtually any computer or workstation authorized by the transfer agent. The Commission proposes to amend the definition of ‘‘receipt’’ to provide that receipt occurs on the business day when the item or written inquiry or request arrives at any premises at which the transfer agent performs transfer agent functions or, in the case of an item or written inquiry or request submitted in electronic form, the business day when the item or written inquiry or request is received by the transfer agent.122 The proposed amendment would also provide that if an item or written inquiry or request arrives or is received on a non-business day, receipt is deemed to occur on the next business day.123 The existing definition does not explicitly address electronic transmissions or electronic deliveries, which are now a common means by which transfer agents receive items and other communications. The proposed amendment would specify that receipt of electronic transmissions occurs when the item or communication is received by the transfer agent, as evidenced by, for example, a time stamp or other electronic record. The proposed amendment would also acknowledge that arrival or receipt can occur at any premises at which the transfer
agent performs transfer agent functions, not just the principal location, thereby reflecting the reality that many modern transfer agents operate from multiple locations. These changes would help ensure that the definition of receipt is clear and applicable to the full range of methods by which transfer agents receive items and communications in today’s electronic environment.
3. Routine
Existing Rule 17ad–1(i) defines a ‘‘routine’’ item by listing eight categories of items that are not routine, including paragraph 17ad–1(i)(2), which specifies that ‘‘a certificate as to which the transfer agent has received notice of a stop order, adverse claim, or any other restriction on transfer’’ would be considered a non-routine item.124 The Commission is proposing to replace the reference to ‘‘certificate’’ in paragraph (i)(2) with ‘‘security’’ to ensure that the definition applies equally to both certificated and uncertificated securities.125 B. Amendments to Rule 17ad–9 Rule 17ad–9 126 defines 12 principal terms with respect to transfer agents as used especially in Rules 17ad–10 through 17ad–13: ‘‘certificate detail,’’ ‘‘master securityholder file,’’ ‘‘subsidiary file,’’ ‘‘control book,’’ ‘‘credit,’’ ‘‘debit,’’ ‘‘record difference,’’ ‘‘record keeping transfer agent,’’ ‘‘co￾transfer agent,’’ ‘‘named transfer agent,’’ ‘‘service company,’’ and ‘‘file.’’ 127 The Commission is proposing amendments to all of the definitions in Rule 17ad–9 other than ‘‘subsidiary file,’’ ‘‘co-transfer agent,’’ ‘‘named transfer agent,’’ ‘‘service company,’’ and ‘‘file.’’ The Commission is also proposing to add three new defined terms: ‘‘authorized securities,’’ ‘‘transfer journal,’’ and ‘‘presentor.’’

1. Certificate Detail
   Existing Rule 17ad–10 requires recordkeeping transfer agents to promptly and accurately post credits and debits containing minimum and appropriate certificate detail to the master securityholder file whenever a security is transferred, purchased, redeemed, or issued.128 The certificate detail that must be posted to the master securityholder file is defined in existing Rule 17ad–9(a) and consists of eight specific ‘‘items’’ of information: (1) The certificate number; (2) The number of shares for equity securities or the principal dollar amount for debt securities; (3) The securityholder’s registration; (4) The address of the registered securityholder; (5) The issue date of the security; (6) The cancellation date of the security; (7) In the case of redeemable securities of investment companies, an appropriate description of each debit and credit (i.e., designation indicating purchase, redemption, or

129 17 CFR 240.17Ad–9(a).
130See proposed Rule 17ad–9(a).
131See proposed Rule 17ad–10.
132See proposed Rule 17ad–11 (amending the term ‘‘certificate detail’’ in the title to instead refer to ‘‘position detail’’). 133For example, the Stock Exchange Daily Official List (SEDOL) is used primarily in the United Kingdom and Ireland, while the Reuters Instrument Code (RIC) is used specifically within London Stock Exchange Group (LSEG) systems. 134See 17ad–9 through 13 Proposing Release, supra note 9, at 47270. 135See 17 CFR 240.17Ad–17. transfer); and (8) Any other identifying information about securities and securityholders the transfer agent reasonably deems essential to its recordkeeping system for the efficient and effective research of record differences.129 The Commission is proposing to replace the term ‘‘certificate detail’’ with a neutral term that can apply to any form of security, whether certificated or uncertificated, and to amend items one, three, four, and eight, in the definition of certificate detail, as described more fully below. The Commission proposes to amend the definition of ‘‘certificate detail’’ to reflect the securities industry’s transition from a manual, paper-based environment to an automated, electronic environment and to ensure that the Commission’s transfer agent rules appropriately reflect and facilitate transfer agents’ use of new and emerging technologies in their recordkeeping and operations. First, given that most securities today are uncertificated, the Commission proposes to replace the term ‘‘certificate detail,’’ which signifies the use of a paper certificate, with the term ‘‘position detail,’’ which is a neutral term that can apply to any form of security, whether certificated or uncertificated.130 To ensure consistency throughout the rules, the Commission proposes to make conforming changes in other rules that use the term certificate detail as well, specifically throughout Rule 17ad–10,131 as discussed in more detail below, and by amending the title of Rule 17ad–11.132 Second, the Commission is proposing to expand item one beyond solely a certificate number for certificated securities. A certificate number is a unique numerical identifier pre-printed on physical stock or bond certificates used to identify the security and track ownership. However, the Commission understands that both certificated and uncertificated securities may also have unique alpha-numeric identifiers, while only certificated securities specifically have ‘‘certificate numbers.’’ Under the existing definition of certificate detail, transfer agents are not required to maintain in the master securityholder file a unique identifier for securities. Given the importance of being able to uniquely identify and track securities, it is necessary and appropriate for the protection of investors to require transfer agents to maintain a unique identifier for securities when such a unique identifier is available. Accordingly, under the proposed changes, item one would consist of the certificate number for certificated securities, and for
all securities, including certificated securities, the applicable unique identifier for the security, which could be a Committee on Uniform Securities Identification Procedures number (CUSIP) or Financial Instrument Global Identifier number (FIGI). With respect to the applicable unique identifier, the Commission understands that both the CUSIP and the FIGI are standardized identification numbers widely used for both certificated and uncertificated securities across different asset classes, that CUSIP is widely used with respect to U.S. exchange-traded securities, including some tokenized securities, and FIGI can be and is used with respect to both traditional and tokenized securities. However, the amended rule would not mandate the use of these specific identifiers. The Commission is aware that other unique identifiers are used, often in connection with a specific jurisdiction or specific system,133 and others may be developed in the future. The Commission is also aware that it is possible that in some instances an uncertificated security may not have a unique identifier. Accordingly, through this change, the position detail maintained by transfer agents would include unique identifiers for both certificated and, if applicable, uncertificated securities, including tokenized securities. Third, the Commission is proposing to amend item three, ‘‘registration.’’ A securityholder’s registration, historically referred to the registered owner’s name, as well as any relevant formatting or titling information, such as whether the security is held individually, jointly, in trust, by a corporate entity, etc.134 To ensure that transfer agents understand the term and apply it consistently, the Commission is proposing to replace the term ‘‘registration’’ with a description of the specific information that constitutes ‘‘registration,’’ as noted above. Specifically, item three would include the securityholder’s full name and any other relevant identifying, titling, or formatting information (e.g., a digital wallet address in the case of any tokenized security; whether the security is held individually, jointly, or in trust; whether it is held by a natural person, a corporation, etc.) necessary to accurately identify the specific securityholder to the exclusion of other securityholders. Ensuring that transfer agents maintain accurate and up-to-date registration information for registered securityholders is vital to determine who is legally recognized as the securityholder, who is entitled to receive distributions, proxies, issuer communications, and corporate rights provided to the legal owner of the securities, who has legal authority to authorize transfers, and how ownership is recorded and validated. All recordkeeping transfer agents are also required to comply with the lost securityholder notice and search requirements set forth in Rule 17ad– 17,135 which requires transfer agents to identify and maintain certain contact information for individual
securityholders. Ensuring that transfer agents’ position detail information includes sufficient information to identify individual securityholders to the exclusion of other securityholders would also help recordkeeping transfer agents meet their lost securityholder search obligations under Rule 17ad–17. For these same reasons, the Commission is proposing to expand item four to include additional contact information beyond the securityholder’s physical mailing address. Specifically, under the proposal, item four would include contact information for the registered securityholder sufficient to enable the transfer agent to effectively deliver securityholder communications, dividends and other payments, legal notices, and other communications, including at a minimum a physical mailing address. In addition to a mailing address, such contact information could include, for example, a home phone number, a mobile phone number, an email address, a blockchain wallet address, or another form of communication, although the Commission recognizes that the specific contact information for a given securityholder could vary depending on the securityholder. For example, a buy￾and-hold investor who prefers written communications or phone calls might only have a mailing address and home phone number, while an investor that prefers online access and communication methods might prefer to receive email communications or be contacted through such investor’s mobile phone number. Comprehensive and current securityholder contact information is essential to ensure prompt and accurate clearance and

136 17 CFR 240.17Ad–17(a)(1), Exchange Act Rule 17ad–17(a)(1). 137See proposed Rule 17ad–9(a). 138 17 CFR 240.17Ad–9(b). 139 Id. 140See proposed Rule 17ad–9(b). 141See 17ad–9 through 13 Adopting Release, supra note 111, at 28234. 142See id. 143 Id. settlement. Limiting the securityholder contact information maintained by transfer agents to a physical mailing address is no longer adequate to support the efficient functioning of a modern clearance and settlement system that relies on electronic communications to process securities transactions. The ability to rapidly and reliably communicate with registered securityholders through multiple channels enables transfer agents to fulfill their critical role within the national clearance and settlement system, reduce settlement failures, resolve processing discrepancies in real time, and comply with the full range of applicable laws and regulations governing their participation in that system, all of which directly serve protecting investors and the broader public interest. At the same time, it is still important for transfer agents to ensure that the contact information they maintain for registered securityholders includes a physical mailing address because physical mail may serve as the primary means of communication for some securityholders and a secondary means of communication for other securityholders, and ensuring that a physical mailing address is part of the master securityholder file may help recordkeeping transfer agents comply with Rule 17ad–17, which requires recordkeeping transfer agents to exercise reasonable care to ascertain the correct addresses for lost securityholders.136 Even in situations where a transfer agent is sending correspondence to a securityholder electronically, when that correspondence is returned as undeliverable, having a physical mailing address may help the transfer agent to obtain a correct electronic address for the securityholder. Finally, item eight would be expanded to include any other identifying information about securities and securityholders the transfer agent reasonably deems necessary to its recordkeeping, operations, or for the efficient and effective research of record differences.137 This would be an expansion of existing item eight, which only requires identifying information the transfer agent reasonably deems essential to its recordkeeping system for the efficient and effective research of record differences. As with the amendments to items three and four, these amendments would help ensure that transfer agents have sufficient information to comply with their obligations under the transfer agent rules, including the proposed amendments to Rules 17ad–6 and 17ad– 7 discussed herein, and the new operational risk requirements that would be imposed in connection with the proposed amendments to Rule 17ad–12 discussed below. Requiring that transfer agents maintain this information also would help ensure that the information is kept and retained in
accordance with the recordkeeping requirements that apply to transfer agents. Further, as noted, modern transfer agents’ activities go beyond the type of ministerial recordkeeping and administrative tasks that characterized their work when these definitions were first adopted. In addition to identifying information about securities and securityholders the transfer agent reasonably deems necessary to researching record differences, modern transfer agents might maintain other information the transfer agent reasonably deems necessary to its operations. For example, a transfer agent may maintain information about registered securityholders that enable the transfer agent to provide securityholders access to an online portal that allows them to view their holdings, initiate transactions, or download corporate communications in lieu of receiving them in paper copy through the mail and information needed to make payments to securityholders. Provision of these services may involve collecting and storing specialized information, such as passwords and other login information, necessary to ensure the proper functioning of the transfer agent’s website, online portal, or other technology platforms. As another example, a transfer agent providing paying agent services may need to maintain information about registered securityholders that enable them to make payments. It is vital that transfer agents that choose to provide services in these ways maintain the identifying information necessary to make them work effectively, accurately, and securely. The proposed amendments to item eight would help ensure that a transfer agent’s position detail comprises information sufficient to meet the full scope of its regulatory obligations under the transfer agent rules and effectively support its provision of transfer agent services.
2. Master Securityholder File
Existing Rule 17ad–9(b) defines ‘‘master securityholder file’’ as ‘‘the official list of individual securityholder accounts.’’ 138 The rule further provides that ‘‘[w]ith respect to uncertificated securities of companies registered under the Investment Company Act of 1940 (‘‘1940 Act’’), the master securityholder file may consist of multiple, but linked, automated files.’’ 139 The Commission proposes to amend the existing definition of ‘‘master securityholder file’’ to require that it be maintained in electronic form and to remove reference to investment company securities, such that any master securityholder file (not just those related to uncertificated investment company securities) may consist of multiple linked files or systems. The amended definition would further specify that the specific technology, systems, or files that compose the master securityholder file are within the transfer agent’s discretion, provided the transfer agent maintains at all times exclusive control over the master securityholder file.140 The master securityholder file is the authoritative record of who owns an issuer’s securities. It is the list of individual securityholder accounts recognized by the issuer as the official list of record owners of the issuer’s securities and is intended to be synonymous with the record referred to in state corporate law as the ‘‘stockholder ledger’’ or ‘‘stockholder register.’’ 141 Ensuring that it is consistently accurate and reliable is one of the core roles of a transfer agent and fundamental to the prompt and accurate clearance and settlement of securities transactions. In adopting the definition of master securityholder file in 1983, the Commission found that open-end investment companies commonly maintained master securityholder files as multiple, but linked, automated files whereas most other transfer agents did not.142 Specifically, the Commission noted that common industry practice among mutual fund transfer agents at the time was to maintain a group of three or more computer files, commonly linked by the securityholder’s account number and that, taken together, these files contained the required certificate detail as well as other useful account information.143 At the same time, the Commission noted that this was not the practice with respect to ‘‘other securities issues;’’ rather, industry practice at that time was to post certificate detail to a

144 Id.
145 Id.
146 Id.
147See Recordkeeping Requirement for Transfer Agents, Exchange Act Release No. 44227 (Apr. 27, 2001), 66 FR 21648, 21656–57 (May 1, 2021) (discussing the benefits associated with transfer agents adopting electronic recordkeeping). 148See Exchange Act Rule 17ad–9(b), 17 CFR 240.17Ad–9(b). 149 17 CFR 240.17Ad–9(d). 150Rule 17ad–11(a)(1), 17 CFR 240.17Ad– 11(a)(1). 151Rule 17ad–6(b), 17 CFR 240.17Ad–(6)(b). single master securityholder file.144 The Commission stated that ‘‘maintaining a single record containing all critical certificate and account detail simplifies performance of transfer agent functions, contributes to efficient transfer agent operations, and promotes the accuracy of securityholder records.’’ 145 This supported the Commission’s decision to adopt a carve-out for uncertificated securities of investment companies registered under the 1940 Act, but not for other securities issues.146 Contemporary securities industry standards and practices, chief among them information technology standards and the efficiency, reliability, and recoverability of electronic recordkeeping systems, no longer warrant such a delineation. While maintaining the master securityholder file as a single record may have promoted efficiency and accuracy in 1983, when manual, paper-based processes were the standard, that is not the case today. Through its oversight of the transfer agent industry, the Commission understands that most if not all transfer agents now maintain their master securityholder files electronically and that electronic recordkeeping is essential to the efficient operation of both modern transfer agents and the national clearance and settlement system. Compared to paper-based recordkeeping, electronic records provide better accessibility because multiple people can access the same record at the same time or from different locations; better searchability using automated keyword searches and other methods not possible with paper-based records; better security and control through encryption, password protection, access restrictions, logical controls, and automated audit trails that are not possible with paper-based records; and more efficient workflows and enhanced reliability and backup through automation, digital duplication and distribution, and other digital tools not possible with paper-based records.147 To ensure that transfer agent records can benefit from these aspects of electronic recordkeeping compared to paper-based records given the importance of the master securityholder file to protecting investors, promoting the prompt and accurate clearance and settlement of securities transactions, and promoting the safeguarding of funds and securities, the proposed amended definition of master securityholder file would explicitly specify that it be maintained in electronic form. Further, because the existing definition only permits the master securityholder file to consist of ‘‘multiple, but linked, automated files’’ with respect to uncertificated
securities of companies registered under the 1940 Act,148 the proposed amendments also would remove the distinction between investment company securities and other securities to permit transfer agents to maintain their master securityholder files in multiple, linked files or systems with respect to all securities, not just investment company securities. This proposed expansion would make the definition both technology and format neutral while continuing to facilitate the maintenance of an accurate master securityholder file which, in turn, supports the prompt and accurate clearance and settlement of securities transactions and the safeguarding of funds and securities. The provision that transfer agents have discretion regarding the specific technology and systems used, provided the transfer agent maintains at all times exclusive control over the master securityholder file, would provide flexibility while ensuring that the transfer agent maintains exclusive control over, and responsibility for, such a crucial record. The amended definition is designed to be flexible and capable of accommodating future technological developments, provided the standards as set forth in proposed Rule 17ad–7(f) for electronic recordkeeping systems are met. The Commission recognizes that developments in information technology manifest unpredictably and, thus, the proposed definition would not mandate or otherwise endorse a specific electronic format in which the master securityholder file would be required to be maintained. For example, the amended definition would permit a transfer agent to utilize a blockchain or other distributed ledger technology as its master securityholder file, or a component thereof, but it would not mandate it. Rather, the rule’s guiding principle is to ensure that master securityholder files are securely maintained and updated as promptly as possible, regardless of the technology or platform utilized.
3. Control Book
The term ‘‘control book’’ is defined in existing Rule 17ad–9(d) as ‘‘the record or other document that shows the total number of shares (in the case of equity securities) or the principal dollar amount (in the case of debt securities) authorized and issued by the issuer.’’ 149 The term is used in various other of the transfer agent rules. For example, pursuant to existing Rule 17ad–10(e), recordkeeping transfer agents must, among other things, maintain and keep current an accurate control book for each issue of securities (and may not make changes to the control book except upon written authorization from a duly authorized agent of the issuer). Similarly, the definition of ‘‘issuer capitalization’’ in existing Rule 17ad– 11(a)(1) is defined as the market value of the issuer’s authorized and outstanding equity securities as ‘‘determined by reference to the control book and current market prices.’’ 150 The terms ‘‘authorized,’’ ‘‘issued,’’ and ‘‘outstanding’’ securities are also used throughout the transfer agent rules, but not always consistently. For example, as noted above, the existing definition of control book refers only to ‘‘authorized and issued’’ securities but does not explicitly reference ‘‘outstanding’’ securities. In contrast, existing Rule 17ad–6(b) requires transfer agents meeting certain conditions to, among other things, retain documentation showing the total number of shares authorized and ‘‘the total issued and outstanding pursuant to issuer authorization,’’ but does not use the term ‘‘control book.’’ 151 In the Commission’s experience, the lack of consistent terminology can lead to confusion and inconsistent application of the rules, which in turn may negatively impact a transfer agent’s ability to monitor for overissuance and meet its recordkeeping obligations. Accordingly, to ensure that defined terms are used in a consistent manner throughout the transfer agent rules, and therefore are more likely to be applied accurately and consistently by registered transfer agents, the Commission is proposing a series of amendments designed to define certain key terms and use them consistently throughout the rules. To that end, the Commission proposes to amend the definition of ‘‘control book’’ to specify that, in addition to authorized and issued securities, it also must show outstanding securities. Specifically, the proposed definition would provide that ‘‘control book’’ means ‘‘the record or other document

152See proposed Rule 17ad–9(d). As used here, the term record captures any type of record used or contemplated for use by transfer agents (e.g., physical records, digital records, and records existing on a distributed ledger or blockchain). 153The proposed amendments to Rule 17ad–10 would include a new definition of ‘‘overissuance,’’ which would mean an out-of-balance condition wherein the securities issued and outstanding exceed the securities authorized and outstanding, as reflected in the transfer agent’s control book. 154 17 CFR 240.17Ad–9(e) and (f). 155See proposed Rules 17ad–9(e) and (f). 156 17 CFR 240.17Ad–9(g). 157See proposed Rule 17ad–9(g). 158See 17ad–9 through 13 Proposing Release, supra note 9, at 47271. 159Exchange Act Rule 17ad–9(h), 17 CFR 240.17Ad–9(h) (emphasis added). 160 2015 Concept Release, supra note 4, at Section IV.A.3 (discussing definition of ‘‘recordkeeping transfer agent’’). that shows the total number of shares (in the case of equity securities) or the principal dollar amount (in the case of debt securities) of an issuer’s authorized, issued, and outstanding securities.’’ 152 As discussed in more detail below, the term ‘‘authorized securities’’ will be defined in a new addition to Rule 17ad–
9. It would represent the maximum
number of securities that may be issued pursuant to the issuer’s governing documents. The term ‘‘issued securities’’ refers to the total number of securities (or principal dollar amount in the case of debt securities) that have been granted to stockholders or employees, or that are held in the issuer’s treasury (because they have not been sold or granted yet, or because the issuer repurchased them, often referred to as treasury shares). Outstanding securities are the portion of issued securities that have actually been distributed to investors or employees (i.e., issued securities, less any outstanding treasury shares). As discussed below in connection with the proposed amendments to Rule 17ad–10, knowing and tracking the total number of outstanding securities supports a transfer agent’s ability to monitor for overissuances.153 Yet the existing definition of control book does not reference outstanding securities. The proposed amendment would specify that the control book must include all three categories—authorized, issued, and outstanding—as all three are relevant to transfer agents’ efforts to monitor against overissuance and maintain accurate records that are necessary to protect investors, promote the prompt and accurate clearance and settlement of securities transactions, and promote the safeguarding of funds and securities.
4. Credit and Debit
Existing Rule 17ad–9(e) defines ‘‘credit’’ as ‘‘an addition of appropriate certificate detail to the master securityholder file,’’ and existing Rule 17ad–9(f) defines ‘‘debit’’ as ‘‘a cancellation of appropriate certificate detail from the master securityholder file.’’ 154 Consistent with the proposed amendments to Rule 17ad–9(a) above, the Commission also proposes to replace references to ‘‘certificate detail’’ in both definitions with ‘‘position detail’’ to ensure that the definitions apply equally to certificated and uncertificated securities and conform the definitions to the proposed amendments to Rule 17ad–9(a), as discussed above.155
5. Record Difference
Existing Rule 17ad–9(g) states that a ‘‘record difference’’ occurs when either:
‘‘(1) The total number of shares or total principal dollar amount of securities in the master securityholder file does not equal the number of shares or principal dollar amount in the control book; or (2) The security transferred or redeemed contains certificate detail different from the certificate detail currently on the master securityholder file, which difference cannot be immediately resolved.’’ 156 The Commission is proposing to add a third category of record difference as paragraph (g)(3):
position detail in the master securityholder file that is inconsistent with the history of transactions in the transfer journal.157 Additionally, consistent with the proposed amendments to Rule 17ad–9(a) above, the Commission also proposes to replace references to ‘‘certificate detail’’ in paragraph 17ad–9(g)(2) with ‘‘position detail’’ to ensure that the definition applies equally to certificated and uncertificated securities and conform the definition to the proposed amendments to Rule 17ad–9(a), as discussed above. Discrepancies or inaccuracies in the master securityholder file can lead to errors in vote counts for corporate actions, missed or incorrect dividend, interest, or other payments to securityholders, errors in other corporate action entitlements, unauthorized or overissuance of securities, improper escheatment, or financial, regulatory, or reputational harm for investors, issuers, and transfer agents. Given the importance of maintaining accurate securityholder records, the term ‘‘record difference’’ should encompass any type of inaccuracy in the securityholder files, regardless of the cause or source of the inaccuracy. The intention in defining the term ‘‘record difference’’ was to ‘‘include any type of record difference or inaccuracy in the securityholder files, whether occurring, among other things, as the result of a physical overissuance of shares or clerical or other posting errors.’’ 158 Based on the Commission’s experience supervising and monitoring the transfer agent industry, the two situations captured by the existing definition of record difference are insufficient to capture other means by which an inaccuracy could be introduced to the master securityholder file. The proposed amendment to the definition of ‘‘record difference’’ would require transfer agents to track and resolve any discrepancy or inaccuracy in the master securityholder file as compared to the control book, transfer journal, or the physical security itself, which can lead to recordkeeping errors that, as discussed above, harm investors and compromise the integrity and efficient functioning of the national clearance and settlement system. A discrepancy between the transfer journal and the master securityholder file could mean that transfers of securities are not recorded in the master securityholder file, potentially leading to some investors not being recorded as registered owners of securities or not being credited with the correct amount of securities. The addition of this third category of record difference also seeks to resolve inconsistencies between the master securityholder file and the transfer journal, which would help ensure that transfer agents identify and resolve discrepancies in their records that could otherwise lead to inaccurate securityholder records. This addition would reflect the importance of the transfer journal, which is proposed to be defined for the first time in Rule 17ad– 9(n) as discussed below, as a key record for tracking
changes in position detail.
6. Recordkeeping Transfer Agent
Existing Rule 17ad–9(h) defines ‘‘recordkeeping transfer agent’’ as ‘‘the registered transfer agent that maintains and updates the master securityholder file.’’ 159 As the Commission stated in the 2015 Concept Release, ‘‘[a]ll other transfer agents associated with a given issue of securities are defined as ‘co￾transfer agents,’ which are registered transfer agents that transfer securities but do not maintain and update the master securityholder file.’’ 160 In the Commission’s view, a single registered transfer agent should be responsible for maintaining and updating the master securityholder file for a given issue. A given issue of

161See proposed Rule 17ad–9(h).
162See proposed Rule 17ad–9(m).
163See, e.g., 17 CFR 240.17Ad–9(d) ([T]he total number of shares . . . authorized by the issuer.) (emphasis added). 164See proposed Rule 17ad–9(n). 165See CFR 240.17Ad–6(a)(10). 166See CFR 240.17Ad–10(a)(3). 167See proposed Rule 17ad–9(o). securities would mean, for purposes of this proposed rule, all of the securities which an issuer has issued and which are intended to be fungible, such as all shares of stock of a given class. As discussed in more detail below, any other requirement would create an unreasonably high risk of errors in master securityholder files, thereby negatively impacting investors and the national clearance and settlement system. Accordingly, the Commission is proposing to amend the definition of ‘‘recordkeeping transfer agent’’ to mean ‘‘the registered transfer agent that maintains and updates the master securityholder file for an issue of securities,’’ and specify that ‘‘[t]here can be only one recordkeeping transfer agent for a given issue of securities.’’ 161 This requirement is necessary to ensure that the identity of the one registered transfer agent responsible for both maintaining and updating the master securityholder file is clear and unambiguous to issuers, regulators, and other transfer agents. In the Commission’s experience supervising transfer agents, when multiple entities are responsible for the constituent actions necessary for maintaining and updating the master securityholder file, errors increase, effective communication and clear lines of responsibility decrease, and efficiency, accuracy, and security suffer. Further, transfer agents splitting the recordkeeping function into multiple parts and spreading them among multiple entities can increase the likelihood of recordkeeping errors, compliance failures, and investor harm. Avoiding such deleterious outcomes with respect to such a vital record as the master securityholder file is necessary to ensure the safe and efficient functioning of the national clearance and settlement system, protect investors, and advance the public interest. By specifying that there can be only one recordkeeping transfer agent for a given issue of securities, the proposed amendment will help avoid ambiguity in situations where multiple transfer agents are involved in servicing an issue and ensure that issuers, investors, regulators, and transfer agents themselves have a clear and unambiguous understanding that a single transfer agent must be responsible for maintaining and updating the master securityholder file for a given issue. The proposed amendment would not, however, prevent a recordkeeping transfer agent from utilizing a service company or co-transfer agent, or multiple linked files or systems, or a particular technology, as the recordkeeping transfer agent nevertheless remains responsible for maintaining and updating the master securityholder file for a given issue.
C. New Definitions To Be Added to Rule
17ad–9

1. Authorized Securities
   The Commission proposes to add a new definition for ‘‘authorized securities’’ as paragraph (m) of Rule 17ad–9. The proposed definition would provide that ‘‘authorized securities’’ means ‘‘the maximum number of shares of equity securities or principal amount of debt securities or number of units if relating to any other kind of security that can be issued by an issuer as authorized in the issuer’s certificate of incorporation, charter, bond indenture, or similar governing document.’’ 162 A very similar term is already used (although it has not been defined) in connection with the definition of control book as one of the elements that must be tracked as part of a transfer agent’s control book.163 As such, adopting a formal definition of this term would provide clarity and would help ensure consistent interpretation and application of the term as it is used in the Commission’s transfer agent rules. The definition being proposed herein is consistent with the definition as it has long been used and understood throughout the securities industry.
2. Transfer Journal
   The Commission proposes to add a new definition for ‘‘transfer journal’’ in Rule 17ad–9(n). The proposed definition would provide that ‘‘transfer journal’’ means ‘‘a record of all issuances, cancellations, transfers, distributions of cash or securities, additions and cancellations of position detail, and other information necessary to enable the transfer agent to track and document changes in security ownership, the movement of securities, and other changes.’’ 164 The term ‘‘transfer journal’’ is referenced in various transfer agent rules but has not been previously defined by the Commission. For example, Rule 17ad–6 requires every registered transfer agent to make and keep current a copy of any transfer journal prepared by a registered transfer agent.165 Additionally, in Rule 17ad–10, transfer journals are referenced as a communication mechanism between co￾transfer agents to a recordkeeping transfer agent to post certificate detail to the master securityholder file.166 Transfer journals are typically maintained by transfer agents to document all transactions affecting securities ownership, helping them track changes in ownership, resolve record differences, and ensure accuracy of the master securityholder file, especially when multiple transfer agents help service a single issue. For example, as noted above, a co-transfer agent that transfers a certificated security but does not maintain and update the master securityholder file would document the transfer in its transfer journal and then provide the transfer journal to the recordkeeping transfer agent, who would, subsequent to receiving the transfer journal, update the master securityholder file with the credit, debit, and other relevant information from the co-transfer agent’s transfer journal. Transfer journals are separate and distinct from a master securityholder file. Whereas a master securityholder file establishes the list of an issue’s current registered owners and can only be maintained by the recordkeeping transfer agent as discussed above, a transfer journal is a time-sequenced record of all changes in position detail and can be maintained by any registered transfer agent as a source of information to track and document the changes in security ownership, the movement of securities, and other changes that are processed by that specific transfer agent. Based on its oversight of the transfer agent industry, the Commission understands that the proposed definition is consistent with most transfer agents’ understanding and use of the term transfer journal. By codifying that common understanding of the term within the Commission’s transfer agent rules, the proposed definition would ensure consistent application of the term, provide specificity to the industry regarding the information that forms a transfer journal, and with the proposed amendments to Rule 17ad–6(a)(10) discussed below, ensure that all registered transfer agents are maintaining this key record.
3. Presentor
   The Commission proposes to add a new definition for ‘‘presentor’’ in Rule 17ad–9(o). The proposed definition would provide that ‘‘presentor’’ means the registered securityholder, the entitlement holder, and their authorized agents.167

168See Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50, at 32404. 169 17 CFR 240.17Ad–1(a)(1)(i) (emphasis added). 170UCC § 8–401. 171See UCC §§ 8–401 and 8–402. The term ‘‘presentor’’ is used throughout the transfer agent rules in connection with the person ‘‘presenting’’ an item for transfer to a transfer agent. The presentor for a transfer is typically the registered owner, a purchaser, or their authorized agent, such as a broker, who presents a certificated security, a stock power, or, in the case of uncertificated securities, an instruction, to a transfer agent. It is a critical component of the definition of the term ‘‘item,’’ which as noted above is the basic unit for which the turnaround and other processing requirements apply and is an essential term used throughout the transfer agent rules.168 For example, Rule 17ad– 1(a)(1)(i) defines an item as ‘‘. . .an instruction to a transfer agent which holds securities registered in the name of the presentor to transfer or to make available all or a portion of those securities.’’ 169 Despite its importance, the term ‘‘presentor’’ is not defined in the transfer agent rules. The proposed definition would specify and thereby limit who may present items for transfer and would align the definition with the Uniform Commercial Code’s use of the term ‘‘appropriate person,’’ which provides a well-established legal framework for determining who is responsible for directing the transfer of securities. For example, under the Uniform Commercial Code, if a presentment or instruction is made by an ‘‘appropriate person’’ 170 and includes appropriate documentation, the transfer agent has a duty to register the transfer.171 This alignment would promote consistency between the federal transfer agent rules and general principles of commercial law and would help ensure that transfer agents have clear requirements regarding whose instructions they may rely upon when processing transfer requests.
4. Request for Comment
The Commission requests comments on all aspects of the proposed amendments to the definitions in Rules 17ad–1 and 17ad–9. In particular, the Commission requests comments on the following:
25. Are the proposed amendments to
the definitions in Rules 17ad–1 and 17ad–9 appropriate and sufficient to modernize the foundational terminology governing transfer agent operations? Are there any gaps, inconsistencies, or unintended consequences that may remain or result from the proposed amendments, or that the Commission should address?
26. Do the proposed amendments
strike the appropriate balance between providing clear and specific requirements and maintaining sufficient flexibility to accommodate current and future technological developments? If not, what modifications would better achieve this balance?
27. Are there any terms used
throughout the transfer agent rules that are not addressed in these proposed amendments but that should be defined or clarified? If so, please identify those terms and explain why definitions or clarifications are needed.
28. Are there any international
standards, practices, or regulatory frameworks that the Commission should consider in connection with the proposed amendments to the definitions in Rules 17ad–1 and 17ad–9? If so, please identify those standards, practices, or frameworks and explain how they should inform the Commission’s approach.
29. Are the proposed amendments to
the definition of ‘‘item’’ appropriate and sufficient to ensure the definition applies to all forms of securities and all methods by which transfer instructions are submitted? Should any additional categories be included in or excluded from the definition? Is the proposed addition of subsection (iv), covering transfer instructions submitted through DTC’s DWAC service or functionally similar services operated by a central securities depository, appropriate? Does the phrase ‘‘functionally similar service’’ provide sufficient clarity, or should the Commission provide additional guidance or examples of what constitutes a functionally similar service?
30. Does the proposed definition of
‘‘item’’ adequately capture transfer instructions submitted through blockchain-based or other distributed ledger technology platforms? Are there specific characteristics of these platforms that the Commission should address in the definition or in accompanying guidance?
31. Are the proposed amendments to
the definition of ‘‘receipt’’ appropriate? Would these amendments provide sufficient clarity regarding when items and other communications are considered to be received by transfer agents?
32. Should the proposed definition of
‘‘receipt’’ address situations where a transfer agent’s electronic systems are unavailable due to technical failures, cyberattacks, or other disruptions? For example, should the definition specify how receipt is determined when a transfer agent’s systems are temporarily offline or when an electronic transmission is delayed due to technical issues outside the transfer agent’s control?
33. Is the proposed amendment to the
definition of ‘‘routine’’ appropriate? Would replacing the reference to ‘‘certificate’’ with ‘‘security’’ in paragraph (i)(2) of the definition provide sufficient clarity regarding its application to both certificated and uncertificated securities? In light of the proposed rescission of Rule 17ad–4, should paragraph (i)(5) of the definition of ‘‘routine’’ be amended so that redemptions or exchanges of investment company shares would be considered routine items? Should any other changes be made to this definition?
34. Are the proposed amendments to
replace ‘‘certificate detail’’ with ‘‘position detail’’ throughout Rules 17ad–1 and 17ad–9 appropriate? Is the proposed expanded list of information to be included in position detail appropriate?
35. Would the proposed amendment
to replace ‘‘certificate detail’’ with ‘‘position detail’’ materially affect the way transfer agents will interpret and comply with rules that the Commission proposes to amend to include the latter term? For example, would the inclusion of position detail in a particular rule increase the time and cost burden it may require to comply with an existing or proposed rule?
36. Are the proposed amendments to
expand the definition of ‘‘position detail’’ to include, among other things, a unique identifier for securities appropriate? Are CUSIP and FIGI appropriate identification numbers to refer to as examples for both traditional and tokenized securities? If not, what alternative identification numbers or systems should be included, and why? Are there any specific considerations or challenges associated with using CUSIP or FIGI for certain types of securities, such as tokenized securities? Is it possible for a security to have more than one unique identifier and if so, should the Commission’s rules address which unique identifier registered transfer agents should be required to include in their records? Should transfer agents be required to record certificate numbers for certificated securities?
37. In light of advancements in
technology and changes in industry practices, are there any specific items currently required to be included in the definition of ‘‘position detail’’ that are less relevant or obsolete today? Are there particular technologies or systems

used by transfer agents that render certain aspects of the ‘‘position detail’’ definition unnecessary, redundant, or unworkable? Should any additional information be required or should any of the proposed requirements be modified to reflect any information that has become less relevant in light of modernization (e.g., issue/cancellation date)? Should any additional information be required or should any of the proposed requirements be modified to reflect any information that has become more relevant in light of modernization (e.g., wallet address as the primary identifier of record for tokenized securities)?
38. Is the proposed amendment to
Rule 17ad–9(a)(3) regarding ‘‘position detail’’ to replace the term ‘‘registration’’ with a description of the specific information that constitutes registration (i.e., the securityholder’s full name and any other relevant identifying, titling, or formatting information necessary to accurately identify the specific securityholder to the exclusion of other securityholders) appropriate and sufficient? Does the proposed description adequately capture all of the information that should be included in a securityholder’s registration, including for all types of securityholders and ownership structures? Is the proposed description sufficiently flexible to enable technological innovation?
39. Would an alternative approach to
a securityholder’s identifying information in Rule 17ad–9(a)(3) of the definition of ‘‘position detail’’ be more appropriate? Specifically, should Rule 17ad–9(a)(3) use a principles-based approach that would require only the information reasonably necessary to accurately identify the specific securityholders to the exclusion of other securityholders? If so, is there any additional information that a transfer agent should collect? As another alternative, should Rule 17ad–9(a)(3) require that the transfer agent collect some unique identifying information that can be tied to an individual’s name and address, which could include, for example, the name and physical mailing address or some other unique identifier?
40. If a securityholder does not
provide a transfer agent with the securityholder’s full name and physical mailing address, would the securityholder still be considered a registered securityholder pursuant to applicable law? Does it depend on variations in state law and/or the types of securities at issue? Is there any information which a securityholder, seeking to be a direct, registered holder of a security must provide to a transfer agent to establish the securityholder’s ownership of the security pursuant to applicable law?
41. Would an alternative approach to
Rule 17ad–9(a)(4) regarding the definition of ‘‘position detail’’ be more appropriate? Specifically, should Rule 17ad–9(a)(4) of the definition of ‘‘position detail’’ omit the requirement to collect, at a minimum, a securityholder’s physical mailing address as contact information? Should Rule 17ad–9(a)(4) be revised to use a principles-based approach that would require the collection of only the information reasonably necessary to establish contact with the securityholder? Should Rule 17ad– 9(a)(4) include some other minimum requirement for contact information, such as an email address, phone number, and digital wallet address? Is there any information in addition to contact information that a transfer agent should collect?
42. Would a transfer agent’s failure to
collect a securityholder’s full name and physical mailing address affect the transfer agent’s ability to comply with any other applicable law or regulations? Would a transfer agent’s failure to collect a securityholder’s full name and physical mailing address affect any other person’s ability to comply with any other applicable law or regulations? If so, please specify the applicable law or regulations and how a transfer agent’s failure to collect a securityholder’s full name and physical mailing address would affect compliance.
43. Are there any other entities or
persons that rely on the securityholder information collected by transfer agents who would be affected by a transfer agent’s failure to collect a securityholder’s full name and physical mailing address? If so, please identify the entities or persons and explain how they would be affected by a transfer agent’s failure to collect a securityholder’s full name and physical mailing address.
44. Does the collection of full name
and physical mailing address create circumstances that increase the likelihood of unauthorized disclosure of personally identifying information or present other risks to investors?
45. Is the proposed amendment to
require that master securityholder files be maintained in electronic form appropriate? Would the proposed conditions within the definition of ‘‘master securityholder file’’ be sufficient to ensure the integrity and reliability of the master securityholder file? Should the Commission impose different or additional conditions on the maintenance of the master securityholder file? If so, please explain what additional conditions should be imposed and why, and whether any such conditions should apply uniformly to all transfer agents or should they vary based on the size, complexity, or type of securities handled by the transfer agent?
46. Is the proposed amendment to
specify that there can be only one recordkeeping transfer agent for a given issue of securities appropriate? Are there situations currently where two or more registered transfer agents effectively serve as the recordkeeping transfer agent for a given issue of securities? Would this proposed amendment affect any types of securities or products in particular, such as exchange-traded funds or tokenized securities?
47. Is the Commission’s proposed
explanation that an issue of securities means, for purposes of identifying the recordkeeping transfer agent, all of the securities which an issuer has issued and which are intended to be fungible, such as all shares of stock of a given class, appropriate? Are there other meanings of the term ‘‘issue’’ that the Commission should consider? Should the Commission distinguish securities that are the same class but issued in different formats, such as uncertificated and tokenized?
48. Could the use of multiple linked
files or systems for maintaining the master securityholder file lead to situations where more than one registered transfer agent is effectively acting as the recordkeeping transfer for a given issue of securities?
49. Would an alternative, principles￾based approach be more appropriate for
recordkeeping transfer agents? For example, should the Commission allow more than one transfer agent to serve as the recordkeeping transfer agent for a given issue of securities so long as each recordkeeping transfer agent remains equally responsible and liable for the accuracy of the master securityholder file as a whole and is able to produce the entire master securityholder file upon request? Are there any other conditions, limitations, or situations the Commission should consider if more than one transfer agent were to serve as a recordkeeping transfer agent for a given issue of securities? Should the Commission allow a recordkeeping transfer agent to not serve as a recordkeeping transfer agent for the entire issue of securities?
50. Are there specific requirements or
conditions that should apply to the use of blockchain or other distributed ledger technology as a master securityholder file or a component thereof?
51. Are the proposed new definitions
for ‘‘authorized securities,’’ ‘‘transfer

172Routine items are defined in Rule 17ad–1(i), 17 CFR 240.17Ad–1(i). 173See 17 CFR 240.17Ad–2(a). However, a transfer agent that is exempt under Rule 17ad–4(b) and that has received 30 days notice of depository￾eligibility of an issue for which it performs transfer agent functions must turnaround 90% of all routine items received each month within five business days of receipt. See Rule 17ad–2(e)(2), 17 CFR 240.17Ad–2(e)(2). 174See 17 CFR 240.17Ad–2(a). 175See 17 CFR 240.17Ad–2(e). 176See id. 177See 17 CFR 240.17Ad–2(b). 178See 17 CFR 240.17Ad–2(c). 179See 17 CFR 240.17Ad–2(d). 180See 17 CFR 240.17Ad–2(f). 181See 17 CFR 240.17Ad–2(g). 182Routine items are defined in Rule 17ad–1(i), 17 CFR 240.17Ad–1(i). 183See 17 CFR 240.17Ad–2(a). However, a transfer agent that is exempt under Rule 17ad–4(b) and that has received 30 days notice of depository￾eligibility of an issue for which it performs transfer agent functions must turnaround 90% of all routine items received each month within five business days of receipt. See Rule 17ad–2(e)(2), 17 CFR 240.17Ad–2(e)(2). 184See 17 CFR 240.17Ad–2(a). 185See proposed Rule 17ad–2(a). 186 17 CFR 240.17Ad–2(b) and (g). 187See Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50. journal,’’ and ‘‘presentor’’ appropriate? Should these definitions be modified in any way?
52. What implementation challenges,
if any, would transfer agents face in complying with the proposed amendments to the definitions? What transition period would be appropriate, and would phased implementation of certain amendments be beneficial? D. Amendments to Rule 17ad–2 Rule 17ad–2 sets processing performance standards for transfer agents. Under the rule, transfer agents who are not acting as a registrar must turnaround within three business days of receipt at least 90% of all ‘‘routine items’’ 172 received by the transfer agent during any month.173 The rule specifies that items received at or before noon on a business day shall be deemed to have been received at noon on that day, and items received after noon on a business day or on a day that is not a business day shall be deemed to have been received at noon the next business day.174 Non-routine items must receive ‘‘diligent and continuous attention’’ and must be ‘‘turned around as soon as possible.’’ 175 Routine items that are not turned around within three business days nevertheless must be ‘‘turned around promptly.’’ 176 Registered transfer agents acting as an outside registrar must ‘‘process’’ at least 90% of all items received during any given month no later than noon of the next business day for any item received after noon and no later than the opening of business on the next business day for those items received at or before noon.177 If a transfer agent fails to meet the performance standards for turnaround set forth in Rule 17ad–2 with respect to any month, it must notify the Commission and the transfer agent’s ARA if it is not the Commission within 10 business days of the end of the month, provide certain turnaround data regarding specific numbers and percentages of items, explain the reasons for the failure, identify what steps have been taken to prevent future failures, and provide certain data regarding routine items that have not been turned around and have been in the transfer agent’s possession for ‘‘more than four business days.’’ 178 Similar notification requirements apply where a transfer agent acting as an outside registrar fails to meet the processing performance standards.179 If a transfer agent receives items at locations other than the premises at which it performs transfer agent functions, the transfer agent must have appropriate procedures to assure, and must assure, that items are forwarded to such premises promptly.180 Rule 17ad–2(g) requires a registered transfer agent that receives processed items from an outside registrar to have appropriate procedures to assure, and to assure, that such items are made available promptly to the presentor.181 The Commission is proposing several targeted amendments to the requirements regarding turnaround and processing, as well as conforming changes to the related notice requirements. In addition, the Commission is proposing to eliminate the turnaround provision for certain exempt transfer agents in light of the proposed rescission of Rule 17ad–4 discussed in
Section III.F below. We discuss these proposed changes in more detail below. The Commission is not proposing any changes to paragraphs (f) and (g) of Rule 17ad–2.

1. Turnaround and Processing of
   Routine Items
   Existing Rule 17ad–2(a) requires transfer agents who are not acting as an outside registrar to turnaround within three business days of receipt at least 90% of all ‘‘routine items’’ 182 received by the transfer agent during any month.183 The rule specifies that items received at or before noon on a business day shall be deemed to have been received at noon on that day, and items received after noon on a business day or on a day that is not a business day shall be deemed to have been received at noon the next business day.184 The Commission is proposing to amend Rule 17ad–2(a) to require registered transfer agents (except when acting as an outside registrar) to establish, maintain, and enforce written policies and procedures reasonably designed to ensure that the transfer agent turns around all routine items received for transfer within the shorter of one business day or the time period specified by Rule 15c6–1(a) under the Exchange Act.185 The proposed rule would eliminate the existing provision that provides for a noon cutoff in determining when an item is received. Instead, pursuant to the proposed amended definition of receipt in Rule 17ad–1 discussed above, an item would be considered to be received on the business day it is received by the transfer agent. Thus, an item received at any point on a business day would be considered to be received on that day. In determining whether policies and procedures are reasonably designed, transfer agents would likely need to consider various factors, including their size, operational complexity, the nature and scope of services provided, technological capabilities, and evolving industry standards and practices, among other things. Similarly, existing Rule 17ad–2(b) requires transfer agents acting as outside registrars to process at least 90% of all items, other than certain nonroutine items, received during a month by the open of business on the next business day or by noon of the next business day, depending on the time of day an item was received.186 As with the proposed amendments to paragraph (a), the Commission is proposing to amend Rule 17ad–2(b) to require transfer agents acting as an outside registrar to establish, maintain, and enforce written policies and procedures reasonably designed to ensure that the transfer agent processes all items received within the existing time frames specified in the rule. The remaining provisions of paragraph (b), including the exception from the definition of ‘‘items received’’ for items enumerated in Rule 17ad–1(i)(5), (6), (7), or (8), would remain the same. The Commission recognizes that these proposed amendments would be a significant change from the existing requirement to turn around within three business days 90% of all routine items received during a given month and to process by the next business day 90% of all applicable items received by an outside registrar. However, the existing rule was adopted in 1977.187 At that

188See generally Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50; see also Proposal to Adopt Rules 17Ad–1, 17Ad–2, 17Ad–3, 17Ad– 4 and 17Ad–5 under the Securities Exchange Act of 1934, Exchange Act Release No. 12440 (May 12, 1976), 41 FR 22595 (June 4, 1976), pertaining to certificate turnaround time, reporting requirements related thereto, response time for confirmation requests and other correspondence and recordkeeping requirements for registered transfer agents; Regulation of Transfer Agents, Exchange Act Release No. 13293 (Feb. 24, 1977), 42 FR 12191 (Mar. 3, 1977) (‘‘Rule 17ad–1 through 17ad–7 Re￾Proposing Release’’). 189For a description of the clearance and settlement process for immobilized and uncertificated securities, see 2015 Concept Release, supra note 4, at Section III.B. 190 17 CFR 240.15c6–1(a). 191See 17 CFR 240.17Ad–2(c). 192See 17 CFR 240.17Ad–2(d). time, nearly all securities were certificated and turnaround was a complicated and time-consuming manual process, often involving multiple parties. The three-day turnaround and 90% threshold requirements in paragraph (a) were tailored to accommodate this complicated and time-consuming manual process.188 Today, nearly all securities are either immobilized at DTC or fully uncertificated, and turnaround is a significantly more streamlined process predominantly effected through electronic debits and credits to the parties’ respective book-entry securities accounts.189 Further, as technology has advanced, so too have transfer agents’ technological and operational capabilities. Ticket windows and couriers have been replaced with electronic communications, high fidelity scans, and reliable overnight delivery services, manual processes have been automated, and efficiency in general has vastly improved. The Commission understands that, with these advancements, the vast majority of transfer agents now regularly turn around and process routine items within one business day or less, even for certificated securities. Further, the standard securities settlement cycle for most broker-dealer securities transactions is currently one day following the trade date, or T+1.190 Linking the turnaround requirement for transfer agents to the existing settlement cycle for most broker-dealer securities transactions will help ensure that most investors’ securities transactions settle within the same time frame, regardless of whether the investor holds in street name (i.e., through a broker-dealer) or in registered form (i.e., with a transfer agent). Because turnaround and processing times have improved since the adoption of the rule, it is no longer necessary to require a particular percentage of compliance by a specified time to accommodate the time needed for manual turnaround and processing. Instead, the proposed amendments would require written policies and procedures reasonably designed to ensure the timely turnaround of all routine items and processing of all applicable items. Based on the
Commission’s experience regulating transfer agents, and as discussed above, most transfer agents either regularly turn around or process, or are capable of turning around or processing, nearly all applicable items within a business day or less. The proposed policies and procedures approach would promote the prompt and accurate clearance and settlement of securities transactions by requiring transfer agents to develop written policies and procedures reasonably designed to accomplish compliance without imposing a de facto strict liability standard that would result in a rule violation for a single missed turnaround or processing deadline. As discussed in this release, the Commission is proposing to rescind Rule 17ad–4, which exempts small transfer agents from the turnaround requirements of existing Rule 17ad–2. In light of this rescission, the Commission is proposing to delete the turnaround provision for certain exempt transfer agents in Rule 17ad–2(e)(2). As a result, all registered transfer agents would be subject to the turnaround requirement for routine items in proposed Rule 17ad–2(a). As discussed in more detail below, given the operational capabilities of modern transfer agents, including small transfer agents, and the importance of timely turnaround, removal of the exemption for small transfer agents is appropriate to promote the prompt and accurate clearance and settlement of securities transactions.
2. Notice Requirements
Existing Rule 17ad–2(c) requires transfer agents that fail to comply with Rule 17ad–2(a) with respect to any month to notify the Commission and the transfer agent’s ARA if it is not the Commission within 10 business days of the end of the month, provide certain data regarding the number and percentages of items that the transfer agent failed to turn around in accordance with Rule 17ad–2(a), explain the reasons for the failure, identify what steps have been taken to prevent future failures, and provide certain data regarding routine items that have not been turned around and have been in the transfer agent’s possession for ‘‘more than four business days.’’ 191 Existing Rule 17ad–2(d) provides similar notification requirements when a transfer agent acting as an outside registrar fails to comply with Rule 17ad–2(b).192 As discussed above, the Commission is proposing to replace the metrics￾based 90% turnaround and processing requirements in paragraphs (a) and (b) with a requirement to have written policies and procedures reasonably designed to ensure 100% compliance. Given these amendments, it no longer makes sense to tie the notification provisions in paragraphs (c) and (d) to a ‘‘failure to comply’’ with paragraphs (a) and (b). Accordingly, the Commission is proposing to amend Rules 17ad–2(c) and (d) to require registered transfer agents to provide the required notifications when they fail to turn around or process more than three percent of applicable items within the time frames specified in proposed Rule 17ad–2(a) and Rule 17ad–2(b), respectively. Based on our experience supervising transfer agents and monitoring the notices required under existing Rule 17ad–2, imposing a three percent threshold for the notification requirements in paragraphs (c) and (d) is reasonable and appropriate. First, few transfer agents fail to turn around or process in a timely manner 90% of applicable items received each month. Rather, as noted above, the vast majority of transfer agents regularly turn around and process nearly 100% of all applicable items within one business day or less, even for certificated securities, or are readily capable of doing so. Second, modern transfer agents process significantly more items per month than did transfer agents in 1977, when Rule 17ad–2 was adopted. Given the significant improvements in processing capabilities and the significant increases in transaction volume discussed above, establishing a three percent threshold would ensure the Commission and other ARAs receive the early warning the rule is designed to provide, but only in situations where the turnaround failure potentially indicates a serious performance issue.
3. Conforming Changes and Turnaround
of Non-Routine Items
Existing Rule 17ad–2(e)(1) requires that all routine items not turned around within three business days of receipt as required by paragraph (a) and all items not processed within the periods required by paragraph (b) shall be turned around promptly and ‘‘all nonroutine items shall receive diligent

193Exchange Act Rule 17ad–2(e)(1), 17 CFR 240.17Ad–2(e)(1). 194See proposed Rule 17ad–2(e)(2). 195See proposed Rule 17ad–2(h). 196See proposed Rule 17ad–2(h)(1) through (4). and continuous attention and shall be turned around as soon as possible.’’ 193 As discussed above, the Commission is proposing to replace the metrics￾based 90% turnaround and processing requirements in paragraphs (a) and (b) with a requirement to have written policies and procedures reasonably designed to ensure the turnaround and processing of all applicable items within the time frames specified in those rules. Consistent with those proposed amendments, the Commission is proposing conforming changes to Rule 17ad–2(e)(1) to require that all routine items not turned around within the time specified in paragraph (a) of this rule and all items not processed within the periods specified in paragraph (b) of this rule shall be turned around promptly. The Commission is not proposing any changes to the provision in paragraph (e)(1) regarding the turnaround of non￾routine items.
4. Written Notice for Rejected Items
Proposed Rule 17ad–2(e)(2) would require every registered transfer agent to provide a written notification to the presentor for any item rejected by the transfer agent that identifies the rejected item, the reasons for rejection, and the specific actions the presentor must undertake for the item to be accepted by the transfer agent for processing or turnaround to be completed. This written notification must be provided (i.e., sent) within one business day of receipt of any item that is rejected by the transfer agent.194 Existing Rule 17ad–2 does not require transfer agents to notify a presentor if an item is rejected by the transfer agent. This means that an investor, intermediary, or other presentor may not be aware that an item has been rejected by the transfer agent and therefore will not be transferred. Based on the Commission’s supervisory experience, individual investors, broker￾dealers, and other presentors would benefit by being both notified that an item has been rejected by the transfer agent and provided the reasons for the rejection. In many instances, the missing or additional information or documentation that would make the item acceptable could be provided by the presentor if the presentor knew that such information or documentation was required. In addition, the proposed rule would require transfer agents to provide the written notification only for items rejected by the transfer agent. This means that, if the transfer agent is not responsible for the rejection, then the transfer agent would not be required to provide a written notification to the presentor. The notification requirements of proposed Rule 17ad–2(e)(2) described above are designed to address these issues and ensure that presentors are aware of and have an opportunity to cure any defects in the items they present so that turnaround can be accomplished as quickly and efficiently as possible, and settlement delays can be minimized, thereby promoting the prompt and accurate clearance and settlement of securities transactions.
5. Instructions for Filing Certain
Required Information With ARAs Rule 17ad–2(h) provides registered transfer agents with instructions regarding how to file the notices required by Rules 17ad–2(c) and (d) with the ARAs. Rule 17ad–2(h) is also referenced in Rules 17Ad–11 and 17ad– 13, which require registered transfer agents to file certain reports with the ARAs, and in the proposed changes to Rule 17ad–7, which would require registered transfer agents to file certain agreements with the ARAs. As a result, the Commission is proposing to amend Rule 17ad–2(h) to state that any notice required by this section or any report required by Rules 17Ad–11 or 17ad–13, or any written agreement required by Rule 17ad–7(h) shall be filed pursuant to the instructions in Rule 17ad–2(h)(1) through (4).195 In light of the proposed rescission of Rule 17ad–4 discussed below, the Commission is also proposing to delete the existing reference to notices required under existing Rule 17ad–4. In addition, the Commission proposes to replace the word ‘‘notice’’ with ‘‘information’’ in Rule17ad–2(h)(1) through (4) to broaden the reference to the types of information that is required to be filed with the ARAs and to replace the existing filing instructions for each ARA with email addresses for each ARA to modernize and simplify the filing instructions.196 Specifically, proposed Rule 17ad– 2(h)(1) would require that any information required to be filed with the Commission shall be filed to the following dedicated email address, TransferAgentFiling@sec.gov. Proposed Rules 17ad–2(h)(2) through (4) would similarly provide that any information required to be filed with the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation shall be filed to dedicated email addresses. Providing for the electronic filing of this required information to dedicated ARA email addresses would be in the public interest as it would remove the burden on transfer agents of preparing and submitting the required information in paper and submitting multiple copies to different ARA office locations, depending on the ARA. In addition, the proposed change from paper filings to email submissions would increase efficiency and decrease costs for transfer agents with respect to their filing obligations, as well as facilitate Commission oversight of the filings by streamlining the process of tracking, reviewing, storing, and retrieving the email submissions made by transfer agents.
6. Request for Comment
The Commission requests comments on all aspects of the proposed amendments to Rule 17ad–2. In particular, the Commission requests comments on the following:
53. Is a policies and procedures
requirement for turnaround and processing appropriate? Is a policies and procedures requirement preferable to a prescriptive performance standard that would require turnaround and processing to be completed within a specific timeframe? Why or why not?
54. Are there any specific elements
that the Commission should require transfer agents to include in their written policies and procedures to ensure they are ‘‘reasonably designed’’ to achieve timely turnaround of routine items?
55. Is a one business day turnaround
standard for routine items appropriate? Should a different timeframe be used? Are there categories of routine items for which a one business day standard would be impractical or inappropriate? Pursuant to the proposed amended definition of receipt in Rule 17ad–1, an item would be considered to be received on the business day it is received by the transfer agent. Thus, an item received at any point on a business day would be considered to be received on that day. Is a one business day turnaround standard for routine items received at any point on a business day appropriate and operationally feasible?
56. Should the Commission retain a
minimum performance threshold for routine items rather than, or in addition to, a policies and procedures requirement? If so, what threshold would be appropriate given current transfer agent capabilities?
57. Should transfer agents acting as
outside registrars have different performance standards for processing items? Is the function of an ‘‘outside

197 17 CFR 240.17Ad–3(a). Such limitations on the business of the transfer agent continue until there has been a period of three successive months in which no notices have been required. 198 17 CFR 240.17Ad–3(b). 199See Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50 (describing Rules 17ad–1 through 17ad–7 generally to include, among other things, ‘‘early warning of inadequate transfer agent performance,’’ and, 17ad–3 specifically, as ‘‘designed to maintain the status quo so that a transfer agent can bring its performance into compliance with the rules.’’ register’’ obsolete and should the terms and rules around ‘‘outside registrar’’ be rescinded in Rules 17ad–1, 2, and 6?
58. With respect to proposed rule
17ad–2(a), is the elimination of the noon cutoff rule for registered transfer agents and its replacement with a business day standard appropriate? Are there operational or logistical reasons to retain a cutoff time for determining when an item is received?
59. Is three percent an appropriate
threshold for imposing the notice requirements under Rule 17ad–2(c) and (d)? Why or why not? If not, what threshold would be appropriate and why?
60. Should the Commission require
transfer agents to provide a written notice to the presentor for items rejected by the transfer agent? Is one business day an appropriate timeframe for providing such notice? Is the requirement that the notice identify the rejected item, the reasons for rejection, and the specific actions the presentor must undertake for the item to be accepted reasonable, operationally feasible, and conducive to the use of automated means of handling routine items promptly? Should the Commission prescribe the format or content of the required written notification in more detail than proposed?
61. Should the Commission require
transfer agents to provide a written notification to the presentor for a rejected onchain transfer even though the transfer agent was not responsible for rejecting the item? Would the transfer agent have sufficient information to be able to provide the written notification? If so, should the Commission exempt rejected onchain transfers from the written notification requirement?
62. Should the Commission require
transfer agents to establish, maintain, and enforce written policies and procedures reasonably designed to ensure that written notifications are provided in a timely manner to the presentor of each rejected item with specific details regarding the reason for rejection? Would a policies and procedures approach permit transfer agents to better address circumstances where the transfer agent might be unaware of a rejected item and thus, unable to provide a written notification?
63. Should the Commission require
transfer agents to track and retain data on rejected items, including the reasons for rejection and the time taken to notify presentors? If so, for how long should such data be retained?
64. Is the existing standard for non￾routine items sufficiently clear and
workable? Should the Commission provide additional guidance on what constitutes ‘‘diligent and continuous attention’’?
65. How would these proposed
changes to Rule 17ad–2 affect transfer agents that provide services to investment companies? Are there any aspects of the proposed changes that do not reflect how shareholder transactions with certain investment companies work or would not be feasible for those transfer agents? If so, what are they and should exemptions or additional changes be provided? Should the rules separately address certain activities that investment company transfer agents conduct, such as ensuring that transacting shareholders receive the correct net asset value or processing shareholder exchange transactions involving the movement from one investment company to another?
66. What transition period, if any,
would be appropriate for transfer agents to develop and implement written policies and procedures compliant with the proposed amendments to Rule 17ad–2? E. Amendments to Rule 17ad–3 Rule 17ad–3 provides limitations on the expansion of transfer agent activities if a transfer agent is unable to meet the minimum performance standards established by Rule 17ad–2. Any transfer agent that is required pursuant to Rule 17ad–2(c) or (d) to provide notice for failure to meet the performance standards for three consecutive months is prohibited from taking on new issues or providing new services for existing issues.197 Further, if a transfer agent fails, for each of two consecutive months, to timely turnaround or process at least 75% of all routine items, it is subject to the limitations on expansion specified in Rule 17ad–3(a) and must notify the chief executive officer of each issuer for which the transfer agent acts.198 Thus, Rules 17ad–2 and 17ad–3, taken together, are designed to provide an early warning system to alert issuers, the Commission and other ARAs of untimely performance and potential problems.199 As discussed above, the proposed amendments to Rule 17ad–2(c) and (d) would require a registered transfer agent to notify the Commission or the transfer agent’s ARA if it fails to turnaround or process more than three (3) percent of routine items within the time frames specified in proposed Rule 17ad–2(a) and Rule 17ad–2(b), respectively. The Commission is proposing a three percent threshold because, given the significant improvements in transfer agents’ processing capabilities and increases in transaction volume, it believes a three percent threshold would ensure the Commission and other ARAs receive the early warning the rule is designed to provide, but only in situations where the turnaround failure potentially indicates a serious performance issue. Under existing Rule 17ad–3(a), a transfer agent that is required to file a notice pursuant to Rule 17ad–2(c) and (d) for each of three consecutive months is prohibited from taking on new issues or providing new services for existing issues. Prohibiting transfer agents with such operational failures from taking on new business would have multiple benefits, including incentivizing a higher success rate, avoiding further failures by preventing such transfer agents from assuming work they may not be able to adequately complete, and ensuring that transfer agents first focus on the success rate of their current volume before expanding their workload. For similar reasons, the Commission is proposing to amend the threshold in Rule 17ad–3(b) from 75% to 95% (a failure rate change from 25% to 5%, respectively) so that any registered transfer agent that fails, for each of two consecutive months, to turn around or process more than five percent of applicable items within the time specified in Rule 17ad–2(a) or in Rule 17ad–2(b), respectively, would be subject to the limitations on expansion in Rule 17ad–3(a) and
required to notify the chief executive officer of each issuer for which the transfer agent acts. For the same reasons a three percent threshold is appropriate for Rules 17ad–2(c) and (d), a five percent threshold for Rule 17ad–3(b) is the appropriate threshold to ensure that Rule 17ad–3 continues to serve its intended purpose, because it requires a higher failure rate over two consecutive months to trigger the Rule but implicates more severe consequences. As explained above, the vast majority of transfer agents regularly turnaround and process nearly 100% of all routine items within one business day or less, or are readily capable of doing so, and modern transfer agents

200 17 CFR 240.17Ad–4.
201 17 CFR 240.17Ad–4(a).
202 17 CFR 240.17Ad–4(b).
203Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50, at 32408. 204Rule 17ad–1 through 17ad–7 Re-Proposing Release, supra note 188. 205Rule 17ad–1 through 17ad–7 Re-Proposing Release, supra note 188, at 12195. 206 Id. 207Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50, at n. 13. 208Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50, at 32408. 209 Id. 210Rule 17ad–1 through 17ad–7 Re-Proposing Release, supra note 188, at 12195. process significantly more items per month than did transfer agents in 1977 when Rules 17ad–2 and 17ad–3 were adopted. Thus, a failure to turn around five percent of routine items within the required timeframe for two consecutive months would be a significant operational failure. Requiring registered transfer agents to provide additional notice to their clients of such significant operational failures would help ensure that issuers receive the warning the rule is designed to provide, but only in situations where the turnaround failure potentially indicates a serious performance issue.
1. Request for Comment
The Commission requests comments on all aspects of the proposed amendments to Rule 17ad–3. In particular, the Commission requests comments on the following:
67. Should Rule 17ad–3 be rescinded
entirely? Please explain.
68. What threshold, if any, would be
appropriate in Rule 17ad–3(b) to impose limitations on expansion and require notification to issuers? Is 95% too low or too high?
69. Should the Commission consider
using other metrics to determine whether to limit a transfer agent’s activities? Please explain in detail.
70. Are there other ways for issuers,
the Commission, or other ARAs to be alerted to a transfer agent’s untimely performance in turning around or processing routine items? Would the proposed change to Question 9 on Form TA–2 provide sufficient information to evaluate a transfer agent’s turnaround and processing of routine items?
71. Are there other alternative
approaches that the Commission should consider? Why or why not? If so, what alternative approaches should the Commission consider? Please explain in detail. F. Rescission of Rule 17ad–4
1. Background and Existing Rule
Rule 17ad–4 provides certain exemptions from the turnaround, processing, and recordkeeping rules.200 Rule 17ad–4(a) creates an exemption from Rules 17ad–2, 17ad–3, and 17ad– 6(a)(1)–(7) and (11) for the processing of interests in limited partnerships, DRIPs, and redeemable securities issued by investment companies registered under
Section 8 of the 1940 Act, which are
also known as open-end funds (‘‘Fund Shares’’).201 Rule 17ad–4(b) provides a similar exemption from Rules 17ad– 2(a), (b), (c), (d) and (h), 17ad–3, and 17ad–6(a)(2)–(7) and (11) for ‘‘exempt transfer agents,’’ which are defined as those that received fewer than 500 items for transfer and fewer than 500 items for processing within a consecutive six month period, provided that the transfer agent has filed proper notice of its exempt status with its ARA or has prepared a document certifying that the transfer agent qualifies as exempt (with respect to those ARAs where filing is not required).202 Rule 17ad–4 was adopted in 1977. The rationale for not requiring exempt transfer agents to comply with the turnaround and related recordkeeping requirements at that time was based on the Commission’s assessment that ‘‘the number of transfers performed by many transfer agents is relatively small and involves issues which are not traded actively,’’ and therefore, it was ‘‘not necessary or appropriate at this time to require those transfer agents to comply with the minimum performance standards and certain recordkeeping provisions.’’ 203 It was for a similar reason—the low volume of transfers— that the Commission determined that interests in limited partnerships were also appropriately exempted from the turnaround and processing requirements.204 The rationale for exempting Fund Shares and DRIPs was similar but slightly different. Comments on the original proposed turnaround and recordkeeping rules noted that ‘‘the activities performed by transfer agents for [Fund Shares] involve for the most
part the redemption of fund shares
which is governed by Section 22(e) of the Investment Company Act of 1940 . . . and that the steps involved therein are significantly different from those required to transfer the ownership of stocks and bonds on an issuer’s records.’’ 205 The Commission believed at the time that ‘‘it would be desirable to study further the need for, and the nature of, minimum performance standards for the transfer of [Fund Shares].’’ 206 When adopting the exemption for Fund Shares a few months later, the Commission also stated that ‘‘[t]he amount of certificated fund shares is relatively small, and the amount of transfer agent activity in connection with transferring ownership of certificated shares represents a very small part of a transfer agent’s activity with regard to an open-end investment company.’’ 207 For these reasons, the Commission determined that the turnaround and related recordkeeping requirements would ‘‘not apply to the issuance, redemption or transfer of [Fund Shares].’’ 208 Similarly, because ‘‘transfers and withdrawals of shares from dividend reinvestment plans’’ also ‘‘require procedures significantly different from the procedures required to transfer ownership of stocks and bonds,’’ the Commission decided to expand the exemption to include DRIPs as well.209 In short, the original rationale for the exemptions provided in Rule 17ad–4 was that it was not necessary or appropriate to require smaller transfer agents for thinly-traded issues to comply with the minimum performance standards and recordkeeping provisions, nor was it necessary or appropriate to apply those standards and provisions to processes that, as the Commission understood at that time, were significantly different from the transfer of ownership of stocks and bonds on issuers’ records. As the Commission noted with respect to Fund Shares, more study was needed.210
2. Proposed Rescission
After nearly half a century of further experience, it is no longer necessary or appropriate to exempt transfer agents from the minimum performance standards and related recordkeeping provisions, regardless of the size of the transfer agent, the volume of securities it processes, or the nature of those securities. The animating principle of all the proposals herein is the recognition that transfer agents are a critical component of the national clearance and settlement system that provides the vital infrastructure for the U.S. securities markets; a transfer agent’s failure to perform its duties promptly, accurately, and safely— especially its duties with respect to turnaround and the related recordkeeping requirements—can compromise the accuracy of an issuer’s securityholder records, disrupt the channels of communication between issuers and securityholders, disenfranchise investors, and expose issuers, investors, securities intermediaries, and the securities markets as a whole to significant

211See 17ad–9 through 13 Proposing Release, supra note 9, (noting examples of substandard transfer agent performance presenting significant potential adverse consequences); Processing Requirements for Cancelled Security Certificates, Exchange Act Release No. 48931 (Dec. 16, 2003), 68 FR 74390 (Dec. 23, 2003) (noting examples of substandard transfer agent performance and significant adverse consequences). 212See 2015 Concept Release, supra note 4,
Section II.B for a discussion of the manual process
in place at the time Rule 17ad–4 was adopted. 213Correspondingly, as a conforming change, we are proposing to delete paragraph (d)(2) from Rule 17ad–13, which provides that a registered transfer agent is exempt from the requirements of Rule 17ad–13 if it is an exempt transfer agent pursuant to Rule 17ad–4(b) and, if it performs transfer agent functions for Fund Shares, it maintains master securityholder files consisting of fewer than 1,000 shareholder accounts, in the aggregate, for each of such issues for which it performs transfer agent functions. See 17 CFR 240.17Ad–13(d)(2)(i) and (ii). 214Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50, at 32409. 215Rule 17Ad–6(a)(1) through (5). 216 17 CFR 240.17Ad–6(a)(6) through (11). 217 17 CFR 240.17Ad–6(b). 218 17 CFR 240.17Ad–6(c). financial loss.211 In light of this important role transfer agents play in a national clearing and settlement system, Rule 17ad–4 was originally adopted to provide certain exemptions for transfer agents where the burden of compliance for certain interests in securities or size of the transfer agent was not justified by the benefit of adherence. Modern technological capabilities and a dramatic increase in the risks posed by those activities to an interconnected electronic national clearance and settlement system have shifted that balance. It is the Commission’s understanding that, since Rule 17ad–4 was adopted in 1977, the laborious manual processes and recordkeeping systems that may have placed an undue burden on smaller transfer agents have been replaced with automated processes and electronic recordkeeping systems that are readily available to even the smallest transfer agent today.212 These same advancements mean that transfer agents that may have had to specialize in or develop bespoke systems to process transactions beyond stocks and bonds in 1977 now can and do process a wide array of even the most complicated transactions efficiently and effectively. At the same time, the securities markets and the national clearance and settlement system in which transfer agents operate have become more automated, efficient, and interconnected, which has increased the ability of all transfer agents, regardless of size, to meet the minimum performance and recordkeeping standards established by the Commission’s transfer agent rules. Finally, as noted above, the Commission understands that the vast majority of transfer agents now regularly turn around routine items within one business day or less, even for certificated securities and beyond stocks and bonds, rendering the exemption from the turnaround requirements unnecessary. Taken together, the balance of the burdens and benefits no longer provides a reason or basis to exempt interests in limited partnerships, DRIPs, Fund Shares, and exempt smaller transfer agents from the Commission’s turnaround and recordkeeping requirements. Accordingly, the Commission is proposing to rescind Rule 17ad–4 in its entirety.213
3. Request for Comment
The Commission requests comments on all aspects of the proposed rescission of Rule 17ad–4. In particular, the Commission requests comments on the following:
72. Should Rule 17ad–4 instead be
modified? If so, why?
73. Should the Commission retain the
exemption from the turnaround, processing, and recordkeeping rules for limited partnership interests, DRIPs, or Fund Shares? If so, why? Have the operational characteristics of processing these securities changed sufficiently since 1977 to justify removing the exemption?
74. Should the Commission retain the
exemption from the turnaround, processing, and recordkeeping rules for ‘‘exempt transfer agents’’?
75. Should the Commission revise the
criteria for ‘‘exempt transfer agents’’ instead of rescinding the exemption entirely? For example, should the volume threshold be adjusted to reflect current market conditions, or should different criteria such as the nature of the securities processed or the sophistication of the issuer be used to determine exempt status? Are there any other criteria that the Commission should consider instead of recission?
76. What are the specific compliance
costs, if any, that small transfer agents or transfer agents specializing in limited partnerships, DRIPs, or Fund Shares would incur as a result of the proposed rescission of Rule 17ad–4? Do small transfer agents currently have access to the automated processing and electronic recordkeeping systems necessary to comply with the proposed turnaround and recordkeeping requirements?
77. Would rescission of Rule 17ad–4
cause small transfer agents to exit the market or consolidate with larger transfer agents? What would be the impact on competition, issuer choice, and investor protection if the number of small transfer agents were to decline as a result of the proposed rescission?
78. What transition period, if any,
would be appropriate for transfer agents currently relying on the exemptions in Rule 17ad–4 to come into compliance with the proposed turnaround and recordkeeping requirements?
79. Should the Commission consider
alternative approaches to address compliance costs for smaller transfer agents? Why or why not? If so, what alternative approaches should the Commission consider? Please explain in detail. G. Amendments to Rule 17ad–6 Existing Rule 17ad–6 aims to ensure that transfer agents’ records are sufficient for each transfer agent to monitor its own performance and to allow the transfer agent’s ARA to examine for compliance.214 It also helps ensure that transfer agents make and keep records necessary to enable and support their critical functions within the national clearance and settlement system. To that end, the rule enumerates specific categories and types of documents that transfer agents must make and keep current. Rules 17ad– 6(a)(1) through 17ad–6(a)(5) require transfer agents to make and keep current various records associated with monitoring turnaround of routine and non-routine items.215 Rules 17ad–6(a)(6) and (7) relate to records associated with monitoring compliance with written inquiries and requests. Rule 17ad– 6(a)(8) addresses records associated with the assumption and termination of services on behalf of issuers, and Rules 17ad–6(a)(9), (10), and (11) relate to stop orders and other restrictions on transfer, transfer journals, and items received in connection with certain types of corporate actions, respectively.216 Finally, Rule 17ad–6(b) requires certain transfer agents to obtain and retain records that would allow them to maintain an accurate control book,217 and Rule 17ad–6(c) relates to records of cancelled securities.218 Rule 17ad–6 has not, with limited exceptions, been updated to account for technological changes, the continued dematerialization of securities, and other market transformations, including the emergence of tokenized securities and AI that have led to significant changes in both the types of records maintained by transfer agents and the format and manner in which they are maintained. To ensure that transfer

219Rule 17ad–6(a)(1) through (5). 220See proposed Rule 17ad–1; discussion, supra
Section III.A.1.
221See proposed Rule 17ad–2; discussion, supra
Section III.D.
222 17 CFR 240.17Ad–6(a)(1).
223See proposed Rule 17ad–6(a)(1). 224See proposed Rule 17ad–2(c). 225 17 CFR 240.17Ad–6(a)(2)(i) and (iv). 226 17 CFR 240.17Ad–6(a)(2)(ii) and (v). 227See proposed Rules 17ad–6(a)(2)(ii) and (iii). agents continue to make and keep records sufficient to enable and support their critical functions within the national clearance and settlement system, monitor their own performance, and be examined for compliance in light of the expansion of transfer agent activities and rapid proliferation of new technologies discussed above, the Commission proposes implementing changes to existing Rule 17ad–6 that will (1) simplify the rule text, specify what recordkeeping requirements apply to uncertificated securities, and appropriately capture the records necessary for modern transfer agents to perform their regulated functions; (2) conform to other amendments in this proposal as appropriate; and (3) supplement the existing record maintenance, retention, and preservation activities by adding recordkeeping requirements relating to maintaining a master securityholder file, control book, and transfer journal. Specifically, the Commission is proposing to amend paragraphs (a)(1)– (3), (8), (10), and (11) of Rule 17ad–6. The Commission is also proposing to amend paragraph (b) of Rule 17ad–6. The Commission is not proposing any amendments to paragraphs (a)(4), (a)(5), (a)(6), (a)(7), (a)(9) or (c) of Rule 17ad–
6. The proposed amendments do not
prescribe a specific category or type of record that must be maintained. For example, rather than require transfer agents to make and keep ‘‘a log, tally, journal, schedule, or other record’’ showing the number of routine items received in a month that were turned around within certain periods, as is required under existing Rule 17ad– 6(a)(2), the proposed amendments would require ‘‘records sufficient to show’’ the required information. A record, in this context, could include both physical and digital records, including records existing on a distributed ledger or blockchain network, provided the other requirements of Rule 17ad–6 and Rule 17ad–7 are met. Records would be ‘‘sufficient to show’’ the required information if the information is apparent from the records themselves without relying on inference or assumptions. For example, a transfer agent could comply with proposed Rule 17ad–6(a)(1) by maintaining separate logs for the date of receipt, the date of turnaround or processing, and the date of rejection for routine and non-routine items. By itself an individual log or a partial record showing only routine items or only some days of the month would not be sufficient to show the business day each routine and non￾routine item is received, made available, and/or rejected as required by the rule. But taken together they could be. In this way, each transfer agent would have the flexibility and discretion to determine the specific method or format of its recordkeeping system or systems and could make and keep records and information in any media or format appropriate to the transfer agent’s specific business model, activities, and technological systems.

1. Records Related to Turnaround
   As explained above, Rules 17ad– 6(a)(1) through 17ad–6(a)(5) require transfer agents to make and keep current various records associated with monitoring the turnaround and processing of routine and non-routine items as required under existing Rule 17ad–2.219 Under the proposed amendments to Rule 17ad–1, the definition of ‘‘item’’ would be expanded to cover additional methods of transmission and types of instructions received by transfer agents.220 The proposed amendments to Rule 17ad–2 would modify the nature and scope of transfer agents’ turn around and processing requirements.221 Accordingly, in addition to the goals noted above, the proposed amendments to Rules 17ad–6(a)(1) through (3) are intended to align the recordkeeping requirements for turnaround and processing with the proposed changes to the nature and scope of the turn around and processing requirements themselves. a. 17ad–6(a)(1) Existing Rule 17ad–6(a)(1) requires transfer agents to make and keep current a receipt, ticket, schedule, log, or other record showing the business day each routine and non-routine item is received from a presentor or outside registrar and made available to the presentor and/or outside registrar.222 The amended rule would require a transfer agent to make and keep ‘‘[r]ecords sufficient to show the business day each routine item and each non-routine item is (i) received by the transfer agent, (ii) made available or turned around, and (iii) if applicable, rejected by the transfer agent.’’ 223 Under this proposal, references to specific types of records (i.e., receipt, ticket, log) would be replaced with the broader, all￾encompassing term ‘‘records’’ and existing references to presentors and outside registrars would be eliminated as unnecessary in light of the proposed amendments to Rule 17ad–2 discussed above in Section II.D. Similarly, the Commission is proposing to require transfer agents to make and keep records showing the business day an item is rejected to align with the proposed changes to Rule 17ad–2 that would require registered transfer agents to provide a written notification to the presentor within one business day of receipt of any item that is rejected by the transfer agent.224 b. 17ad–6(a)(2) Existing Rule 17ad–6(a)(2) requires transfer agents to make and keep records showing the number of routine and non￾routine items received 225 and subsequently turned around within the required timeframes.226 The amended rule would replace references to specific types of records (i.e., log, tally, journal, etc.) with the broader, all-encompassing term ‘‘records’’ to ensure the full scope of records created and maintained by modern transfer agents is reflected in the rule. The Commission also proposes amending the requirements set forth in Rules 17ad–6(a)(2)(ii) and (iii) that reference a three-business day turnaround period for routine items. Instead, the Commission proposes amending these two rules to include a reference to the turnaround standard set forth
   in proposed Rule 17ad–2(a).227 In addition, the Commission proposes to rescind Rule 17ad–6(a)(2)(vi), which requires transfer agents to make and keep records showing the number of routine items that, as of the close of business on the last business day of each month, have been in such registered transfer agents’ possession for more than four business days. This provision would no longer be necessary in light of the proposed amendment to Rule 17ad–6(a)(2)(iii) which would require transfer agents to make and keep records showing the number of routine items received during the month that were not turned around within the shorter of one business day or the time period specified by Rule 15c6–1 of the Exchange Act. The Commission proposes to amend existing Rule 17ad–6(a)(2)(v), which requires transfer agents to make and keep records regarding the number of non-routine items received during the month that were turned around, by

228See proposed Rule 17ad–6(a)(2)(v). 229See proposed Rule 17ad–6(a)(2)(viii) and (ix). 230 17 CFR 240.17Ad–6(a)(3). 231See proposed Rule 17ad–6(a)(3). 232 17 CFR 240.17Ad–6(a)(8). 233 17 CFR 240.17Ad–7(h). 234See 2015 Concept Release, supra note 4, at
Section VI.B.
235 It is the Commission staff’s understanding that typical termination fees may range from about $1,000 to $5,000, though disputes like those described herein may involve a transfer agent’s demand for fees as high as $30,000. adding a requirement for transfer agents to indicate when non-routine items were turned around. Specifically, the proposed amendment would require transfer agents to make and keep records showing the number of non-routine items received during the month that were turned around within the following time frames: within five business days, within six to 10 business days, within 11 to 15 business days, within 16 to 20 business days, and in more than 20 business days.228 These records would assist transfer agents and their ARAs in monitoring the turnaround of non-routine items to determine whether transfer agents are meeting their obligation under proposed Rule 17ad–2(e) to turnaround non￾routine items as soon as possible. The Commission is proposing two additional recordkeeping provisions in Rule 17ad–6(a)(2). Proposed Rule 17ad– 6(a)(2)(viii) would require transfer agents to make and keep records showing the number of items received during the month that were rejected by the transfer agent, while proposed Rule 17ad–6(a)(2)(ix) would require transfer agents to make and keep records showing the number of items received during the month that were rejected by the transfer agent for which written notification to the presentor was provided within one business day of receipt as required by proposed Rule 17ad–2(c).229 These records would assist transfer agents and their ARAs in monitoring turnaround performance and would conform the recordkeeping requirements with the proposed changes to Rule 17ad–2.
c. 17ad–6(a)(3)
Existing Rule 17ad–6(a)(3) requires a transfer agent to make and keep records documenting transfer agent activity involving items for which it acts as an outside registrar.230 As with the proposed amendments discussed above, the amended rule would replace references to specific types of records (i.e., receipt, ticket, schedule, log, etc.) in Rule 17ad–6(a)(3)(i) and (ii) with the broader, all-encompassing term ‘‘records’’ to ensure the full scope of records created and maintained by modern transfer agents is reflected in the rule. The Commission also is proposing to amend the reference to ‘‘the time required by Rule 17ad–2(b)’’ in Rules 17ad–6(a)(3)(ii)(B) and (C) to ‘‘the time specified in Rule 17ad–2(b)’’ to conform to the proposed changes in Rule 17ad–2(b) from a metrics-based processing standard to the proposed policies and procedures requirement.231
2. Records Related to Appointment and
Termination
Existing Rule 17ad–6(a)(8) requires transfer agents to make and keep ‘‘any document, resolution, contract, appointment or other writing, and any supporting document, concerning the appointment and termination of such appointment of such registered transfer agent to act in any capacity for any issue on behalf of the issuer, on behalf of itself as the issuer or on behalf of any person who was engaged by the issuer to act on behalf of the issuer.’’ 232 Documenting in writing the agreement between a transfer agent and its issuer clients (or other transfer agents) is critical to ensuring that transfer agents perform their critical functions within the national clearance and settlement system. Without clear documentation regarding the services a transfer agent is providing, service could be interrupted, records might not be made or kept, and issuers, securityholders, and the national clearance and settlement system could be impacted. Written documentation, such as an agreement, describing the relationship under which a transfer agent and an issuer will operate and terminate the relationship also is vital to avoiding or managing disputes between transfer agents and their issuer clients and ensuring the timely and appropriate turnover of an issuer’s records upon termination to the successor transfer agent. For example, existing Rule 17ad–7(h) provides that certain of a transfer agent’s recordkeeping responsibilities only end when the transfer agent ‘‘ceases to perform transfer agent functions’’ for the relevant issue and delivers certain specified records ‘‘to the successor transfer agent.’’ 233 If there is no written documentation specifying the conditions under which a transfer agent’s services can or will be terminated, disputes regarding whether or when a transfer agent has ceased to perform transfer agent functions for a given issue could arise. Despite the importance of a written agreement or other documentation of the relationship between transfer agents and their issuer clients (or other transfer agents), the Commission is concerned that existing Rule 17ad–6(a)(8) is ambiguous as to whether documents concerning the transfer agent’s appointment and termination must, in all circumstances, be made and kept, or whether a transfer agent must only make and keep ‘‘any’’ such documents they happen to have. While it is the Commission’s understanding that many transfer agents enter into written contracts with their issuer clients, the Commission also is aware that some transfer agents may not document their arrangements with issuers in writing.234 Based on the Commission staff’s experience administering the Commission’s transfer agent rules and examination program, it appears that such undocumented arrangements may be more likely than relationships documented in writing to lead to protracted disputes, especially with respect to: (1) the duration of the arrangement; (2) the conditions of the arrangement’s termination; (3) the disposition of the
securityholder records after termination or notice of termination; and (4) the fees charged by the transfer agent. Such disputes may interfere with the operations of the markets and the protection of investors by disrupting or otherwise hindering transfer agent processing, recordkeeping, and safeguarding. For example, it is the Commission staff’s understanding that some transfer agents, after having been terminated by the issuer, have substantially delayed the handing over of securityholder records to successor transfer agents by demanding that the issuer pay a substantial ‘‘termination’’ fee before the transfer agent would agree to hand over the securityholder records it had been maintaining, even though the issuer claimed there was no written agreement in place or it had otherwise not agreed to such a fee.235 In such cases, the issuer may be unable to retain a new transfer agent if the old transfer agent will not make the records available to the new transfer agent. The inability to retain a new transfer agent could lead to inaccuracies in the master securityholder file and other records or impede trading in the issuer’s securities. Commission staff is also aware of instances in which a termination dispute between an issuer and a transfer agent has resulted in two transfer agents each maintaining separate records, which could be inconsistent with each other. To remove the ambiguity in existing Rule 17ad–6(a)(8) noted above and prevent the type of disruptions to issuers, securityholders, and the

236See proposed Rule 17ad–6(a)(8). 237 17 CFR 240.17Ad–6(a)(10). 238Rule 17ad–1 through 17ad–7 Re-Proposing Release, supra note 188, at 12196. 239See proposed Rule 17ad–6(a)(10). 240Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50, at 32410. 241 17 CFR 240.17Ad–6(a)(11). 242See proposed Rule 17ad–6(a)(11). 243 17 CFR 240.17Ad–6(b). 244See supra Section III.C.1. 245See proposed Rule 17ad–6(b). national clearance and settlement system that can arise especially when there is no written agreement or documentation of the arrangement between a transfer agent and its clients, the Commission is proposing to amend paragraph (a)(8) of Rule 17ad–6 to explicitly require transfer agents to ensure that their agreements with issuers (or other transfer agents) to provide transfer agent services are documented in writing. The proposed rule does not, however, require that the written documentation need necessarily be in the form of a written agreement. Specifically, Rule 17ad–6(a)(8) would be amended to require transfer agents to make and keep ‘‘[r]ecords, including but not limited to documents, resolutions, contracts, appointments or other writings, and any supporting documents, concerning the appointment and the termination of such appointment of such registered transfer agent to act in any capacity for any issue on behalf of the issuer, on behalf of itself as the issuer or on behalf of any person who was engaged by the issuer to act on behalf of the issuer.’’ 236
3. Transfer Journal, Master
Securityholder File, and Control Book Existing Rule 17ad–6(a)(10) requires transfer agents to make and keep records of any transfer journal and registrar journal prepared by the transfer agent.237 At the time it was proposed, the Commission viewed this provision as ‘‘cover[ing] the kinds of information that transfer agents normally would preserve even in the absence of these rules.’’ 238 In the Commission’s experience, some transfer agents read existing Rule 17ad– 6(a)(10) as permissive, meaning the transfer journal and registrar journal must be made and kept only to the extent the transfer agent has already ‘‘prepared’’ them. Further, as discussed throughout this release, the master securityholder file and control book comprise some of the most important and foundational records that recordkeeping transfer agents are required to maintain. Accordingly, to ensure that the transfer agent rules clearly and explicitly require transfer agents to make and keep these records, the Commission proposes amending Rule 17ad–6(a)(10) to (i) require transfer agents to make and keep a transfer journal (or registrar journal if the transfer agent acts as an outside registrar), not just make and keep them in the event they are prepared by the transfer agent, and (ii) expand the rule to also cover the control book and master securityholder file, both of which are required records for recordkeeping transfer agents pursuant to Rule 17ad–10(e) and (b), respectively. Specifically, the proposed amendment to Rule 17ad–6(a)(10) would require that a transfer agent maintain a transfer journal (or registrar journal if the transfer agent acts as an outside registrar), and a control book and master securityholder file (if the transfer agent is a recordkeeping transfer agent) for each securities issue for which the transfer agent is authorized to act on behalf of the issuer, as well as the constituent records, documents, and other information that compose such documents.239
4. Records Related to Non-Routine Items
Existing Rule 17ad–6(a)(11) requires transfer agents to make and keep any document upon which the transfer agent bases its determination that an item received for transfer was received in connection with a special event,240 and, accordingly, was not routine under Rules 17ad–1(i)(5) or (8).241 The Commission proposes amending Rule 17ad–6(a)(11) to require that a transfer agent make and keep any records, documents, or other information upon which the transfer agent bases its determination that any item received for transfer was not routine, rather than just non-routine items received in connection with a special event.242 The existing rule requires only that transfer agents keep records for non-routine items received in connection with a reorganization, tender offer, exchange, redemption, liquidation, conversion, or the sale of securities registered pursuant to the Securities Act of 1933, which excludes other potential non-routine items, such as an item that requires requisitioning of certificates or for which the transfer agent has received notice of a stop order. Such information is readily available to transfer agents and easily retained given the technological advances discussed at length herein. Because routine and non￾routine items are subject to different turnaround standards under existing and proposed Rule 17ad–2, records supporting the classification of an item as non-routine would support transfer agent compliance with the turnaround requirements and thereby promote the prompt and accurate clearance and settlement of securities transactions and the protection of investors.
5. Records Related to the Control Book
Existing Rule 17ad–6(b) requires transfer agents that maintain securityholder records or act as a registrar for a given issue to retain documentation of that issue’s authorized, issued, and outstanding securities. Specifically, existing Rule 17ad–6(b) requires a transfer agent which, under the terms of its agency, maintains securityholder records for an issue or which acts as a registrar for an issue to, with respect to such issue, obtain from the issuer or its transfer agent and retain documentation setting forth the total number of shares or principal amount of debt securities or total number of units of any kind of security authorized by the issuer and the total issued and outstanding pursuant to issuer authorization.243 As noted above, although the term ‘‘security authorized’’ is used in Rule 17ad–6(b) and Rule 17ad–9 requires ‘‘shares . . . authorized’’ to be one of the elements that must be tracked as
part of a transfer agent’s control book,
neither term is defined under the existing rules. However, as discussed herein, the Commission is proposing to define the term ‘‘authorized securities’’ in connection with the Commission’s proposed amendments to Rule 17ad–9 as the maximum number (or principal amount) of securities that can be issued pursuant to the issuer’s governing documents.244 To ensure consistent use of the newly-defined term, the Commission is proposing to amend Rule 17ad–6(b) to reflect that authorized securities would now be a defined term and otherwise simplify it without altering the substantive requirement. Specifically, the Commission is proposing to amend Rule 17ad–6(b) to require every registered transfer agent that maintains securityholder records or acts as a registrar for an issue to obtain from the issuer or its transfer agent and retain documentation setting forth the authorized securities for that issue and the total securities for that issue that are issued and outstanding pursuant to issuer authorization.245
6. Request for Comment
The Commission requests comments on all aspects of the proposed amendments to the recordkeeping requirements in Rule 17ad–6. In

246 17 CFR 240.17Ad–7. particular, the Commission requests comments on the following:
80. Are the proposed amendments to
the recordkeeping requirements appropriate and sufficient to ensure that they apply to all forms of records (e.g., both physical and digital records, records that exist solely on distributed ledgers or blockchain networks) and all types of records that are utilized by transfer agents to monitor their performance and to allow ARAs to examine for compliance?
81. Are the proposed amendments to
Rule 17ad–6 sufficiently flexible to accommodate the diverse range of transfer agent business models, sizes, and technological systems currently in use, while still ensuring adequate oversight and compliance monitoring? If not, what modifications would better achieve this balance?
82. The proposed amendments
contemplate that records may exist on distributed ledgers or blockchain networks. Are the proposed requirements sufficiently clear regarding how transfer agents should maintain, access, and produce such records for examination purposes? What specific challenges, if any, do distributed ledger or blockchain-based records present for compliance with Rule 17ad–6 and Rule 17ad–7?
83. Do the proposed recordkeeping
rules, as written, adequately facilitate the implementation of recordkeeping systems that associate onchain database records and information (e.g., wallet address, quantity of security owned, and issue date) with offchain database records and relevant information (e.g., security holder name and address) so that the transfer of a tokenized security on a blockchain results in a corresponding transfer of the security on the master securityholder file?
84. How should the Commission
address situations where records exist solely on a blockchain or distributed ledger that is not exclusively controlled by the transfer agent? Should the Commission establish specific requirements for ensuring the integrity, accessibility, and immutability of such records for compliance purposes?
85. Are the proposed amendments to
Rules 17ad–6(a)(1) through (3) sufficient to capture all relevant information needed to monitor transfer agent turnaround performance? Should the Commission also require transfer agents to record the time of day, in addition to the business day, that items are received, turned around, or rejected to provide more granular performance data?
86. The proposed amendment to Rule
17ad–6(a)(8) would explicitly require that transfer agent agreements with issuers be documented in writing. Are there circumstances in which requiring written documentation could create undue burdens for transfer agents or issuers, particularly smaller entities? If so, how should the Commission balance the need for written documentation with the potential burden on smaller market participants?
87. The proposed amendment to Rule
17ad–6(a)(10) would explicitly require transfer agents to maintain a transfer journal rather than only keeping such record if it had already been ‘‘prepared.’’ Are there any circumstances in which this requirement would be unduly burdensome or impractical for transfer agents, particularly smaller transfer agents or those serving issuers of tokenized securities?
88. For transfer agents that maintain
records on distributed ledgers or blockchain networks, how should the requirements for maintaining a master securityholder file, control book, and transfer journal be applied? Are there technical or operational challenges in maintaining these records on a blockchain or other distributed ledger environment that the Commission should address?
89. The proposed amendment to Rule
17ad–6(a)(11) would expand the recordkeeping requirement for non￾routine items to cover all non-routine items, not just those received in connection with specific types of corporate actions. Is this expansion appropriate and sufficient to capture all relevant non-routine items? Are there specific categories of non-routine items that present unique recordkeeping challenges the Commission should address? H. Amendments to Rule 17ad–7 A transfer agent’s maintenance, retention, and preservation of records, including electronic records, is critical to the prompt and accurate clearance and settlement of securities transactions, including the transfer of record ownership and the safeguarding of securities and funds related thereto. Missing, incomplete, or erroneous transfer agent records can disrupt the clearance and settlement process, lead to financial loss, and undermine confidence in the securities markets. The Commission is proposing amendments to Rule 17ad–7 to, among other things, establish a single, uniform retention period of six years for most transfer agent records, and streamline and modernize the rule’s provisions governing electronic recordkeeping. A uniform, outcomes-based approach, a simplified retention schedule, and updated requirements for electronic records would better reflect how transfer agents create, manage, and preserve records today, including the widespread use of digital systems, cloud-based services, and other technology-enabled controls. By adapting the Rule to incorporate real￾world technological developments currently in use among transfer agents, these proposed changes would promote more consistent and accurate recordkeeping among transfer agents, as well as better oversight and effective examinations by the Commission, which would in turn support a well￾functioning securities market and contribute to investor protection.

1. Background
   Paragraphs (a) through (e) of Rule 17ad–7 specify the particular lengths of time for which the various records described in Rule 17ad–6 must be maintained.246 Paragraph (a) states that the records required by Rule 17ad– 6(a)(1), (3)(i), (6), and (11)—records showing or documenting: the business day routine and non-routine items were received and made available; the date and time each item was received and made available by a registered transfer agent acting as an outside registrar, and/ or notice of refusal to perform the registrar function was made available to the presenting transfer agent; inquiries and responses; and the transfer agent’s determination that an item is non￾routine—must be maintained for a period of not less than two years, the first six months in an easily accessible place. Paragraph (b) of Rule 17ad–7 states that the records required by Rule 17ad–6(a)(2), (3)(ii), (4), (5) and (7)— records showing the number of routine and non-routine items received and the timing of their turnaround, and the number of items in the registered transfer agent’s possession; the number of items received, processed, and not processed within the relevant time periods; the transfer agents’ performance calculations; copies of Rule 17ad–2 notices; and Rule 17Ad–5 inquiries that were not responded to within the requisite time periods and the number of such inquiries pending— must be maintained for a period of not less than two years, the first year in an easily accessible place. Paragraph (c) specifies that the records required by Rule 17ad–6(a) (8), (9) and (10) and (b)—records showing the transfer agent’s appointment or termination; active stop orders, adverse claims, and transfer restrictions; the transfer agent’s

247See Recordkeeping Requirements for Transfer Agents, Exchange Act Release No. 44227 (Apr. 27, 2001), 66 FR 21648 (May 1, 2001); Recordkeeping Requirements for Registered Transfer Agents, Exchange Act Release No. 48949 (Dec. 18, 2003), 68 FR 75050 (Dec. 29, 2003). 248 17 CFR 240.17Ad–7(g). 249 17 CFR 240.17Ad–7(h). 250Rule 17ad–1 through 17ad–7 Adopting Release, supra note 50, at 32411. 251Paragraph (j) of Rule 17ad–7 is held in reserve. Paragraph (k) of Rule 17ad–7 governs the written policies and procedures and other records required pursuant to Regulation S–P and was added to Rule 17ad–7 in 2024 pursuant to certain amendments to Regulation S–P. See Regulation S–P: Privacy of Consumer Financial Information and Safeguarding Customer Information, Exchange Act Release No. 100155 (May 16, 2024), 89 FR 47688 (Jun. 3, 2024) (‘‘Regulation S–P Adopting Release’’). The Commission is not proposing any amendments to paragraphs (j) and (k) at this time. 252The Commission would also amend the reference to Rule 17ad–7(i) in Rule 17ad–17(d) to conform to this proposed change. 253See proposed Rule 17ad–30. transfer and registrar journal; and the total number of shares (or principal amount or number of units) authorized, issued and outstanding for each issue serviced by the transfer agent—must be maintained in an easily accessible place during the continuance of the transfer agency and for one year after termination of the transfer agency. Paragraph (d) specifies that the records required by Rule 17ad–6(c)—cancelled certificates, bonds, etc.—must be maintained for a period of not less than six years, the first six months in an easily accessible place. Paragraph (e) of Rule 17ad–7 specifies that every registered transfer agent must maintain all records required under Rule 17f– 2(d)—processed fingerprint cards and other related information—in an easily accessible place until at least three years after the termination of employment of persons required to be fingerprinted under Rule 17f–2 and that all records required under Rule 17f–2(e)—all ‘‘Notices Pursuant to Rule 17f–2’’ regarding claimed exemptions from the fingerprinting requirements of Rule 17f– 2—must be maintained in an easily accessible place. Paragraph (f) of Rule 17ad–7 was updated in 2001 and 2003 to authorize the use of electronic recordkeeping, electronic storage media, and micrographic storage media, such as microfilm records.247 It permits transfer agents to maintain and retain records, including those required under Rule 17ad–6, using electronic storage or micrographic media, provided certain conditions are met. Paragraph (g) of existing Rule 17ad–7 pertains to transfer agent records maintained and preserved by an outside service bureau, other recordkeeping service, or the issuer. If the records required to be maintained and preserved by a transfer agent pursuant to Rule 17ad–6 or Rule 17ad–7 are maintained and preserved on behalf of the transfer agent by any of those parties, the transfer agent
must obtain from that party an agreement in writing that the records are subject to reasonable periodic or special examination at any time, and that the third party will furnish hard copies of the records.248 Paragraph (h) of existing Rule 17ad– 7 specifies that the responsibility under Rule 17ad–7 to retain the records required to be made and kept pursuant to Rule 17ad–6(a)(1), (6), (9), (10), (11), (b), and (c) ends when the transfer agent ceases to perform transfer agent functions for an issue and delivers such records to the successor transfer agent.249 This provision was originally included to clarify when a transfer agent is relieved of such recordkeeping responsibilities.250 Finally,251 paragraph (i) of existing Rule 17ad–7 states that the records required by Rule 17ad–17(d), written procedures for compliance with Rule 17ad–17, and Rule 17Ad–19(c), written procedures for the cancellation, storage, transportation, destruction, or other disposition of securities certificates, shall be maintained for a period of not less than three years, the first year in an easily accessible place. Rule 17ad–7 was adopted when transfer agents retained most records in paper form and relied on micrographic storage (e.g., microfilm and microfiche) to preserve documentation. Later amendments in 2001 and 2003 allowed the use of electronic storage media, but they did so by specifying technology￾oriented requirements—for example, labeling removable media, maintaining separate duplicate copies of indexed records, and prescribing file-level metadata, such as requiring the labeling of files with a unique file name, date and time of file creation and last modification, and file sequence number—rather than setting technology￾neutral objectives for security, integrity, accessibility, and auditability. As the Commission has observed over time, these prescriptive, media-specific provisions are increasingly out of step with modern recordkeeping environments, including systems that provide tamper-evident audit trails, robust authentication, and resilient backup/restore capabilities without reliance on the specific media or file conventions contemplated by the existing rule.
2. 17ad–7(a)–(e) and (i)
The Commission is proposing to expand the list of records that must be maintained pursuant to Rule 17ad–7 to include all records required to be made or kept by a transfer agent under the Exchange Act and, with some exceptions, replace the existing patchwork of retention periods with a single six-year requirement for most records. Specifically, paragraph (a) of Rule 17ad–7 would provide that, unless otherwise specified in Rule 17ad–7, all records required to be made or kept under the Exchange Act shall be maintained for a period of not less than six years, the first two years of which in an easily accessible place. Because they would now be subsumed by amended paragraph (a), the Commission is proposing to delete paragraphs (b), (d), and (i) of Rule 17ad–7.252 Expanding the record retention requirements is necessary and appropriate to ensure the integrity, reliability, and examinability of modern transfer agent records. The need for a broader retention requirement is especially acute in light of transfer agents’ increasingly central role in the rapidly evolving technological landscape of the U.S. securities markets. As transfer agents continue to explore and expand the use of distributed ledger technology, AI, and other nascent technologies in connection with their recordkeeping and operations, a broader retention requirement is essential to the Commission’s oversight and examination capabilities. A six-year standard will more appropriately balance operational practicality with the needs of oversight and enforcement, recognizing that modern systems facilitate the retention of data well beyond the minimum requirements for transfer agents at minimal cost and can meet ‘‘readily producible’’ requirements without reliance on paper or micrographic duplicative processes. It would also permit Commission staff conducting examinations to look back further in time for comparative purposes. This amendment will also reduce compliance complexity and related cost by eliminating the existing, multi-tiered approach and differing ‘‘easily accessible’’ windows tied to specific subsets of records, thereby simplifying and streamlining the transfer agent’s administrative burden in implementing the rule, including the written policies and procedures that would be required by new Rule 17ad–
30.253 It also will enhance examination
efficiency and predictability by providing a clear and consistent baseline for the availability of records across transfer agents and record types, and promote parity with other

254 17 CFR 240.17a–4(c). 255 17 CFR 240.17a–4(e)(5). 256 17 CFR 240.17a–4(e)(10). 257See Recordkeeping Requirement for Transfer Agents, Exchange Act Release No. 44227 (Apr. 27, 2001), 66 FR 21648, 21651 (May 1, 2021) (where the Commission noted that the amendments to the Rule are ‘‘technology neutral’’). 258See proposed Rule 17ad–7(f). As noted in the discussion of Rule 17ad–6, the Commission is not requiring that any records be maintained in hard copy. However, the Commission is proposing a requirement that the master securityholder file be maintained using an electronic recordkeeping system. See proposed Rule 17ad–9(b). 259See proposed Rule 17ad–7(f)(1). 260Exchange Act Rule 17ad–7(f)(2), 17 CFR 240.17Ad–7(f)(2). 261 17 CFR 240.17Ad–7(f)(3)(i) through (iii). Commission recordkeeping frameworks and modern industry standards that employ multi-year retention horizons for core business records. For example, under Commission rules, certain exchange members, brokers and dealers already incorporate a six-year standard on certain recordkeeping requirements. Records related to terms and conditions with respect to the opening and maintenance of closed customer accounts must be preserved under Rule 17a–4 for six years,254 records related to certain customer identification information must be retained for at least six years,255 and information related to Form CRS (or customer relationship summary) provided to retail investors must be retained for six years.256 Establishing a single and clear recordkeeping requirement covering most record types would promote compliance and adequate record retention for those registered transfer agents who have affiliates subject to other, typically six year, record retention requirements, by reducing the administrative burden and inaccuracies inherent in differing requirements and the need to determine relevant categories throughout the administrative process. The retention periods specified in paragraphs (c) and (e) of Rule 17ad–7 continue to be appropriate, and may extend longer than six years in some cases, and therefore the Commission is not proposing amendments to those provisions. Transfer agents will continue to be required to retain records showing the transfer agent’s appointment or termination, stop orders, adverse claims, and transfer restrictions, and the transfer agent’s transfer journal for the duration of the transfer agency and an additional year following termination, and to retain certain fingerprinting-related records required pursuant to Rule 17f–2 for the time periods specified in paragraph (e).
3. 17ad–7(f)
a. Electronic Recordkeeping Systems As noted above, existing Rule 17ad– 7(f) permits transfer agents to retain and preserve the records required under Rule 17ad–6 using electronic or micrographic media, provided certain conditions are met. The rule further states that records stored electronically or micrographically may serve as a substitute for the hard copy records required to be maintained pursuant to Rule 17ad–6. Existing Rule 17ad–7(f)(1) sets forth definitions for the terms ‘‘micrographic media,’’ ‘‘electronic storage media,’’ and ‘‘ARA.’’ This rule was adopted in 2001 and was designed to be technology-neutral but was guided by the electronic storage methods available at that time, including microfiche and optical disks, such as CD–ROMS and DVDs.257 The Commission is proposing amendments to this rule to replace the phrase ‘‘electronic storage media’’ with the phrase ‘‘electronic recordkeeping system’’ throughout the rule to continue its technology-neutral approach but encompass a broader range of electronic recordkeeping solutions. In addition, the Commission is proposing to remove the definition of, and all references to, micrographic media, as the Commission understands that registered transfer agents have moved away from using micrographic media to store records. Nonetheless, the amended rule is designed to be technology neutral, and the amended rule would not require or prohibit any specific technology, including micrographic media, so long as the transfer agent otherwise complies with the provisions of the rule. The Commission is also proposing to remove the definition of ARA, as the abbreviation for appropriate regulatory agency would be replaced with the full term for consistency with other Commission rules applicable to transfer agents. Therefore, proposed Rule 17ad–7(f) would state that, subject to the conditions set forth in this section, the records required to be maintained pursuant to Rule 17ad–6, may be maintained, retained, or preserved using an electronic recordkeeping system. In addition, the rule would state that records stored electronically in accordance with this paragraph may serve as a substitute for any hard copy records.258 For purposes of the proposed rule, the term ‘‘electronic recordkeeping system’’ would be defined as a system designed to maintain, retain, or preserve records in a digital format.259 The proposed definition of ‘‘electronic recordkeeping system’’ is designed to refer to the technological means by which records are stored, without specifying a particular type of technology. b. Requirements for Transfer Agents Using Electronic Recordkeeping Systems Existing Rules 17ad–7(f)(2)–(5) establish the specific requirements for transfer agents using electronic storage media or micrographic media to store their records. The proposed amendments discussed below are not intended to materially change the nature of transfer agents’ obligations with respect to electronic recordkeeping, but rather would streamline
and consolidate the existing outdated requirements and replace them with updated requirements that align with modern standards related to electronic records, information security, and audit trails. Existing Rule 17ad–7(f)(2) requires transfer agents that use electronic storage media or micrographic media to store their records to: (i) have available at all times for examination by the staffs of the Commission and of the transfer agent’s ARA facilities to project or produce immediately easily readable images of such records; (ii) be ready at all times to provide records requested by the Commission or the transfer agent’s ARA; (iii) create an accurate index of such records, store it with the records, and make it available to the staffs of the Commission and the transfer agents’ ARA for examination; (iv) have quality assurance procedures to verify the quality and accuracy of the records; and (v) maintain separate duplicates of the records and the index, preserve them for the same time period required for the originals, and have them available at all times for examination.260 Existing Rule 17ad– 7(f)(3) requires that any electronic storage media used by a transfer agent to store records must (i) ensure the security and integrity of the records through manual and automated controls that assure the authenticity and quality of the electronic records, detect attempts to alter or remove the records, and provide a means to recover altered, damaged, or lost records; (ii) externally label all removable storage media with a unique identifier; and (iii) uniquely identify and internally label all files with certain identifying and tracking information.261 If a transfer agent uses electronic storage media for its records, it also must establish an audit system, maintain and provide upon request all information necessary to access the records, and place in escrow with a

262 17 CFR 240.17Ad–7(f)(4) and (5); see also Recordkeeping Requirements for Transfer Agents, Exchange Act Release No. 44227 (Apr. 27, 2001), 66 FR 21648 (May 1, 2001) (the purpose of the escrow requirement is to assist the Commission or other ARA in accessing the transfer agent’s records). 263Exchange Act Rule 17ad–7(f)(5), 17 CFR 240.17Ad–7(f)(5). 264 Id. 265See 15 U.S.C. 78q–1. 266See proposed Rule 17ad–7(f)(2). third party and keep current a copy of appropriate documentation and information necessary to access the records and indexes in the event the transfer agent is incapable or unwilling to provide such access.262 Existing Rule 17ad–7(f)(4) requires that an audit system account for inputting of and any changes to every record stored on electronic storage media or micrographic media, that it be available for examination at any time by the staffs of the Commission and the ARA, and that it be preserved for the same time as underlying records. Finally, existing Rule 17ad–7(f)(5) requires transfer agents that use electronic storage or micrographic media to store their records to: maintain, keep current, and provide promptly upon request by the staffs of the Commission and ARA all information necessary to access the records and indexes stored on such media and place such access information and certain other information in escrow with an independent third party.263 Further, the independent escrow agent must file a signed undertaking with the Commission and the transfer agent’s ARA that undertakes to furnish promptly the information in escrow to the Commission upon request.264 Based on its experience overseeing the transfer agent industry, the Commission is proposing to modernize the electronic recordkeeping provisions of Rule 17ad–7(f). As stated, the purpose of the proposed amendments is not to materially change the nature of transfer agents’ obligations with respect to electronic records and electronic recordkeeping, but rather to ensure transfer agents would be able to take advantage of advances in technology, while adhering to modern standards related to availability, integrity, security, and reportability. As discussed throughout this release, the records created and maintained by registered transfer agents—including the ‘‘golden record’’ of securities ownership for investors across the entire securities industry—are critical to protecting investors, safeguarding their funds and securities, and ensuring the safe and efficient functioning of the U.S. securities markets and the national clearance and settlement system. Missing, incomplete, or erroneous transfer agent records can disrupt the clearance and settlement process, lead to financial loss, and undermine confidence in the securities markets. Given the ubiquity of electronic recordkeeping throughout the securities industry, including among registered transfer agents, ensuring that transfer agents are subject to modern standards for electronic recordkeeping, including the controls
described below, is necessary to protect investors, safeguard securities and related funds, and ensure the safe and efficient functioning of the U.S. securities markets and the national clearance and settlement system.265 The updated electronic recordkeeping requirements proposed herein are also designed to, among other things, promote effective oversight of transfer agents by ensuring that their electronic records are available to regulators. Proposed Rule 17ad–7(f)(2) would require a registered transfer agent using an electronic recordkeeping system to implement reasonable controls to ensure the integrity, accessibility, reproducibility, redundancy, and continuity of records maintained, retained, or preserved using the electronic recordkeeping system, including, but not limited to, controls that (1) protect records from unauthorized changes or destruction, including safeguards to detect and prevent unauthorized alteration or loss of records; (2) provide indexing and retrieval capabilities sufficient to allow immediate production of documents in both a human-readable format and in a reasonably usable electronic format; (3) create an audit trail that tracks access, modification, and deletion of records, including the identity of the user and the date and time of the action or attempted actions that is maintained, retained, and preserved using the same controls and for the same time period required by this section for the underlying record, and (4) provide means to recover altered, damaged, or lost records resulting from any cause.266 These proposed requirements are designed to remain technology-neutral and accommodate the types of electronic recordkeeping systems transfer agents may use as technology evolves beyond the types of optical storage systems and micrographic media that were common when Rule 17ad–7 was adopted over two decades ago. The proposed amended language does not necessitate specific types of recordkeeping systems, thereby allowing transfer agents to continue using existing systems, provided they otherwise comply with the requirements of Rule 17ad–7, or adopt new systems and processes in the face of continued technological innovation. The Commission is proposing that transfer agents using electronic recordkeeping systems implement controls to ensure the integrity, accessibility, reproducibility, redundancy, and continuity of records maintained, retained, or preserved using such system. While these controls are similar to the existing controls required for electronic and micrographic storage media, they are meant to be more flexible and encompass a wider range of electronic recordkeeping systems because they do not include requirements specific to a particular form of technology, such as the existing requirement to create an accurate index of the records. Controls to ensure integrity would ensure that records remain authentic, reliable, and complete and would include controls and safeguards to protect records from unauthorized
changes. The controls should not include write-prohibitions that may be incompatible with ordinary transfer agent functions. Instead, an audit trail system that tracks access, modification, and deletion of records, including the identity of the user and the date and time of such action or attempted action, would be more appropriate, and is in keeping with modern standards of data integrity. Controls to ensure accessibility would ensure that records remain available for use and would include controls that provide indexing and retrieval capabilities sufficient to allow immediate production of documents in both a human-readable format and in a reasonably usable electronic format. A human-readable format is a format that can be naturally read by an individual, while a reasonably usable electronic format is a format that is compatible with commonly used systems for accessing and reading records. The ability to produce records in both formats is a necessary and important feature of electronic recordkeeping systems so that Commission and ARA staff may carry out their oversight responsibilities. These controls would also support the prompt production of records for examination by Commission or ARA staff. Controls to ensure reproducibility would permit records to be easily viewed, copied, or exported in a way that preserves the record’s integrity, and which can be produced or otherwise made accessible for examination and regulatory oversight, while controls to ensure redundancy would ensure

267 17 CFR 240.17Ad–7(f)(6).
268 17 CFR 240.17Ad–7(g).
269See proposed Rule 17ad–7(h)(1). 270See proposed Rule 17ad–7(h)(2). 271See proposed Rule 17ad–7(h)(3). records remain available in the event of loss of the original record and would include controls that provide a means to recover altered, damaged, or lost records resulting from any cause. Controls to ensure continuity would permit records to remain complete, accessible, and reliable across their entire lifecycle, without regard to system or technology upgrades, staff changes, or format changes. Where third-party agents are employed by registered transfer agents, those third parties would also need to be held to the same controls, and may often constitute a control mechanism themselves, such as with escrow agents who ensure redundant and secure recordkeeping. The proposed amendments would require transfer agents utilizing electronic recordkeeping systems to implement reasonable controls to ensure the integrity, accessibility, reproducibility, redundancy, and continuity of the transfer agent’s records, which would help ensure that transfer agents ultimately protect investors by promptly and accurately fulfilling their critical recordkeeping responsibilities within the national clearance and settlement system.
c. Requirements for Transfer Agents
Using Third Parties for Recordkeeping Existing paragraph (f)(6) of Rule 17ad–7 states that, if the transfer agent uses a third party to maintain or preserve some or all of its electronic records, that third party must file with the Commission and the transfer agent’s ARA an undertaking stating that it will permit representatives or designees of the Commission to examine any books and records the third party is maintaining or preserving on behalf of the transfer agent and promptly furnish hard copies of any such books and records.267 Existing paragraph (g) of Rule 17ad– 7 pertains to transfer agent records maintained and preserved by an outside service bureau, other recordkeeping service, or the issuer. If the records required to be maintained and preserved by a transfer agent pursuant to Rule 17ad–6 or Rule 17ad–7 are maintained and preserved on behalf of the transfer agent by any of those parties, the transfer agent must obtain from them an agreement in writing that the records are subject to examination by representatives of the Commission and its ARA, if not the Commission, and that the third party will furnish upon demand complete, correct, and current hard copies of the records.268 The Commission is proposing to combine these requirements into a single provision in proposed Rule 17ad– 7(h)(1) to require that, unless it has and maintains at all times independent access to such records, a registered transfer agent that uses a third party, including, but not limited to, an outside service bureau, another registered transfer agent, or the issuer to maintain, retain, or preserve records, including by use of an electronic recordkeeping system or by using servers or other storage mechanisms that are owned or operated by the third party, obtain from such third party and file with the Commission and its ARA, if not the Commission, a legally binding written agreement signed by a duly authorized person of the third party acknowledging that the records of the transfer agent are subject at any time to examination by representatives of the Commission or ARA and agreeing to promptly, upon request, permit examination of such records during regular business hours and furnish legible, true, complete, and current copies of any records so requested.269 Proposed Rule 17ad–7(h)(2) would provide that a registered transfer agent using a third party to maintain, retain, or preserve records has independent access to such records if it can regularly access the records without the need of any intervention by the third party and through such access (1) permit examination of the records at any time by representatives of the Commission or its ARA; and (2) promptly furnish legible, true, complete, and current copies of such records.270 Where a transfer agent is utilizing blockchain￾based or other distributed ledger technology, it would have independent access where it is able to view the records maintained on the blockchain or other distributed-ledger, and can through such
access permit examination and promptly furnish copies, as noted immediately above. The requirements in proposed Rule 17ad–7(h)(1) are similar to the requirements of existing Rule 17ad–7(g) in that the transfer agent would be required to obtain an agreement, in writing, with the third party stating that the records are subject to examination by representatives of the Commission and its ARA, if not the Commission, and that the third party would furnish copies of the records upon demand. In addition, however, proposed rule 17ad– 7(h)(1) would also require the registered transfer agent to file that written agreement with the Commission and its ARA, if not the Commission, and require the third party to promptly furnish copies of any records so requested and permit examination of such records during regular business hours. These additional requirements would help to ensure that Commission and ARA staff have access when needed to transfer agent records being maintained, retained, or preserved by third parties. In addition, proposed Rule 17ad–7(h)(1) would provide an exception for registered transfer agents that have, and maintain at all times, independent access to any records maintained, retained, or preserved by a third party. These transfer agents would not be required to obtain an agreement from the third party. In the Commission’s experience, despite the existing requirement in Rule 17ad–7(f)(6) for third party recordkeepers maintaining records for transfer agents to file a written undertaking with the Commission and ARA, they do not always do so. Under proposed rule 17ad–7(h)(1), the Commission would place the obligation directly on the registered transfer agent. Requiring registered transfer agents to have a written agreement with any third party recordkeepers would foster accountability by the transfer agent, in that the third party would be bound to certain commitments to the transfer agent, which the transfer agent would be able to enforce through contractual remedies. The third party’s acknowledgement in the proposed written agreement that the records held by the third party for the transfer agent are subject at any time to examination by representatives of the Commission or ARA would inform the third party of the importance of maintaining the records as required and providing them, upon request, for examination. Proposed Rule 17ad–7(h)(3) would further provide that any agreement with a third party to maintain, retain, or preserve records will not relieve a registered transfer agent from the responsibility to maintain, retain, or preserve records as required under this
chapter.271 The requirements of
proposed Rule 17ad–7(h)(3) are substantially similar to the requirements of existing Rule 17ad–7(f)(6)(ii) which states that agreement with a third party to maintain records shall not relieve a registered transfer agent from its responsibility to prepare and maintain records as specified in this section or in Rule 17ad–6. The changes the

272See Exchange Act Rule 17ad–7(f)(2)(i) and (ii), 17 CFR 240.17Ad–7(f)(2)(i) and (ii). 273Exchange Act Rule 17ad–7(f)(6)(i), 17 CFR 240.17Ad–7(6)(i). 274See proposed Rule 17ad–7(g). 275See proposed Rule 17ad–7(i). 276 Id. 277See 2015 Concept Release, supra note 4, at 81978. 278See id. It is the Commission staff’s understanding that typical termination fees may range from about $1,000 to $5,000, though disputes like those described herein may involve a transfer agent’s demand for fees as high as $30,000. Commission is proposing would update and conform the language in this provision with the other proposed changes to Rule 17ad–7(f). d. Prompt Production of Records Existing Rule 17ad–7(f) requires transfer agents that use electronic storage media or micrographic media to store their records to have available at all times for examination ‘‘facilities to project or produce immediately easily readable images of such records’’ and to ‘‘[b]e ready at all times to provide such records’’ that the Commission or the transfer agent’s ARA requests,272 but does not explicitly require the prompt production (or examination) of such records. Further, there is no similar provision for records that are not stored using electronic storage media or micrographic media. At the same time, if a transfer agent uses a third party to maintain or preserve some or all of its required records using electronic storage media or micrographic media, existing Rule 17ad–7(f)(6), requires the third party to file a written undertaking with the Commission or the transfer agent’s ARA stating that, among other things, the third party ‘‘hereby undertakes to permit examination of such books and records at any time . . . and to promptly furnish to said Commission or its designee true, correct, complete, and current hard copies of any or all or any
part of such books and records.’’ 273
In the Commission’s supervisory experience, clear, explicit requirements to promptly produce and permit examination of records are necessary and appropriate to help the Commission to fulfill its statutory mandate to regulate and oversee registered transfer agents and facilitate examination of transfer agent records by Commission and ARA staff. Accordingly, proposed Rule 17ad–7(g) would require every registered transfer agent, with respect to any record required to be maintained, retained, or preserved under this
section, or otherwise subject to
examination under section 17(b) of the Exchange Act, to provide promptly upon demand from the representatives of the Commission or the transfer agent’s ARA a legible, true, complete, and current copy of such record in a reasonably usable electronic format.274 This proposed requirement is necessary and appropriate to facilitate examination of transfer agent records by Commission and ARA representatives. The proposed rule would create a simplified, single requirement applicable to all records subject to examination under Section 17(b) of the Exchange Act, regardless of whether the records are maintained in a paper-based or electronic format. It would require records to be produced promptly upon request. Promptly, in this context, means making reasonable efforts to produce records requested by Commission or ARA representatives without delay. In the Commission’s experience, given the widespread use of electronic recordkeeping, transfer agents have the technical capability to furnish records within a few hours of a request, although they may request additional time to review and prepare them prior to production. Thus, the Commission expects that only in unusual circumstances would a registered transfer agent be able to delay furnishing records for more than one business day and still meet the ‘‘promptly’’ standard. The proposed rule would require records to be produced in a reasonably usable electronic format. This means that any electronic recordkeeping system used by a transfer agent would need to be able to download and transfer a copy of a record in a reasonably usable electronic format to meet this obligation. A reasonably usable electronic format would be a format that is compatible with commonly used systems for accessing and reading electronic records and, as a result, may change over time as technology evolves. This proposed requirement is designed to prevent situations where regulators receive files in proprietary formats they cannot open or review. The proposed rule would require transfer agents to provide legible, true, complete, and current copies of records requested by Commission or ARA representatives. This provision would necessarily require a transfer agent to have controls in place to verify the quality and accuracy of its records to ensure that any records provided to Commission or ARA representatives are legible (capable of being read), true (accurate and authentic), complete, and current.
4. Delivery of Records to Successor
Transfer Agent
Existing Rule 17ad–7(h) provides that when a registered transfer agent ceases to perform transfer agent functions for an issue, the responsibility of such transfer agent under Rule 17ad–7 to retain the records required to be made and kept under Rule 17ad–6(a)(1), (6), (9), (10), and (11), (b) and (c) shall end upon delivery of such records to the successor transfer agent. The Commission proposes to renumber this provision as Rule 17ad– 7(i) and add language specifying that a transfer agent may also deliver certain required records to the issuer or the issuer’s designee to end its responsibility to retain those records.275 In addition, the Commission proposes to add a requirement for registered transfer agents to deliver, provide, or otherwise make available, to the issuer or the issuer’s designee all records required to be made and kept current under Rule 17ad–6(a)(1), (6), (9), (10), and (11), (b) and (c) related to an issue within 15 calendar days after ceasing to perform transfer agent functions for that issue.276 The Commission has received issuer complaints noting that two primary conflicts arise between transfer agents and issuers: (1) fee disputes and (2) termination/succession issues. Disputes between issuers and transfer agents can interfere with the transfer agent’s processing, recordkeeping, and safeguarding and therefore cause disruptions with the clearance and settlement system.277 For example, issuers have noted that some transfer agents, after being terminated by the issuer, have delayed or have refused to hand over securityholder records to successor transfer agents unless the issuer pays a termination fee 278 that was not previously agreed upon by both parties. The withholding of securityholder records does not allow the successor transfer agent to ensure the master securityholder file and other records are accurate. If the relationship between an issuer and a transfer agent is terminated, and the issuer engages a new transfer agent, it is essential to the issuer, its securityholders, and market participants who may seek to trade the issuer’s securities, that the issuer’s records are promptly delivered to the new transfer agent to provide an orderly continuity of services. To promote the continuous and accurate recordkeeping of issuer and securityholder records, this provision would require that all relevant master securityholder files, transfer journals, control books, records of cancelled securities certificates, and other key records be delivered, provided, or otherwise made available

279See proposed Rule 17ad–7(i). to the issuer or its designee no later than 15 calendar days of the transfer agent ceasing to perform transfer agent functions for an issue.279 Based on the Commission’s experience supervising transfer agents, 15 calendar days is sufficient time for a transfer agent to identify the relevant documents and provide copies of such documents to the issuer or the issuer’s designee, such as a successor transfer agent. The timely transfer of issuer and securityholder records is essential to maintaining the accuracy and continuity of critical transfer agent functions that support the national clearance and settlement system. As discussed above, delays in producing or transmitting documents and records can create operational gaps that impede a successor transfer agent’s ability to commence servicing the issuer’s securities, potentially affecting issuers, investors, and downstream market participants who rely on accurate and current records to process transactions and maintain orderly markets. Requiring transfer agents to make these critical records available provides certainty that a successor transfer agent will be able to resume core functions on behalf of the issuer and its securityholders in a timely manner, reducing the likelihood and duration of disruptions that could interfere with recordkeeping, distributions, transfers, and other essential services. These concerns underscore why a clear and enforceable requirement to deliver all relevant documents within a defined period is necessary to support the continuous and accurate servicing of securityholder accounts, to mitigate the risks of service interruptions, and to help ensure the safe and efficient functioning of the national clearance and settlement system.
5. Request for Comment
The Commission requests comments on all aspects of the proposed amendments to Rule 17ad–7. In particular, the Commission requests comments on the following:
90. Is the proposed uniform six-year
retention period appropriate for most transfer agent records? Are there categories of records that should have a shorter or longer retention period? If so, which ones and why?
91. The proposed rule would extend
the retention requirement to cover all records required to be made or kept under the Exchange Act, not just those specified in Rule 17ad–6. Are there categories of records currently created and maintained by transfer agents in the ordinary course of business that should be explicitly excluded from this expanded scope? If so, which ones and why? Do commenters believe that this requirement would conflict with any other Commission recordkeeping requirement (for example, for transfer agents that are also registered broker￾dealers)?
92. Would the proposed uniform six￾year retention period create
disproportionate compliance burdens for smaller or less complex transfer agents, such as those that perform transfer agent functions solely for their own or affiliated companies’ securities? Should the Commission consider tiered retention requirements based on transfer agent size or complexity?
93. With respect to records that would
be subject to a retention requirement under the proposed expansion of Rule 17ad–7(a), do transfer agents already create and maintain such records in the ordinary course of their operations, and if so, for how long are such records currently retained in practice? Are there categories of records that transfer agents currently create and use operationally but do not retain for any defined period, such that the proposed rule would require not only a new retention obligation but also changes to existing systems, policies, or infrastructure to preserve records that are currently discarded or overwritten after use? Please identify any such record categories and describe the operational, technological, and cost implications of retaining them for six years.
94. The proposed rule would require
electronic recordkeeping systems to maintain an audit trail that tracks access, modification, and deletion of records, including the identity of the user and the date and time of the action or attempted action. Are there circumstances in which maintaining such an audit trail would be technically infeasible or operationally impractical, such as with legacy systems or certain cloud-based platforms? How should the rule address such circumstances?
95. The proposed rule would replace
the term ‘‘electronic storage media’’ with ‘‘electronic recordkeeping system.’’ Is the proposed definition for this term sufficiently clear and technology-neutral to accommodate current and emerging recordkeeping technologies, including cloud-based platforms, distributed ledger systems, and AI-driven recordkeeping tools? Are there technologies or systems that might fall outside this definition that should be covered?
96. The proposed rule would remove
all references to micrographic media, reflecting the Commission’s understanding that registered transfer agents have largely moved away from such technology. Are there transfer agents that continue to rely on micrographic media for recordkeeping? If so, what transition period or accommodation, if any, would be appropriate to allow such transfer agents to come into compliance with the amended rule?
97. The proposed rule would require
transfer agents to implement controls to ensure the continuity of records across their entire lifecycle, without regard to system or technology upgrades, staff changes, or format changes. What specific challenges do transfer agents face in ensuring record continuity across system migrations, technology upgrades, or changes in service providers? Are there particular standards or frameworks such as those developed by the National Institute of Standards and Technology (NIST) or the International Organization for Standardization (ISO) that the Commission should reference or incorporate to provide clearer guidance on continuity requirements?
98. Would there be situations in
which a transfer agent is unable to obtain the agreement required under proposed Rule 17ad–7(h) from a third￾party service provider? If so, what requirements would be appropriate?
99. Do commenters agree that a
transfer agent utilizing blockchain-based or other distributed ledger technology would have independent access to such records consistent with proposed Rule 17ad–7(h)(2) such that the transfer agent would be able to regularly access and view the records maintained on the blockchain or other distributed-ledger without the need of any intervention by a third party, and could through such access permit examination of the records and promptly furnish copies of the records?
100. Should the Commission require
transfer agents to maintain a duplicate copy of each required record, separately from the original, using the same controls and for the same retention period as the original? Would such a requirement be practical and cost￾effective for transfer agents of all sizes and complexity? Should such a rule specify minimum standards for the geographic or logical separation of original and duplicate records, such as requiring that duplicates be maintained at a different physical location or on a separate network?
101. The proposed rule would require
transfer agents to deliver, provide, or otherwise make available to the issuer or its designee all specified records within 15 calendar days of ceasing to

280See generally, 17ad–9 through 13 Adopting Release, supra note 111, at 28232. 281 17 CFR 240.17Ad–10(a)(2). 282See infra Section III.J.1 for further discussion of transfer agents’ paying agent activities. 283See 17 CFR 240.15c6–1(a); see also proposed Rule 17ad–2. 284See proposed Rule 17ad–9. 285See supra Section III.B.1. 286See proposed Rule 17ad–10. 287See 17 CFR 240.17Ad–1(d), (e) (definitions of transfer and turnaround). 288Under the UCC, registration of a new owner for uncertificated securities occurs when the issuer (or the issuer’s agent) registers the purchaser as the new owner on its books. See U.C.C. § 8–301 (delivery of uncertificated securities occurs when the issuer registers the purchaser as the registered owner on its books). 289See proposed Rule 17ad–10(a)(2)(i). perform transfer agent functions for an issue. Is 15 calendar days a sufficient and realistic timeframe for all transfer agents, regardless of the size or complexity of the issue? Should the rule provide for extensions of this deadline in specified circumstances, such as those involving disputes between the transfer agent and the issuer, or operational disruptions? If so, what specified circumstances would warrant such an extension and what process should govern such extensions? Should the Commission consider alternative approaches to a transfer agent’s maintenance, retention, and preservation of records? Why or why not? If so, what alternative approaches should the Commission consider? Please explain in detail.
I. Amendments to Rule 17ad–10
The Commission adopted Rule 17ad– 10 in 1983 to ensure the accuracy of securityholder records and to address potential harm caused by inaccurate securityholder records.280 It requires each recordkeeping transfer agent to promptly and accurately post certificate detail to the master securityholder file after a security is transferred, purchased, redeemed or issued. The meaning of the term ‘‘promptly’’ varies with the relevant transaction but generally means five business days, although for certain exempt transfer agents under Rule 17ad–4(b) promptly means 30 calendar days, and for transfer agents functioning solely for their own or their affiliated companies’ securities and using batch processing promptly means ten business days.281 Timely updating of the master securityholder file is required because delayed posting or the failure to post would promote the proliferation of record inaccuracies that could impede the accurate payment of dividends and the processing of proxy solicitations.282 The Commission proposes amending Rule 17ad–10 to specify that the rule applies to both certificated and uncertificated securities equally, align the ‘‘prompt’’ posting timeframe to the modern settlement cycle,283 and modernize the rule text by replacing references to physical processes, hard copy records, and mail with technology neutral terms and standards. The proposed amendments are narrowly tailored to these three areas and mirror the standards and practices the Commission has already observed transfer agents adopt operationally. Specifically, the Commission proposes replacing the term ‘‘certificate detail’’ as used in this rule, with ‘‘position detail’’ to conform to the changes to Rule 17ad–
9.284 Similarly, the Commission
proposes amending its rules to remove references to ‘‘hard copy’’ records, physical processes, and mail and replace them, where necessary, with technology neutral terms. Lastly, the Commission seeks to revise the ‘‘buy￾in’’ rule by removing the term ‘‘physical overissuance,’’ replacing it with ‘‘overissuance,’’ as the former term has led to questions regarding whether it applies to uncertificated securities. In connection with that change, the Commission is proposing to add a definition for the term ‘‘overissuance’’ to specify that the rule applies to any overissuance, whether it involves certificated or uncertificated securities, to avoid any confusion, as more fully described below.

1. Global Amendments
   Consistent with the amended definitions in Rule 17ad–9 discussed above,285 the Commission is proposing to replace each reference to ‘‘certificate detail’’ throughout Rule 17ad–10 with a reference to ‘‘position detail,’’ including each instance of the term ‘‘certificate detail’’ in the title of the rule and in paragraphs (a)(1), (a)(3), (f), and (h) of Rule 17ad–10.286 The Commission also is proposing to replace each reference to ‘‘certificate’’ with a reference to ‘‘security,’’ including each instance of the term ‘‘certificate’’ in paragraph (g) of Rule 17ad–10. This will help ensure that the prompt posting and other requirements specified in Rule 17ad–10 clearly and explicitly apply equally to both certificated and uncertificated securities. This is especially important with respect to uncertificated securities because turnaround for uncertificated securities is accomplished when the transfer agent completes the registration of the change in ownership,287 and registration of uncertificated securities is accomplished when the appropriate position detail reflecting the transaction is posted to the transfer agent’s master securityholder file.288 In other words, for uncertificated securities, prompt posting is turnaround. Finally, the Commission is proposing to replace outdated references to paper￾based modes of communication, such as ‘‘dispatch or mail’’ with the term ‘‘provide,’’ which is technology-neutral and broad enough to encompass both the manual, mail-based means of communication envisioned when the rule was first adopted, and electronic, digital, and other means of communication that modern transfer agents might utilize. Specifically, the Commission proposes to replace the terms ‘‘dispatch or mail’’ and ‘‘mail’’ with the term ‘‘provide’’ in paragraphs (c)(1), (c)(2), and (d) of Rule 17ad–10.
2. Prompt Posting To Master
   Securityholder File
   As discussed in connection with the proposed amendments to Rule 17ad–2, improvements to operational efficiency enabled by advances in technology, the widespread availability of near￾instantaneous electronic communications, and the prevalence of uncertificated securities in today’s securities markets allow transfer agents to process transfers, communicate and share information with outside parties, and update and maintain their critical records significantly faster than was possible in 1983 when Rule 17ad–10 was first adopted. The manual, mail￾dependent processes associated with the prompt posting of certificate detail have given way to near-instantaneous electronic communications and automated processes and workflows. Given these advancements, and given that most securities processed by transfer agents are uncertificated, it is appropriate to align the timing for prompt posting under Rule 17ad–10 with the timing for turnaround under Rule 17ad–2, regardless of whether the security being transferred, purchased, redeemed, or issued is certificated or uncertificated. Indeed, as noted, for uncertificated securities the two processes are one and the same. Accordingly, the Commission is proposing to amend Rule 17ad– 10(a)(2)(i) to redefine ‘‘promptly’’ as meaning the shorter of one business day or the time period specified by Rule 15c6–1(a) under the Exchange Act.289 This change aligns with the amendments to Rule 17ad–2 and establishes a uniform standard for turnaround that matches the requirements for all recordkeeping transfer agents and for all securities, whether they are certificated or uncertificated. This would mean that,

290See supra Section III.D.1.
291 17 CFR 240.17Ad–10(c).
292 Id.
293See proposed Rule 17ad–10(c). 294 17 CFR 240.17Ad–10(d). 295 Id. 296See proposed Rule 17ad–10(d). 297 17 CFR 240.17Ad–10(f). 298See proposed Rule 17ad–10(f). 299 17 CFR 240.17Ad–10(g)(1). 300See 17ad–9 through 13 Adopting Release, supra note 111. under the existing standard securities settlement cycle, all recordkeeping transfer agents would be required to promptly and accurately post to the master securityholder file debits and credits containing minimum and appropriate position detail representing every security transferred, purchased, redeemed, or issued within one business day after the security is transferred, purchased, issued, or redeemed, regardless of whether the security is certificated or uncertificated. As discussed above,290 linking the prompt posting requirement for transfer agents to the existing settlement cycle for most broker-dealer securities transactions will help ensure that most investors’ securities transactions settle within the same time frame, regardless of whether the investor holds in street name (i.e., through a broker-dealer) or in registered form (i.e., with a transfer agent). As a result of this proposed change, the Commission would rescind all other meanings of the term promptly from Rule 17ad–10(a)(2). Specifically, the Commission would rescind the meaning of promptly for (i) recordkeeping transfer agents (other than those that perform transfer agent functions for redeemable securities issued by investment companies registered under
section 8 of the 1940 Act) that are
exempt transfer agents under Rule 17ad–4(b), (ii) recordkeeping transfer agents (other than those that perform transfer agent functions for redeemable securities issued by investment companies registered under section 8 of the 1940 Act) that perform transfer agent functions solely for their own or their affiliated companies’ securities issues and employ batch processing systems, and (iii) all other recordkeeping transfer agents. As noted above, these provisions are no longer necessary in light of the technological and operational developments that enable transfer agents to promptly update the master securityholder file.
3. Communications Between Co￾Transfer Agents and Recordkeeping
Transfer Agents
Existing Rule 17ad–10(c) requires co￾transfer agents to ‘‘dispatch or mail promptly’’ to the recordkeeping transfer agent a record of debits and credits for every security transferred or issued.291 ‘‘Promptly’’ in this context means two business days following transfers (or daily if the transfer is within five days of the record date).292 Consistent with the proposed amendments to Rule 17ad–2 discussed above, the Commission proposes to amend paragraph (c) of Rule 17ad–10 to require co-transfer agents to provide the required information within one business day rather than two.293 As discussed, advances in technology and other innovations enable co-transfer agents to provide records of debits and credits for transferred securities within one business day and often contemporaneous with their occurrence. This will help support recordkeeping transfer agents’ ability to meet the new turnaround timing requirements and ensure that all registered transfer agents perform their processing obligations consistently and timely. Similarly, existing Rule 17ad–10(d) requires co-transfer agents to ‘‘respond promptly to all inquiries from the recordkeeping transfer agent regarding records required to be dispatched or mailed by the co-transfer agent’’ pursuant to Rule 17Ad–10(c).294 For purposes of paragraph (d), ‘‘promptly’’ means within five business days of receipt of an inquiry from the recordkeeping transfer agent.295 The Commission is proposing to amend paragraph (d) to require co-transfer agents to respond within one business day of receipt of an inquiry from the recordkeeping transfer agent.296 Given the shortened turnaround deadlines in Rule 17ad–2 and the changes to paragraph (c) of Rule 17ad–10 noted above, it is imperative that co-transfer agents respond to inquiries from recordkeeping transfer agents in a timely manner. As with the proposed amendment to Rule 17ad–10(a), this change comports with the uniform standard set forth in Rule 17ad–2 and will help support recordkeeping transfer agents’ obligations to effect turnaround in a timely manner.
4. Retention of Certificate Detail
Existing Rule 17ad–10(f) requires every recordkeeping transfer agent to retain a record of all ‘‘certificate detail’’ (or, as proposed, ‘‘position detail’’) deleted from the master securityholder file for a period of six (6) years from the date of deletion.297 The Commission adopted this requirement to facilitate the resolution of record differences by recordkeeping transfer agents. The Commission proposes amending this rule to rescind the language allowing transfer agents that do not keep or maintain a ‘‘hard copy’’ of the information to comply with the rule by adhering to the electronic storage requirements set forth in Rules 17ad– 7(f) and (g).298 This provision would no longer be necessary, as the Commission’s proposed amendments to the recordkeeping rules do not require transfer agents to keep and maintain hard copies of records. This proposed amendment would not require a particular method for transfer agents to retain records of ‘‘position detail’’ information deleted from the master securityholder file, meaning that such information could be maintained, for example, by onchain records.
5. Overissuances
Existing Rule 17ad–10(g) requires a registered transfer agent, in the event of any actual ‘‘physical overissuance,’’ that it caused and of which it has knowledge, to buy-in securities (i.e., purchase them in the open market) equal to the number of shares (in the case of equity securities) or principal dollar amount (in the case of debt securities) of the overissuance.299 The buy-in requirement is designed to deter transfer agents from permitting record differences to accrue and incentivizes them to maintain complete and accurate records that assure that securityholders will receive all appropriate corporate distributions and communications.300 The Commission is aware, however, that the use of the word ‘‘physical’’ in referring to an overissuance could be read to convey that the rule applies only to an overissuance of certificated securities, because they are represented by ‘‘physical’’ paper certificates. This is not the case. The buy-in requirement specified in existing Rule 17ad–10(g) applies to any overissuance, whether the overissuance involves certificated or uncertificated securities. An overissuance is a type of record difference, but not all record differences are overissuances. Only record differences that result in an overissuance require a buy-in under existing Rule 17ad–10(g). When Rule 17ad–10(g) was proposed, the term ‘‘physical overissuance’’ was designed to distinguish between the type of record difference that results in an overissuance (i.e., where ‘‘the share or dollar totals in the master securityholder file do not balance with the control book’’) and another type of record difference where ‘‘securities transferred or redeemed contain

301 17ad–9 through 13 Proposing Release, supra note 9, at 47271. 302See 17ad–9 through 13 Adopting Release, supra note 111, at 28237. 303See proposed Rule 17ad–10(i). 304See proposed Rule 17ad–10(g). 305 2015 Concept Release, supra note 4, at Section VI.C (internal citations omitted). Exchange Act Rule 17ad–17(c)(2) defines the term ‘‘paying agent’’ to include any issuer, transfer agent, broker, dealer, investment adviser, indenture trustee, custodian, or any other person that accepts payments from the issuer of a security and distributes the payments to the holders of the security. 17 CFR 240.17Ad– 17(c)(2). 306 2015 Concept Release, supra note 4, at Section VI.C (internal citations omitted). 307 Id.; see also Transfer Agent Safeguarding of Funds and Securities, OCIE Risk Alert (Feb. 13, 2019), available at https://www.sec.gov/files/ OCIE%20Risk%20Alert%20-%20Transfer%20 Agent%20Safeguarding.pdf (last visited Mar. 23, 2026). 308This figure is based on transfer agent annual reports filed with the Commission on Form TA–2 under the Exchange Act for the 2014 reporting period, which are publicly available once filed. See generally, Exchange Act Rule 17Ac2–2(a), 17 CFR 240.17Ac2–2(a); SEC Form TA–2, 17 CFR 249b.102. 309This figure is based on transfer agent annual reports filed with the Commission on Form TA–2 under the Exchange Act for the 2024 reporting period, which are publicly available once filed. See generally, Exchange Act Rule 17Ac2–2(a), 17 CFR 240.17Ac2–2(a); SEC Form TA–2, 17 CFR 249b.102. 310For example, based on information received in response to information requests by Commission staff, we understand that aggregate gross purchase and redemption activity for some of the larger mutual fund transfer agents has ranged anywhere from $3.5 trillion to nearly $10 trillion just for a single entity in a single year. As discussed in
Section II.D, we are proposing to amend Form TA–
2 to include this information. certificate detail different from the certificate detail currently on the master securityholder file.’’ 301 The distinction is important because only the first type of record difference—the type that results in an overissuance—requires a buy-in under existing Rule 17ad–10.302 Importantly, it is possible for the share or dollar totals in the master securityholder file to be out of balance with the control book for any type of security, whether it is uncertificated or certificated. Accordingly, and to avoid future confusion among industry participants, the Commission is proposing to remove the word ‘‘physical’’ in reference to overissuance in the title and throughout paragraph (g) of Rule 17ad–10. To provide further clarity regarding the meaning of the term overissuance, the Commission is proposing to add paragraph (i) to Rule 17ad–10, which will define overissuance as ‘‘an out-of￾balance condition wherein the securities issued and outstanding exceed the securities authorized and outstanding, as reflected in the transfer agent’s control book.’’ 303 This proposed definition is appropriate because it is not potentially limited to certificated shares through use of the term ‘‘physical’’ as discussed above, and instead uses technology-neutral language that is equally applicable with respect to certificated and uncertificated securities. The proposed definition would help ensure that transfer agents are accurately and consistently applying the term and complying with their obligation to monitor against overissuances generally and conduct buy-ins consistent with Rule 17ad– 10(g).304
6. Request for Comment
The Commission requests comments on all aspects of the proposed amendments to the requirements in Rule 17ad–10. In particular, the Commission requests comments on the following:
102. The proposed rule would
redefine ‘‘promptly’’ for purposes of Rule 17ad–10(a) as the shorter of one business day or the time period specified by Rule 15c6–1(a), aligning the prompt posting requirement with the current T+1 settlement cycle. Is this standard achievable for all categories of transfer agents and all types of securities transactions, including those involving certificated securities, complex corporate actions, or securities issued by smaller issuers? Are there transaction types or operational circumstances that would make one-business-day posting impractical or infeasible?
103. The proposed rule would
eliminate the existing differentiated ‘‘promptly’’ standards for exempt transfer agents under Rule 17ad–4(b), transfer agents using batch processing systems, and all other recordkeeping transfer agents. Would the elimination of these differentiated standards create disproportionate compliance burdens for smaller or less technologically sophisticated transfer agents? Should the Commission consider an exemption or different standards for certain types of transfer agents, or a phased implementation schedule or transitional relief for transfer agents that would need to significantly upgrade their systems to meet the new standard?
104. Should the Commission consider
allowing multiple recordkeeping transfer agents to jointly but separately maintain the master securityholder file for a particular issue across multiple files and systems? If so, how would the prompt posting and overissuance requirements in Rule 17ad–10 apply in such arrangements, and what additional safeguards or coordination requirements would be necessary to ensure accuracy and integrity of the master securityholder file?
105. Should transfer agents that
maintain the master securityholder file exclusively on an immutable blockchain network be exempt from the record deletion and retention requirement set forth in Rule 17ad–10(f), given that records created on such networks cannot be ‘‘deleted’’ in the traditional sense? If so, what alternative requirements, if any, should apply to ensure that the purposes of Rule 17ad– 10(f) are achieved?
106. Should the Commission amend
Rule 17ad–10(h) to eliminate the provision stating that recordkeeping transfer agents shall not be required to add certificate detail (or position detail, as proposed to be amended) to the master securityholder file for certificates issued prior to the effective date of this
section, which was September 30, 1983?
107. Should the Commission consider
alternative approaches to ensuring that the requirements of Rule 17ad–10 apply equally and effectively to uncertificated securities, beyond the proposed replacement of ‘‘certificate detail’’ with ‘‘position detail’’ throughout the rule? For example, should the Commission consider adopting separate, tailored provisions for uncertificated securities that better reflect the operational realities of maintaining and updating securityholder records in a fully electronic environment? Please explain. J. Amendments to Rule 17ad–12

1. Background
   A significant number of registered transfer agents provide administrative, recordkeeping, processing, and custody services associated with distributing cash and stock dividends, bond principal and interest, mutual fund redemptions, and other payments to securityholders, a constellation of services often referred to as ‘‘paying agent’’ services.305 These activities often require transfer agents to receive, accept, and hold funds or securities for periods ranging from less than one day to as long as 30 days before distributing them to intended recipients.306 In some instances, transfer agents may hold residual or unclaimed funds and securities for extended durations when the intended recipient is lost or unresponsive before distribution or escheatment under applicable law.307 The scope and scale of these activities are significant. In 2014, transfer agents distributed over $2.4 trillion in securityholder dividends and interest payments.308 In 2024, the amount rose to nearly $4.4 trillion in dividend disbursements and interest payments.309 These figures do not include distributions made by mutual fund transfer agents.310 This data underscores

311 2015 Concept Release, supra note 4, at Section VI.C (internal citations omitted). 312 Id.; see also OCIE Risk Alert, supra note 307. 313 2015 Concept Release, supra note 4, at Section VI.C (internal citations omitted); see also DTCC During Market Turmoil (July 2, 2021), available at https://www.dtcc.com/dtcc-connection/articles/ 2021/july/02/dtcc-during-market-turmoil (last visited Mar. 23, 2026). 314 17 CFR 240.17Ad–12(a)(1) and (2). 315 17 CFR 240.17Ad–12(a)(2). 316 17ad–9 through 13 Proposing Release, supra note 9, at 47274. 317 Id. 318 Id. 319See 17 CFR 240.17Ad–13. 320See 17 CFR 240.17Ad–17. 321 2015 Concept Release, supra note 4, at Section VI.C (internal citations omitted). 322 Id. 323 2015 Concept Release, supra note 4, at Section VI.E (internal citations omitted). 324See OCIE Risk Alert, supra note 307. the increasing magnitude and systemic importance of the paying agent functions performed by registered transfer agents. Operational disruptions have historically demonstrated the potential market impact of custody and processing failures: the late-1960s Paperwork Crisis (including widespread physical-certificate backlogs and theft), the 2008 financial crisis, and the 2012 flooding of DTCC’s securities vault during Superstorm Sandy each highlighted the importance of safe, accurate, and efficient delivery of funds and securities—whether certificated or uncertificated—for market integrity and investor protection.311 Given transfer agents’ custody and paying agent roles, risks include fraud, theft, misappropriation, recordkeeping errors, attachment (e.g., judgments against a transfer agent), and insolvency (e.g., commingling of issuer or securityholder funds with transfer agent funds, potentially leading to those issuer or securityholder funds being treated as general assets of the transfer agent in bankruptcy).312 As operations have become increasingly automated and data-driven, transfer agents also face operational and information￾security risks that can affect ownership interests of securityholders and disrupt market activity, particularly in light of electronic linkages to DTC and other market participants.313
2. Existing Requirements Under Rule
17ad–12
Rule 17ad–12 is the safeguarding rule. It requires registered transfer agents (1) to assure that all securities in their custody or possession are held in safekeeping and handled, in light of all facts and circumstances, in a manner reasonably free from risk of theft, loss or destruction and (2) to assure that all funds in their custody or possession are protected, in light of all facts and circumstances, against misuse.314 In evaluating which particular safeguards and procedures must be employed, Rule 17ad–12 specifies that the cost of the various safeguards and procedures as well as the nature and degree of potential financial exposure are two relevant factors.315 When Rule 17ad–12 was first proposed in 1982, the Commission noted that ‘‘registered transfer agents, in addition to possess[ing] securities in transfer, may have custody and possession of substantial amounts of funds and securities for a variety of reasons’’ and that it was proposing Rule 17ad–12 ‘‘to strengthen investor protection.’’ 316 At the time, the Commission was primarily concerned with transfer agents maintaining physical custody of funds and securities through their role in maintaining balance certificates, administering DRIPs, retaining abandoned dividend checks and certificates under state abandoned property laws, maintaining supplies of unissued certificates, distributing cash dividends, and processing mutual fund redemptions.317 The examples of ‘‘safekeeping’’ measures a transfer agent might employ were indicative of the focus on physical possession or control: dual control vaults, sign-in procedures for vault entry, closed circuit TV cameras, security guards, locked doors to offices where transfer agent activities are performed, identification badges by employees, and password procedures or terminal access controls for system terminals in the transfer agent’s office, among others.318 Other rules touch on mitigating risks associated with transfer agents’ activities. For example, Rule 17Ad–13 requires an independent accountant’s annual report concerning internal accounting control and related procedures for the transfer of record ownership and the safeguarding of related funds and securities,319 and Rule 17ad–17 addresses a narrow aspect of paying agent activity—searches for lost securityholders and notices to unresponsive payees.320 However, these rules do not prescribe specific minimum standards for the complex administrative, recordkeeping, and processing activities associated with transfer agents’ paying agent services, nor do they explicitly address operational and information security risks that arise in modern, largely electronic environments.
3. Modern Transfer Agent Activities and
the Expanded Risk Landscape While many paying agent activities remain similar in kind to those contemplated in 1982, their scope, volume, and complexity have dramatically increased. Modern transfer agents routinely:

• Receive and hold issuer or
  securityholder funds and securities prior to distribution, exposing them to custody and delivery risks over varied holding periods;
• Maintain residual or unclaimed
  funds and securities for extended durations due to lost contact or unresponsive payees, implicating escheatment obligations;
• Execute complex distribution
  workflows—e.g., determining record￾date eligibility; calculating and balancing cash dividends or stock dividend equivalents; issuing, registering, and delivering securities in certificated or book-entry form; printing and posting payments; reconciling checks and disbursements; and providing ancillary services (e.g., stops on lost/stolen checks or certificates, reissues, paid-check copies, and IRS tax reporting); 321 and
• Administer special distributions
  (e.g., settlements and litigations) requiring granular reconciliation of ownership records across time windows and eligibility criteria, where errors can trigger investor loss and issuer/agent liability.322 At the same time, the widespread use of uncertificated securities, including tokenized or book-entry securities, and end-to-end automation has introduced material operational and information￾security risks. Transfer agents store, access, and manipulate data related to the securities and funds they hold. Unauthorized or inappropriate access or failure of those systems can directly lead to loss, misappropriation, or disruption of market activity—including among street-name owners via electronic linkages to DTC.323 In the Commission’s experience, there is wide variance among transfer agents’ practices concerning information security and operational risk management, and it is not uncommon for failures in information security or operational risk management to directly cause or contribute to losses through theft or misappropriation.324 While physical security is vitally important, cybersecurity and operational threats are equally vital to an effective safeguarding program. Yet Rule 17ad–12 focuses on physical custody and does not provide clear, definitive standards for safeguarding

325See In the Matter of Columbia Management Investment Services Corp., Exchange Act Release No. 80016 (Feb. 10, 2017) (settled matter) (finding that the transfer agent’s Records Management Manager ‘‘viewed sensitive personal account information such as addresses, dates of birth, and identification numbers’’ to misappropriate foreign deceased shareholders’ funds and securities); In The Matter of Equiniti Trust Company, LLC f/k/a American Stock Transfer & Trust Company, LLC, Exchange Act Release No. 100780 (Aug. 20, 2024) (settled matter) (finding that the transfer agent ‘‘suffered two separate cyber incidents in 2022 and 2023, respectively, that led to the net loss of approximately $4.08 million total in client funds’’). 326Proposed Rule 17ad–12(a). 327Proposed Rule 17ad–12(b). 328Proposed Rule 17ad–12(c). uncertificated securities, nor does it mandate a comprehensive risk￾management framework capable of addressing cybersecurity and operational threats at the scale of modern activities. Further, risks such as recordkeeping errors, attachment, and insolvency remain salient and are not fully addressed by the existing safeguarding regime.
4. Proposed Amendments
Given the evolving roles of transfer agents, the magnitude of funds and securities they process and hold, increasing importance of cybersecurity and operational risk management in protecting investor and issuer funds and securities, more specificity and a robust, comprehensive standard is necessary to better protect investors, facilitate the prompt and accurate clearance and settlement of securities transactions, and preserve the resilience of the national clearance and settlement system.325 Reframing Rule 17ad–12 as an outcomes-based, policies-and￾procedures requirement—supplemented by targeted minimum safeguards—is both necessary and appropriate in the public interest and for the protection of investors to:

• Explicitly cover all asset forms,
  including uncertificated securities, by extending the safeguarding requirement to misappropriation, damage, and improper or unauthorized access—terms that directly encompass electronic records and modern data systems;
• Mandate segregation of funds,
  requiring that issuer, securityholder, and other third-party funds be maintained in a bank account designated as a ‘‘for the benefit of’’ account, distinct from any transfer agent operating accounts, which will help ensure that those funds are not treated as the transfer agent’s general assets in the event of insolvency and reduce risks from commingling, attachment, and operational confusion;
• Require business continuity plans
  (‘‘BCP’’) to address events posing significant operational disruption risks—ensuring timely recovery of records and resumption of operations and obligations and providing a baseline of preparedness to help mitigate local and systemic risks; and
• Establish a comprehensive risk￾management framework to identify,
  measure, monitor, and mitigate material custody, operational, cybersecurity, and related risks—calibrated to each transfer agent’s business model and services— providing flexibility while ensuring consistent, minimum standards across the industry. Accordingly, the Commission is proposing to reframe Rule 17ad–12 as a comprehensive risk management rule. Specifically, under proposed amendments to Rule 17ad–12, a registered transfer agent would be required to establish, maintain, and enforce written policies and procedures reasonably designed to (i) ensure that all securities and funds in the transfer agent’s possession, control, or custody are protected at all times against the risk of theft, loss, misappropriation, misuse, damage, destruction, and improper or unauthorized access and (ii) identify, measure, monitor, and mitigate any material custody, operational, cybersecurity, and other risks posed by or associated with the transfer agent’s business, activities, and operations.326 This approach would help establish clear but flexible compliance requirements that would permit each transfer agent to develop policies and procedures tailored to its risks and other characteristics. The specific policies and procedures would still need to comply with the minimum requirements specified in the rule but would otherwise be within the discretion of the transfer agent depending on the nature and scope of the transfer agent’s services and activities. The rule would also require that all issuer, securityholder, and other third￾party funds held by a registered transfer agent be maintained in a bank account designated as a ‘‘for the benefit of’’ account separate from any other bank account of the registered transfer agent.327 The proposed rule would not, however, require transfer agents to maintain segregation of third-party funds on a client-by-client basis. This requirement would help ensure that a transfer agent’s operational funds are not commingled with issuer, securityholder, or other third-party funds and that those issuer, securityholder, or third-party funds are kept bankruptcy remote in the event the transfer agent enters bankruptcy or otherwise goes out of business, thereby facilitating access of issuers, securityholders, and other third parties to funds that are rightfully theirs. Finally, the amended rule would require transfer agents to establish, maintain, and enforce a written business continuity plan that (i) identifies and addresses events that pose a significant risk of disrupting the transfer agent’s operations; (ii) ensures the timely recovery of the transfer agent’s records; (iii) enables the timely resumption of the transfer agent’s operations and fulfillment of its responsibilities and obligations; and (iv) is tested, reviewed, and updated no less frequently than annually.328 This requirement is necessary and appropriate to ensure that registered transfer agents address and mitigate the significant risks that disruptions pose to investors,
  issuers, the securities markets, and the national clearance and settlement system. As discussed above, any interruption to a transfer agent’s functions—whether caused by natural disaster, operational failure, cyber incident, employee malfeasance, or other events—can result in significant delays or errors in the delivery of funds and securities, lead to the loss of physical or electronic records, funds or securities, or in some cases jeopardize the ownership interests of securityholders. Based on the Commission’s supervisory experience, historical disruptions, including those triggered by severe weather events and other operational shocks, have demonstrated that the continuity of transfer agent operations is essential to maintaining market stability and protecting investors. The Commission understands that modern transfer agents rely extensively on electronic systems for recordkeeping, processing, and communication with issuers, securityholders, and other market participants. These systems introduce dependencies and vulnerabilities that did not exist when the transfer agent rules were first adopted, including the risk that a system outage, data loss, or cybersecurity incident could impair a transfer agent’s ability to process transactions, access or reconcile records, or fulfill its obligations as a paying agent or custodian. Because transfer agents often serve as a critical link between issuers, registered securityholders, depositories, and other intermediaries, an operational disruption at a single transfer agent can have broader effects on trading, clearance and settlement, and investor access to funds or securities. For these reasons, requiring registered transfer agents to establish, maintain, and enforce a written business continuity plan is a key component of

329See 17 CFR 240.17Ad–17(a).
330See Rule 17ad–17 Adopting Release, supra note 57. 331 Id. 332See Unclaimed Property: Compliance Obligations and Challenges for Broker Dealers— SIFMA, SIFMA (January 2015), available at https:// www.sifma.org/research/white-papers/unclaimed￾property-compliance-obligations-and-challenges￾for-broker-dealers (discussing common dormancy triggers adopted by the states). 333See, e.g., Revised Uniform Unclaimed Property Act, Section 210 (Indication of Apparent Owner Interest in Property). 334For example, New York, Arizona, South Dakota, Maryland, and New Hampshire have three￾year dormancy periods for securities. See also letter from Senator Elizabeth Warren, Ranking Member, Committee on Banking, Housing, and Urban Affairs, to Meaghan Aguirre, National Association of Unclaimed Property Administrators, dated April 15, a modernized safeguarding framework and is necessary to mitigate the operational and information security risks faced by contemporary transfer agents. The requirement that the business continuity plan ensure the timely recovery of the transfer agent’s records is designed to ensure that each transfer agent considers how to address the recovery of both physical and electronic records. For example, duplicate copies of records that are kept separate from the originals may serve as a safeguard against data loss, corruption, or tampering. As such, duplicate copies of records may be part of a transfer agent’s business continuity plan, enabling the timely recovery of records and resumption of operations if needed. The requirement that the business continuity plan be tested, reviewed, and updated no less frequently than annually is designed to help ensure that each transfer agent’s plan remains current, effective, and appropriately calibrated to the transfer agent’s technology, business model, scale, and risk profile. The proposed amendments to Rule 17ad–12 will provide an outcomes￾based but measurable standard that enables transfer agents to tailor their risk management to their particular operations while establishing a consistent minimum baseline of preparedness across the industry. Given the volume of assets handled by transfer agents and the dependence of issuers and investors on their uninterrupted operation, reframing Rule 17ad–12 as a comprehensive risk management rule is necessary and appropriate to promote the prompt and accurate clearance and settlement of securities transactions, the safeguarding of securities and funds, and to protect investors and the public interest.
5. Request for Comment
The Commission requests comments on all aspects of the proposed amendments to Rule 17ad–12. In particular, the Commission requests comments on the following:
108. Is an outcomes-based, policies
and procedures approach appropriate for registered transfer agents’ risk management, or should the rule specify more prescriptive minimum standards for particular types of risks or activities?
109. Should the Commission provide
guidance on what would constitute a ‘‘material’’ custody, operational, cybersecurity, or other risk that would need to be addressed in a transfer agent’s risk management policies and procedures?
110. Are the proposed requirements
for BCPs adequate to ensure timely recovery and resumption of operations after a disruption?
111. Should transfer agents be
required to report cybersecurity incidents or other significant operational disruptions to the Commission or their ARA within a specified timeframe? If so, what types of incidents should trigger a reporting obligation, and what information should be included in such reports?
112. Should transfer agents be
required to obtain independent assessments of their cybersecurity and operational risk management practices, such as SOC 2 reports (i.e., the compliance and privacy standard developed by the AICPA) or similar third-party attestations? If so, how frequently should such assessments be required, and should they be filed with the Commission or made available to ARA staff?
113. Is the proposed requirement to
maintain issuer or securityholder funds in segregated bank accounts practical and effective from a safeguarding perspective? Should the rule address whether stablecoins and tokenized deposits can be funds (in addition to cash) and whether the bank account could be a bank’s custodial wallet? Should the rule specify minimum requirements for the banks at which such accounts must be maintained? Should the rule permit transfer agents to use trust accounts or other types of intermediaries, such as registered broker-dealers, to hold issuer or securityholder funds? K. Amendments to Rule 17ad–17

1. Background
   Existing Rule 17ad–17(b)(2) defines a lost securityholder as a securityholder to whom an item of correspondence that was sent is returned as undeliverable. Existing Rule 17ad–17(a)(1) requires recordkeeping transfer agents, brokers, and dealers with accounts of lost securityholders to exercise reasonable care to ascertain the correct physical mailing addresses of such securityholders, including by conducting at least two database searches pursuant to a specific
   schedule.329 The Commission adopted
   Rule 17ad–17 in 1997 to address situations where recordkeeping transfer agents could lose contact with securityholders, which could prevent securityholders from receiving corporate communications or interest, dividend, and other payments from the issuer to which the securityholder may be entitled.330 The Commission also noted that loss of contact could place securityholders’ securities and related interest and dividend payments to which they are entitled at risk of being deemed abandoned under operation of state escheatment laws.331 Generally, such state escheatment laws require transfer agents to remit ‘‘abandoned’’ securities and funds to a state’s unclaimed property administrator after a certain period of time has elapsed following a ‘‘dormancy trigger’’— historically five years for securities. There are two primary dormancy triggers for securities adopted in most states. First, one dormancy trigger is the return as undeliverable of one or more items of U.S. mail sent to the owner of the securities, commonly referred to as the ‘‘Returned Post Office’’ or ‘‘RPO’’ standard. Second, another dormancy trigger begins after the last owner￾generated contact or activity, regardless of whether physical mail is successfully delivered.332 In general, the property owner can avoid escheatment following a dormancy trigger by indicating an awareness of and interest in the security, for example by communicating with the transfer agent, accessing an account, negotiating a check, or making a deposit or withdrawal.333 Although securityholders who have had their securities escheated may be able to petition the state to reclaim their property, states generally indemnify holders only for the value of the securities at the time of escheatment, not for subsequent market appreciation, dividend streams, or tax consequences. Thus, ensuring that transfer agents can identify active and engaged securityholders is a key factor in preventing escheatment and the attendant harm or inconvenience it can cause to investors. The Commission is aware of a recent trend among some states to reduce the dormancy period for securities from five years to three years.334 The Commission

2026, available at https://www.banking.senate.gov/ imo/media/doc/20260415vlettertonaupaones cheatment.pdf. 335For example, in 2026, Florida Senate Bill 1457 enacted several significant changes to Florida’s unclaimed property laws. The new Florida standard incorporates both a returned communication standard and a 10-year period to show an indication of interest, or activity, in an account. It also allows investors to demonstrate continued interest by securely accessing a website, engaging through a mobile app, or responding to an account notice, among other actions. See Fla. SB 1452 (2026). See also, 12 Del. C. § 1133; N.Y. Abandoned Property Law § 50; Michigan Compiled Laws § 567; Texas Property Code Title 6; Iowa Code Chapter 556. is also aware that many states have now replaced or supplemented the long￾standing RPO standard that defines lost securityholders under Rule 17ad–17(a) with an inactivity standard that requires the owner to actively manage or access their account or it can be deemed dormant following a requisite period of inactivity.335 The argument in favor of the inactivity standard appears to be that the RPO standard is outdated, as many owners now access their accounts and receive statements electronically. However, a risk is that many investors adopt a ‘‘buy and hold’’ or ‘‘set it and forget it’’ strategy with their investment accounts, especially those established as retirement or educational savings accounts, and may see no need to routinely access their account, especially if they are receiving periodic statements. The net effect of these developments is to increase the likelihood of escheatment for investors. In the case of inactivity standards replacing the RPO standard, it is possible that state laws could vitiate the purpose of Rule 17ad– 17 altogether by requiring a transfer agent, broker, or dealer to escheat funds or securities to the state even though there is no lost securityholder as defined by the rule.
2. Proposed Amendments Regarding
Inactive Securityholders Accordingly, for the reasons discussed above, the Commission proposes to add Rule 17ad–17(b)(3) to establish a new defined term for ‘‘inactive securityholder.’’ Under the new Rule 17ad–17(b)(3), an inactive securityholder would include a securityholder for whom the transfer agent, broker, or dealer has not observed any account activity for a period of 18 months. For this purpose, the term ‘‘account activity’’ by a securityholder includes any of the following actions regarding its account: electronically accessing the account, including account login or email access; any electronic communication with the transfer agent, broker, or dealer regarding the account; conducting a transaction in the account where the assets are held, including deposits or withdrawals of funds; indication of receipt of communications (such as read receipts); or any other affirmative indication or action that reasonably demonstrates that the securityholder is reachable and engaged with its account. Under this proposal, a securityholder for whom the transfer agent, broker, or dealer has not observed any account activity for a period of 18 months would be treated as an inactive securityholder. Pursuant to the new requirement in proposed Rule 17ad–17(a)(3), the transfer agent, broker, or dealer would be required to exercise reasonable care to notify such securityholder. In exercising reasonable care to notify such securityholders, each such recordkeeping transfer agent and broker or dealer shall provide not less than two written notifications to each inactive securityholder stating that such inactive securityholder has not been active in its account, that some jurisdictions may consider inactive accounts to be unclaimed or abandoned property subject to escheatment, and describe the steps a securityholder may take to show activity in the account. Such notifications must be provided no later than six (6) months after the securityholder became an inactive securityholder and no later than six (6) months after providing the first notification. Such notifications need not be provided if the securityholder ceases to be an inactive securityholder prior to the notifications being provided. Such notifications may be sent by any method reasonably expected to reach the inactive securityholder. Providing the notifications could aid the transfer agent, broker, or dealer in reestablishing activity in the account, prior to the transfer agent, broker, or dealer being required to remit funds or securities to the state escheatment authority pursuant to a potential dormancy standard, thereby advancing the protection of investors against escheatment of their assets.
3. Proposed Amendments Regarding
Correspondence and Payments To reflect the use of electronic means for sending correspondence and payments, the Commission is also proposing to update existing paragraphs (b)(2), (c)(1), and (c)(3). Paragraph (b)(2) defines the term ‘‘lost securityholder.’’ A securityholder can become a lost securityholder if, among other things, an item of correspondence that was sent to the securityholder at the address contained in the transfer agent’s master securityholder file or customer security account records of the broker or dealer has been returned as undeliverable. The Commission is proposing to delete from this definition the phrase ‘‘at the address contained in the transfer agent’s master securityholder file or customer security account records of the broker or dealer.’’ Under the revised definition, a securityholder would become a lost securityholder whenever an item of correspondence that was sent to the securityholder has been returned as undeliverable, regardless of whether the address where the item was sent was contained in the transfer agent’s master securityholder file or customer security account records of the broker or dealer. The Commission is proposing this update to reflect that some securityholders may correspond using means and addresses, including electronic methods, that may not always be contained in the transfer agent’s master securityholder file or customer security account records of the broker or dealer. This proposal would ensure that all securityholders receive the protections afforded by the rule, regardless of how they may choose to correspond. Similarly, the Commission is proposing to update paragraphs (c)(1) and (c)(3) to reference electronic means for sending payments. Paragraph (c) requires a paying agent, as defined in Rule17ad–17(c)(2), to provide not less than one written notification to each unresponsive payee, in certain circumstances. Paragraph (c) currently refers to checks not being negotiated, in determining whether a securityholder is an unresponsive payee and when a paying agent must provide the written notification. The Commission is proposing to update paragraph (c) to refer to a rejected electronic payment, in addition to a check that has not been negotiated. The Commission is proposing this update to reflect that some securityholders may receive payments through electronic methods. This proposal would ensure that all securityholders receive the protections afforded by the rule, regardless of how they may choose to receive payments.
4. Request for Comment
The Commission requests comments on all aspects of the proposed amendments to Rule 17ad–17. In particular, the Commission requests comments on the following:
114. Should the rule specify
additional steps that transfer agents, brokers, or dealers must take before or after completing unsuccessful database searches before remitting funds or securities to a state unclaimed property administrator, such as attempting to contact the securityholder by alternative

336See proposed Rule 17ad–30(a). 337See proposed Rule 17ad–30(b). 338See proposed Rule 17ad–30(a). means or notifying the issuer? For example, should the Commission require that a lost securityholder provide affirmative consent before a transfer agent, broker, or dealer may remit funds or securities to a state unclaimed property administrator?
115. Is the Commission’s proposed
definition of ‘‘inactive securityholder’’ appropriate? Should the Commission amend the definition of ‘‘inactive securityholder’’ to incorporate any other account dormancy or inactivity component? If so, please describe in detail the other account dormancy or inactivity components. Is the Commission’s proposed period of inactivity appropriate? What period of inactivity should trigger lost securityholder status?
116. Is the Commission’s proposed
description of account activity appropriate? What types of account activity should be sufficient to prevent a securityholder from being deemed inactive? Does the description adequately capture activity in tokenized securities?
117. Should the Commission consider
other or additional measures to protect investors from the consequences of escheatment, such as requiring transfer agents, brokers, or dealers to provide an additional written notice to securityholders of the risk of escheatment before remitting their assets to a state unclaimed property administrator, or requiring transfer agents to maintain records of escheated assets to facilitate reclamation by investors?
118. Should the Commission make
any other amendments to Rule 17ad–17 to reflect the use of electronic communications? For example, should the Commission amend the definition of ‘‘Information data base service’’ to reference electronic contact information and communications? Should the Commission include in the definition of ‘‘Information data base service’’ a data base that contains contact information reasonably likely to result in reestablishing contact with the lost securityholder, in the case of any other undeliverable correspondence? Should the Commission require transfer agents, brokers, or dealers to search for a correct physical mailing address for a lost securityholder? Should the Commission allow transfer agents, brokers, or dealers to satisfy their obligations under Rule 17ad–17 by searching for a correct electronic mailing address or other means of electronic communication? Are there commercially available databases which transfer agents, brokers, or dealers can use to search for a correct electronic mailing address or other means of electronic communication?
119. Should the Commission make
any other amendments to Rule 17ad– 17(c) to reflect paying agents’ use of electronic communications and electronic payments?
120. In situations where a transfer
agent, broker, or dealer does not have a physical mailing address for a securityholder, how does the transfer agent, broker, or dealer comply with Rule 17ad–17? Are there alternative means of complying with Rule 17ad–17 that do not require the use of physical mail?
121. Should the Commission consider
any other alternative approaches to protect investors from the consequences of escheatment? If so, what alternative approaches should the Commission consider? For example, should the Commission harmonize with approaches taken by other regulators, such as the Department of Labor? Should the Commission consider explicitly preempting state laws related to escheatment? Please explain in detail.
122. Should the Commission consider
providing an alternative to the database search requirement in circumstances where the transfer agent, broker, or dealer does not have identifying information for a lost securityholder? For example, should the Commission consider a lost securityholder reauthentication requirement whereby the transfer agent, broker, or dealer must make at least two attempts to reestablish contact with a lost securityholder using all available contact information reasonably available to the transfer agent, broker, or dealer?
IV. Proposed New Rules
It is appropriate to address on-going concerns regarding transfer agent operations as well as strengthen the industry’s approach to new technology and investor protection. Accordingly, the Commission is proposing a strengthened compliance framework which would include requirements for registered transfer agents to develop compliance policies and procedures and to refrain from improperly removing restrictive legends. Each of these proposed new rules is discussed in detail below. A. Proposed Rule 17ad–30: Compliance Proposed Rule 17ad–30 would require every registered transfer agent to establish, maintain, and enforce written policies and procedures reasonably designed to (i) achieve compliance with the federal securities laws and the rules and regulations thereunder applicable to the transfer agent and (ii) identify and remediate instances of non-compliance with the policies and procedures in a timely manner.336 The proposed rule would also require that the policies and procedures be reviewed and approved by the transfer agent’s board of directors or similar governing body no less frequently than annually or following material changes to either the transfer agent’s operations or the federal securities laws and rules and regulations described in paragraph (a)(1) of this section.337 Based upon its supervisory experience with respect to transfer agents, the Commission has observed that there is significant variance among transfer agents in terms of their awareness of and experience with the federal securities laws, including the Commission’s transfer agent rules. This variance can have significant consequences, including compromising the accuracy of issuer securityholder records, disrupting communications between issuers and securityholders, disenfranchising investors, and potentially exposing issuers, investors, and the broader securities markets to significant financial loss and undermining the national system of clearance and settlement. These requirements would establish a uniform baseline compliance requirement for all registered transfer agents, regardless of size, business model, or specific services provided, while at the same time providing individual transfer agents with the flexibility to develop and implement written policies and procedures based on their specific business model, services, risks, and other characteristics. Such flexibility would help accommodate the various business models transfer agents may have while at the same time advancing the Commission’s investor protection goals and facilitating the safe and efficient functioning of the national clearance and settlement system.

1. Policies and Procedures Reasonably
   Designed To Achieve Compliance Proposed Rule 17ad–30(a)(1) would require every registered transfer agent to establish, maintain, and enforce written policies and procedures reasonably designed to achieve compliance with the applicable federal securities laws, rules, and regulations.338 As noted, this approach is designed to provide flexibility while promoting a baseline of compliance across the industry. The policies and procedures requirement

339See e.g., 17 CFR 275.206(4)–7 (a rule requiring registered investment advisers to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Investment Advisers Act and rules adopted thereunder. This rule also includes requirements to review, no less frequently than annually, the written compliance policies and procedures and to designate a chief compliance officer responsible for administering such policies and procedures); see also 17 CFR 270.38a–1 (a rule requiring registered investment companies to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the federal securities laws. This rule also includes requirements to review, no less frequently than annually, the adequacy of the compliance policies and procedures and to designate a chief compliance officer responsible for administering such policies and procedures). 340See proposed Rule 17ad–30(a)(2). 341See proposed Rule 17ad–30(b). 342See generally Clearing Agency Governance and Conflicts of Interest, Exchange Act Release No. 98959 (Nov. 16, 2023), 88 FR 84454 (Dec. 5, 2023). would necessitate that registered transfer agents conduct a critical review and evaluation of the regulatory landscape and identify the specific statutes, rules, and regulations implicated by the transfer agent’s registration status and specific activities. The establishment of written policies and procedures for regulated entities is commonplace in existing securities laws and regulations.339 Beyond simply establishing a compliance framework, written policies and procedures also facilitate the identification and remediation of compliance issues in a timely manner. Written policies and procedures are an essential tool through which transfer agents can organize, communicate, implement, monitor, and improve their compliance efforts, and the proposed rule’s requirement for such policies and procedures is therefore complementary to existing legal obligations. In establishing and maintaining such written policies and procedures, a transfer agent may tailor them to its particular circumstances and the scope of its transfer agent activities. In establishing, maintaining, and enforcing such written policies and procedures, a transfer agent generally should ensure that its directors, officers, employees, contractors, and service providers are aware of the transfer agent’s policies and procedures and both obligated and capable of complying with them in the performance of their duties. The Commission understands that there are various ways for a firm to ensure awareness and compliance among its management and personnel, including maintaining and distributing employee handbooks, establishing robust training programs, ensuring that firm policies and procedures are easily accessible, utilizing technology like compliance software and online policy management tools, consistent interpretation and enforcement of the policies
and procedures by management, internal audits and risk assessments, and creating a culture of transparency and accountability where questions, concerns, and issues can be raised openly and without fear of retaliation. Regardless of the specific methods and tools a transfer agent uses to ensure that its management and staff are aware of and follow relevant policies and procedures, determining which methods and tools will work best is a key component of ensuring that the policies and procedures are reasonably designed to achieve compliance. Sub-paragraph (2) of Rule 17ad–30(a) would require that the policies and procedures be reasonably designed to identify and remediate noncompliance with the transfer agent’s policies and procedures in a timely manner.340 While transfer agents would have flexibility to ensure that compliance failures are remediated in a way that is tailored to the specific transfer agent, any approach would need to include policies and procedures reasonably designed to identify and track instances of non-compliance, as well as an approach to identify and implement appropriate remedial measures. This system would help provide the transfer agent with data and other information necessary to evaluate the overall effectiveness of the compliance program, including whether the policies and procedures, or any other part of the compliance program, may need to be updated or amended as required under paragraph (b) of proposed Rule 17ad–30. By requiring transfer agents to establish systems for identifying and remediating violations, the proposed rule would help ensure that compliance issues are addressed promptly before they can disrupt the prompt and accurate processing of securities transactions or otherwise harm investors, issuers, or the broader securities markets, and at the very least mitigate such disruptions and harm.
2. Board Approval and Annual Review
Proposed Rule 17ad–30(b) would require that the policies and procedures be reviewed and approved by the transfer agent’s board of directors or similar governing body no less frequently than annually or following material changes to either the transfer agent’s operations or the federal securities laws and rules and regulations described in proposed rule 17ad–30(a)(1) 341 Compliance with applicable securities laws, rules, and regulations is fundamental to a transfer agent’s ability to perform its critical functions in the national clearance and settlement system, and the board of directors or similar governing body is ultimately responsible for the overall direction and oversight of the transfer agent’s business, including compliance. Requiring board approval would emphasize the importance of compliance and help ensure that adequate attention is paid at the highest levels of the firm.342 Similarly, the requirement to review the policies and procedures no less frequently than annually would provide an opportunity for the governing body responsible for making such determinations to assess the effectiveness of the compliance program, identify any gaps or weaknesses, and ensure that the compliance program evolves as needed to address changes in the transfer agent’s business, applicable rules and regulations, and the broader securities market. The requirement for the board of directors to review and approve the policies and procedures following material changes to the transfer agent’s operations or the applicable federal securities laws and rules should also ensure that a transfer agent keeps its policies and procedures updated following any relevant developments in the compliance and regulatory landscape.
3. Request for Comment
The Commission requests comments on all aspects of proposed Rule 17ad–
30. In particular, the Commission
requests comments on the following:
123. Should the Commission provide
more specific guidance or safe harbors regarding what constitutes policies and procedures ‘‘reasonably designed’’ to achieve compliance? If so, what specific elements or standards should be included?
124. Should the rule apply uniformly
to all registered transfer agents, or should the Commission adopt a tiered or scaled approach based on factors such as size, transaction volume, number of issuer accounts serviced, or complexity of services provided? If so, how should such tiers be defined and what requirements should apply to each?
125. Are there particular categories of
federal securities laws and regulations that should be explicitly identified in the rule or accompanying guidance as requiring coverage in a transfer agent’s compliance policies and procedures?

343See Rule 144(a)(3), 17 CFR 230.144(a)(3). 344See Securities Act of 1933 Section 5, 15 U.S.C. 77e. 345See e.g., In the Matter of Manhattan Transfer Registrar Company and John C. Ahearn, Exchange Act Release No. 83267 (May 17, 2018) (settled action against a transfer agent and its former principal for violations of Sections 5(a) and 5(c) of the Securities Act of 1933 related to their roles in removing restrictive legends and effectuating numerous stock transfer requests which led to the unlawful public sale of the securities of two companies. 346See Securities Act of 1933 Section 5, 15 U.S.C. 77e. 347See proposed Rule 17ad–31. 348See proposed Rule 17ad–31(a). 349See proposed Rule 17ad–31(b). Notwithstanding the requirements of proposed Rule 17ad–31(b), any seller of a security in an unregistered transaction would continue to bear the burden of establishing the availability of an exemption from registration. See, e.g., In the Matter of the Application of William H. Murphy & Co., Inc. and William H. Murphy For Review of Disciplinary Action Taken by FINRA, Exchange Act Release No. 90759 (Dec. 21, 2020) (stating that ‘‘[u]pon the Alternatively, would such specificity undermine the flexibility the Commission intends to provide?
126. Should the rule require transfer
agents to designate a specific compliance officer or maintain a dedicated compliance function responsible for overseeing the implementation and enforcement of the compliance program? If so, should there be minimum qualifications for such a role, and how should any such requirement be scaled for smaller transfer agents?
127. Should a transfer agent’s board of
directors or similar governing body be required to review and approve the transfer agent’s compliance policies and procedures annually? For transfer agents that lack a traditional board structure, such as sole proprietorships, partnerships, or certain limited liability companies, what entity or individual should be responsible for fulfilling the approval and oversight functions specified by the proposed rule? Should the Commission provide additional guidance on what constitutes a ‘‘similar governing body’’ for purposes of this requirement?
128. Should the Commission provide
guidance on what constitutes a ‘‘material’’ change to the transfer agent’s operations or the federal securities laws and rules that would trigger the requirement for the transfer agent’s governing body to review and approve the transfer agent’s compliance policies and procedures?
129. Should the rule require transfer
agents to report material instances of noncompliance to the Commission within a specified timeframe? If so, how should ‘‘material’’ be defined for this purpose?
130. Should the rule require transfer
agents to keep any particular records regarding the development and/or enforcement of the policies and procedures that would be required by the proposed rule? Should the rule require transfer agents to keep any particular records regarding the governing body’s annual review and approval of the policies and procedures required by the proposed rule?
131. Should the Commission consider
any alternative approaches to establishing a compliance framework for transfer agents? If so, what alternative approaches should the Commission consider? Please explain in detail. B. Proposed Rule 17ad–31: Restrictive Legends As discussed in the 2015 Concept Release, transfer agents play a particularly important role in the securities industry with respect to the issuance and transfer of restricted securities. In no case may a security be resold or transferred legally unless there is an effective registration statement or an available exemption from registration for the resale. Restricted securities are, most commonly, among other things, securities acquired directly or indirectly from the issuer, or from an affiliate of the issuer, in a transaction or chain of transactions not involving any public offering.343 Typically, these securities bear restrictive legends indicating that their sale or transfer may be subject to a restriction or limitation and intermediaries will not effectuate their transfer until restrictive legends are removed. Because transfer agents are often the party responsible for affixing, tracking, and removing restrictive legends, they help to prevent unregistered securities distributions that violate Section 5 of the Securities Act of 1933.344
Section 5 violations facilitated by the
removal of restrictive legends have remained a perennial issue. Transfer agent failures to adequately perform this function have, under certain circumstances, been found to have violated Section 5.345 As a result, requirements specifically applicable to transfer agents to address their unique role in this process are necessary and appropriate to protect investors and the public interest by reducing the risk of such violations of the federal securities laws. Therefore, the Commission is proposing new Rule 17ad–31 to establish requirements for transfer agents regarding the placement and removal of restrictive legends and to help prevent transfer agents from facilitating violations of Section 5 of the Securities Act of 1933.346 The proposed rule would require transfer agents to: (1) maintain and rely upon a current list of authorized issuer employees on whose instructions the transfer agent is authorized to act regarding the placement and removal of restrictive legends; and (2) refrain from facilitating any unregistered securities transaction unless the transfer agent has a reasonable basis to believe that the transaction does not violate, or is not
part of a chain of transactions that
would violate, Section 5(a) of the Securities Act of 1933. The proposed rule would also provide a non-exclusive safe harbor for transfer agents seeking to establish such a reasonable basis prior to facilitating an unregistered securities transaction.347

1. Requirement To Maintain List of
   Authorized Issuer Representatives— Proposed Rule 17ad–31(a) Proposed Rule 17ad–31(a) would require each transfer agent to, for each issue of securities it services on behalf of an issuer, (1) obtain from the issuer and maintain a current list of issuer employees on whose instructions the transfer agent is authorized to act regarding the placement and removal of restrictive legends; and (2) refrain from acting on instructions from any person not included on the list required pursuant to paragraph (a)(1).348 The purpose of this provision is to ensure that transfer agents only perform services based on instructions from employees of the issuer who are authorized by the issuer to provide such instructions. This would address situations in which transfer agents receive requests to perform services such as removing restrictive legends or issuing new securities from an unauthorized person rather than at the direction of the issuer. The Commission is aware that some promoters may represent themselves as agents of the issuer when they are not. The proposed rule would prevent a transfer agent from acting upon the instructions of an unauthorized person to issue stock or to remove restrictive legends.
2. Requirements To Establish
   Reasonable Basis Before Facilitating Certain Transactions—Proposed Rule 17ad–31(b) Proposed Rule 17ad–31(b) would require transfer agents to refrain from facilitating any unregistered securities transaction unless the transfer agent has a reasonable basis to believe that the transaction does not violate, or is not
   part of a chain of transactions that
   would violate, Section 5(a) of the Securities Act of 1933.349 The proposed

establishment of a prima facie case of a Section 5 violation, the burden shifted to WHM to show that the offers and sales at issue were exempt from the registration requirements . . . Because ‘public policy strongly supports registration,’ the burden of proof rests with the party claiming the exemption.’’) (citations omitted). 350For purposes of proposed Rule 17ad–31(b), the term ‘‘transfer’’ includes non-sale transfers of securities. 351See proposed Rule 17ad–31(c). 352See proposed Rule 17ad–31(c)(2). 353See proposed Rule 17ad–31(c)(1). 354See supra Section IV.B.2 for a discussion of potential red flags. In addition, a transfer agent should generally consider whether the opinion of counsel is provided by an attorney who is licensed to practice law and in good standing in the jurisdiction(s) where the attorney is so licensed. For example, certain market centers may provide a list of prohibited service providers that include attorneys convicted of criminal activity or subject to regulatory bans or suspensions. 355See proposed Rule 17ad–31(c)(2). rule provides three examples of unregistered securities transactions:
processing or recording (1) an original issuance of securities not registered pursuant to the Securities Act; (2) a request to remove a restrictive legend or stop order on any security; or (3) the purchase, sale, or transfer 350 of a security by an affiliate, officer, or director of the issuer of the security. The purpose of this provision is to help prevent the removal of restrictive legends or the facilitation of other transactions involving unregistered securities from being used as a step in a potentially illegal distribution of securities. By requiring transfer agents to have a reasonable basis to believe that the transaction will not violate Section 5, the rule is designed to strengthen transfer agents’ role in this process to help prevent violations of the Securities Act. Given transfer agents’ access to information about the securities and the parties involved, transfer agents are able and should be required to take reasonable steps to ensure they are not facilitating a potentially illegal distribution. This proposed provision would require transfer agents to ensure that they have a reasonable basis for believing that a transaction may proceed legally before facilitating it. Therefore, transfer agents should ensure that they are not aware of any red flags associated with such transaction. The term ‘‘red flag’’ refers to an aspect of a transaction or series of transactions that may indicate the transaction is fraudulent, illegal, or otherwise problematic. Red flags associated with unregistered securities transactions may include, among other things, trading suspensions, concentration of ownership of the majority of freely tradeable securities, large reverse stock splits, companies whose assets are large but revenue is minimal, a shell company acquisition of a private company, incomplete or nonexistent issuer filings with the Commission, a sudden spike in investor demand for a thinly traded or low priced security, suspicious documents such as inconsistent financial documents or altered certificates of incorporation, an issuer with several recent name changes, business combinations, or recapitalizations, and receipt of similar documents from different issuers with certain characteristics, such as involvement of the same attorney. If a transfer agent becomes aware of a red flag while processing an unregistered securities transaction, the transfer agent should take reasonable steps to inquire further regarding the red flag and proceed processing the transaction only when the transfer agent has a reasonable basis to believe that doing so will not facilitate a violation of Section 5.
3. Methods for Establishing Reasonable
Basis—Proposed Rule 17ad–31(c) Proposed Rule 17ad–31(c) would create a non-exclusive safe harbor by providing transfer agents with two methods for developing the reasonable basis required under paragraph (b): (1) obtaining and reviewing an opinion of counsel that meets certain specified requirements; or (2) making their own determination that the transaction may be conducted pursuant to a specific exemption from registration.351 Under either method, in order to rely on the safe harbor, the transfer agent also must not be aware of circumstances indicating that the transaction may violate, or is part of a chain of transactions that may violate, Section 5(a) of the Securities Act of 1933. a. Opinion of Counsel Under proposed paragraphs (c)(1) and (c)(2), a transfer agent may establish the required reasonable basis by obtaining and reviewing an opinion of counsel that meets certain requirements. Specifically, the opinion must be from counsel who is not an affiliate, officer, director, or employee of either the issuer or the individual or entity seeking to resell shares of the issuer.352 This requirement is designed to help ensure the independence and objectivity of the legal analysis. The opinion must identify the documents and information the counsel reviewed and relied upon in providing the required analysis. This requirement is designed to provide transparency regarding the factual basis for the legal opinion and to enable the transfer agent to assess whether the opinion is based on a sufficient factual record. The opinion must analyze the applicability and validity of a specific exemption from registration and, based on that analysis, opine that the specific transaction at issue may be conducted pursuant to the specific exemption from registration so identified. This requirement is designed to ensure that the opinion provides a substantive legal analysis of why a specific exemption applies to the specific transaction, rather than simply providing a conclusory statement that the transaction is exempt. In addition to obtaining an opinion that meets these requirements, the transfer agent must not be aware of circumstances indicating that the transaction may violate, or is part of a chain of transactions that may violate,
Section 5(a) of the Securities Act.353
This requirement is designed to ensure that transfer agents do not simply rely blindly on an opinion of counsel when there are ‘‘red flags’’ or other circumstances that have alerted or should alert the transfer agent to potential problems with the transaction.354 b. Transfer Agent’s Own Determination Under proposed paragraph (c)(3), as an alternative to obtaining an opinion of counsel, a transfer agent may make its own determination that the transaction may be conducted pursuant to a specific exemption from registration, provided the transfer agent is not aware of circumstances indicating that the transaction may violate, or is part of a chain of transactions that may violate,
Section 5(a) of the Securities Act.355
This alternative is designed to provide flexibility for transfer agents that have the expertise and resources to conduct their own legal analysis. The Commission recognizes that some transfer agents, particularly larger transfer agents with experienced legal and compliance staff, may prefer to conduct their own analysis rather than rely on opinions from outside counsel. Permitting transfer agents to make their own determinations, subject to appropriate documentation and approval requirements as discussed below, would provide appropriate flexibility while still ensuring adequate safeguards.
4. Documentation Requirements for
Transfer Agent Determinations— Proposed Rule 17ad–31(d) Proposed Rule 17ad–31(d) would establish specific documentation requirements for any determination made by a transfer agent under

356See proposed Rule 17ad–31(c)(3). 357See Final Reports of the SEC Government￾Business Forum on Small Business Capital Formation from 2019, 2020, 2022, 2023, 2024, 2025, and 2026, available at https://www.sec.gov/about/ divisions-offices/office-advocate-small-business￾capital-formation/final-reports-sec-government￾business-forum. 358See 15 U.S.C. 78(c)(f). 359See 15 U.S.C. 78w(a)(2). 360See 2015 Concept Release, supra note 4, at 81949. paragraph (c)(3). These requirements are designed to help ensure that transfer agents that choose to make their own determinations regarding the availability of exemptions from registration maintain appropriate records to support those determinations and subject them to appropriate management review and approval. Specifically, any determination under paragraph (c)(3) must be supported by written documentation, reviewed and approved by management of the transfer agent, that: (1) identifies the specific exemption from registration pursuant to which the relevant transaction may be conducted; (2) identifies the documents and information the transfer agent reviewed and relied upon in making the determination; and (3) identifies and analyzes the specific facts, including the documents and information that establish and support such facts, that support the transfer agent’s determination.356 These documentation requirements are designed to help ensure that transfer agents that make their own exemption determinations engage in an analysis similar to what would be expected in an opinion of counsel. By requiring the transfer agent to identify the specific exemption, the documents and information reviewed, and the specific facts supporting the determination, the rule is designed to ensure that the determination is based on a thorough analysis of the relevant legal requirements and factual circumstances. The requirement that the determination be reviewed and approved by management is designed to help ensure appropriate oversight and accountability. Requiring management review and approval will help ensure that determinations are made carefully and consistently and that appropriate controls are in place to prevent errors or misconduct.
5. Request for Comment
The Commission requests comments on all aspects of proposed Rule 17ad–
31. In particular, the Commission
requests comments on the following:
132. Should proposed Rule 17ad–31
apply to an original issuance of securities not registered pursuant to the Securities Act? Are there categories of original issuances for which the rule’s requirements would be unnecessary or unduly burdensome, and if so, should such categories be explicitly excluded?
133. Should the Commission provide
a specific, non-exhaustive list of ‘‘red flags’’ or circumstances that should alert a transfer agent to potential Section 5 violations and trigger heightened scrutiny or additional inquiry before facilitating a transaction? If so, what specific red flags should be included, and should they be incorporated into the rule itself?
134. Are the requirements for
opinions of counsel under proposed paragraph (c)(2) appropriate? Should any additional requirements be included, or should any of the proposed requirements be modified? For example, should transfer agents be required to request and retain, subject to the record maintenance and retention rules, copies of documents the counsel reviewed and relied upon in providing the opinion?
135. Is the alternative of permitting
transfer agents to make their own determinations under proposed paragraph (c)(3) appropriate? Should there be any limitations on which transfer agents may use this alternative (for example, based on size, resources, or expertise)? If so, how should such limitations be defined?
136. Are the documentation
requirements under proposed paragraph (d) appropriate and sufficient? Should any additional documentation be required?
137. Should the Commission provide
additional guidance regarding what constitutes ‘‘circumstances indicating’’ a potential violation under paragraphs (c)(1) and (c)(3)? If so, what specific guidance would be helpful?
138. Are there circumstances under
which transfer agents should be permitted to facilitate transactions covered by proposed paragraph (b) without meeting the requirements of proposed paragraph (c)? If so, what circumstances and what alternative requirements, if any, should apply?
139. Should the Commission expand
proposed Rule 17ad–31 to require transfer agents to make information about the issuance, ownership, and transfer history of securities, including those traded over the counter, available to broker-dealers or investors? 357 If so, what information should the Commission require transfer agents to disclose? Would this information facilitate liquidity for smaller public companies? Would this information better allow broker-dealers to determine whether the securities present heightened risk profiles or red flags associated with unlawful distributions?
140. Should the Commission consider
any alternative approaches to addressing the risks associated with improper removal of restrictive legends? If so, what alternative approaches should the Commission consider? Please explain in detail.
V. Economic Analysis
A. Introduction
The Commission is mindful of the economic effects, including the costs and benefits, of the proposed rules and amendments. Section 3(f) of the Exchange Act directs the Commission, when engaging in rulemaking where it is required to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.358 Further, Section 23(a)(2) of the Exchange Act requires the Commission, when making rules pursuant to the Exchange Act, to consider the impact that the rules would have on competition, and prohibits the Commission from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act.359 The Commission’s consideration of the proposal’s economic effects draws on transfer agents’ role in the national clearance and settlement system, technological and regulatory changes in transfer agent activities, and market failures within the transfer agent industry. Transfer agents act as issuers’ agents and play a critical role in the clearance and settlement of securities transactions. Transfer agents’ key functions include: (i) maintaining the official ‘‘golden record’’ of ownership of an issuer’s securities; (ii) facilitating the issuance, cancellation, and transfer of those securities and making and retaining records documenting and relating to such transactions; (iii) facilitating communications between issuers and registered securityholders; and (iv) making dividend, principal, interest, and other payments and distributions to securityholders.360 Between the 1970s and 2026, there have been significant technological and regulatory changes to securities markets and transfer agent activities. Transfer agents’ operations have transitioned from manual book-entry and paper records to automated book-entry and electronic recordkeeping, and transfer

361See 2015 Concept Release, supra note 4, at 81949. 362See, e.g., Nasdaq v. SEC, 34 F.4th 1105, 1111– 14 (D.C. Cir. 2022). This approach also follows SEC staff guidance on economic analysis for rulemaking. See SEC Staff, Current Guidance on Economic Analysis in SEC Rulemaking (Mar. 16, 2012), available at https://www.sec.gov/divisions/riskfin/ rsfi_guidance_econ_analy_secrulemaking.pdf (‘‘The economic consequences of proposed rules (potential costs and benefits including effects on efficiency, competition, and capital formation) should be measured against a baseline, which is the best assessment of how the world would look in the absence of the proposed action.’’); Id. at 7 (‘‘The baseline includes both the economic attributes of the relevant market and the existing regulatory structure.’’). 363See supra section II.A. 364See Exchange Act Rule 17ac2–2, 17 CFR 240.17Ac2–2; SEC Form TA–2, 17 CFR 249b.102 (Form for Reporting Activities of Transfer Agents Registered Pursuant to Section 17A of the Securities Exchange Act of 1934). 365See Exchange Act Rule 17ac3–1, 17 CFR 240.17Ac3–1; Exchange Act Section 7A(c)(3)(a), 15 U.S.C. 78q–1(c)(3)(A); SEC Form TA–W, 17 CFR 249b.101 (Notice of Withdrawal from Registration as a Transfer Agent). 366See Exchange Act Rule 17ad–1, 17 CFR 240.17Ad–1. 367See Exchange Act Rule 17ad–2, 17 CFR 240.17Ad–2. 368See Exchange Act Rule 17ad–3, 17 CFR 240.17Ad–3. agents now commonly rely on electronic means of communication with issuers instead of handwritten inquiries and telephone responses. The bulk of securities holdings are no longer certificated securities. Many transfer agents may also be registered as investment companies, investment advisers, broker-dealers, and banking entities, and have changed their business and compliance practices to comply with the evolving set of recordkeeping, compliance, custody, conduct, and other requirements with respect to their activities that are unrelated to their transfer agent activities. The above changes notwithstanding, the Commission’s core transfer agent rules were first adopted in the late 1970s and early 1980s. These rules have not been revisited since their adoption and do not reflect subsequent technological changes or evolving industry practices. This misalignment between the rules and modern transfer agent activities has created unnecessary complexity and potentially inhibited transfer agents’ ability to perform their functions. The market for transfer agent services is characterized by market failures:
adverse selection and moral hazard arising from asymmetric information, externalities, and market power exploitation stemming from holdup problems. Regarding the asymmetric information that gives rise to adverse selection and moral hazard, issuer clients observe the outcome of transfer agents’ operations rather than their intentions, information, processes, and methods, which are crucial to the proper performance of transfer agent activities. These informational disparities can lead to adverse selection, where issuers are unable to differentiate among transfer agents based on each transfer agent’s capability to perform transfer agent activities, and moral hazard, where transfer agents may underinvest in operational quality once a contract is secured. Regarding externalities, transfer agent services are negotiated between transfer agents and issuers, but their effects extend to securityholders, other third-party users of transfer agent services, and the securities markets as a whole. Transfer agents’ failure to perform their duties promptly, accurately, and safely can, among other things, expose issuers, investors, and the securities markets as a whole to significant financial losses;361 reduce the willingness of investors to participate in securities markets; and impair the ability of issuers to raise capital in those markets. The fact that each issuer engages a single transfer agent creates the potential for market power exploitation and holdup problems. Holdup problems arise when issuers make relationship￾specific investments (e.g., migrating securityholder records to a particular transfer agent) that are costly to reverse, which enable the transfer agent to opportunistically renegotiate terms after the contract is established. Broadly, the proposal would facilitate the prompt and accurate clearance and settlement of securities transactions, strengthen investor protection, increase investor participation in securities markets, facilitate capital raising, enhance regulatory oversight, reduce informational asymmetries between transfer agents and issuers, and address holdup problems. As discussed in Section V.C, the proposal has benefits and costs, many of which are difficult to quantify. For example, although the following analysis discusses specific benefits expected to result from the proposal, including more prompt and accurate clearance and settlement of securities transactions, improved investor protection, and increased capital market participation, the Commission lacks the data necessary to estimate the magnitudes of these effects separately or in the aggregate. Similarly, the Commission lacks data to estimate certain costs associated with the proposal such as the costs incurred by transfer agents to acquire the operational capability to meet turnaround requirements under the existing one-day standard settlement cycle and the costs of complying with the proposed amendments to Rule 17ad–12. Where economic effects cannot be quantified, the
Commission provides a qualitative assessment in lieu of quantification and invites commenters to provide data and information to support quantification of the benefits and costs of the proposal and its impacts on efficiency, competition, and capital formation. B. Economic Baseline The baseline against which the costs, benefits, and effects on efficiency, competition, and capital formation of the proposal are measured consists of the current state of the transfer agent markets and the existing regulatory framework governing transfer agents.362 Sections V.B.1 and V.B.2 address the regulatory baseline and affected parties, respectively. As described in Section V.B.3 below, the Commission’s understanding of the baseline is informed by two primary data sources and its regulatory experience. Subsequent sections address specific aspects of the baseline, namely the structure of the transfer agent industry, including trends in market concentration; transfer agent activities; statistics related to transfer agents’ withdrawal from registration; statistics about issuers that receive transfer agent services; database searches and account remittances; segregated funds; and basis for removing restrictive legends.

1. Regulatory Baseline
   a. Federal Regulations A transfer agent must apply for registration by submitting Form TA–1 to its ARA, and must amend the form as necessary to maintain its accuracy once its registration becomes effective.363 Registered transfer agents must file an annual report with the Commission using Form TA–2.364 Registered transfer agents may withdraw from registration by filing Form TA–W.365 Rules 17ad–1 and 17ad–9 define terms used throughout the rules.366 Rule 17ad–2 sets performance standards for transfer agents,367 principally concerning turnaround and processing time. Transfer agents failing these performance standards must notify the Commission and their other ARA. Further, Rule 17ad–3 sets notification requirements and limits expansion of activities if a transfer agent does not meet these standards.368 Rule

369See Exchange Act Rule 17ad–4, 17 CFR 240.17Ad–4. 370See Exchange Act Rule 17ad–6, 17 CFR 240.17Ad–6. 371See Exchange Act Rule 17ad–7, 17 CFR 240.17Ad–7. 372See Exchange Act Rule 17ad–10, 17 CFR 240.17Ad–10. 373See Exchange Act Rule 17ad–11, 17 CFR 240.17Ad–11. 374See Exchange Act Rule 17ad–12, 17 CFR 240.17Ad–12. 375See Exchange Act Rule 17ad–13, 17 CFR 240.17Ad–13. 376See Exchange Act Rule 17ad–17, 17 CFR 240.17Ad–17. 377See generally, Listed Company Manual,
Section 601.01, NYSE, available at https://
nyse.wolterskluwer.cloud/listed-company-manual/ 09013e2c8503fcc2. 378 Id. 379 Id. 380See generally, Rules, By-Laws and Organization Certificate of the Depository Trust Company, The Depository Trust Company, available at https://www.dtcc.com/-/media/Files/ Downloads/legal/rules/dtc_rules.pdf. 381See supra Section III.K. 382See supra Section III.K. 383See infra Section V.B.4. 384See infra Section V.B.7. 385See infra Sections V.B.3 and V.B.7. 386These estimates were based on an analysis of
Schedule I to the FOCUS filings and Form BD
filings for the quarter. This count excludes notice￾registered broker-dealers. Carrying broker-dealers hold title to and maintain records of beneficial ownership of securities held in street name. This is distinct from maintaining a security issue’s master securityholder file. Either carrying or non-carrying broker-dealers may be cross-registered as transfer agents or be a business affiliate of a transfer agent or may be additionally registered as an investment adviser; the vast majority are not transfer agents. As of June 30, 2026, four entities were registered as transfer agents and broker-dealers. Three of these entities were also registered as investment advisers. See infra Section V.B.4. One entity that was registered as a transfer agent and broker-dealer (but not as an investment adviser) was a carrying broker￾dealer. Another entity that was registered as a transfer agent, broker-dealer, and investment adviser was a carrying broker-dealer. 387The Commission also makes available quarterly compilations of transfer agent information filed with the Commission in a tab-delimited flattened format (starting with Q4 2006). See Transfer Agent Data Sets, SEC, available at https:// www.sec.gov/dera/data/transfer-agent-data-sets. See also Transfer Agent Data, SEC, available at https://www.sec.gov/files/ta_readme.html.pdf (for a guide to this data). 388See infra Section V.B.7. 17ad–4 provides certain exemptions from the turnaround, processing, and recordkeeping rules.369 Rule 17ad–6 generally details what records transfer agents shall make and keep;370 Rule 17ad–7 principally specifies how long certain records shall be maintained.371 Rule 17ad–10 principally requires recordkeeping transfer agents to promptly post certificate detail to each master securityholder file.372 Rule 17ad–11 requires that recordkeeping transfer agents report to issuers and their ARA information regarding aged record differences.373 Rule 17ad–12 requires transfer agents to safeguard funds and securities of which they have custody or possession in a manner reasonably free from theft, loss, destruction, or misuse.374 Rule 17ad–13 generally requires registered transfer agents to file an annual report concerning certain internal controls and procedures.375 Rule 17ad–17 requires transfer agents, brokers, dealers, and other financial intermediaries to make efforts to find lost securityholders and unresponsive payees.376 Transfer agents that are also broker￾dealers, investment advisers, or both must comply with applicable federal and other regulations. b. Bank Regulations and SRO Regulations Transfer agents that are banks or subsidiaries of banks must comply with the relevant banking regulations. There are also SRO rules and requirements applicable to transfer agents which will apply when transfer agents engage in certain activities or join programs governed by an SRO. For example, an exchange may have rules and requirements for transfer agents servicing securities listed on it;
transfer agents for NYSE-listed securities are subject to NYSE requirements.377 By way of example, the NYSE requirements focus on (i) dual registrars and transfer agents; (ii) turnaround times; (iii) capitalization; and (iv) insurance coverage.378 These requirements also address transfer agent personnel, safeguarding, and co-transfer agents.379 Similarly, transfer agents that participate in DRS must comply with DTC rules and regulations.380 DTC requirements of a security issuer may also indirectly apply to the issuer’s transfer agents. A transfer agent that engages in other business may be subject to SRO rules based on those other activities, such as a broker-dealer that may be subject to FINRA regulations.
c. Regulation of Transfer Agents Under
State Law
Transfer agents are also subject to state laws. States require that financial institutions including transfer agents report when property is deemed to be ‘‘unclaimed’’ or ‘‘abandoned’’; 381 such property may be escheated after a period of inactivity.382
2. Affected Parties
The proposal would principally affect transfer agents; there were an estimated 327 registered transfer agents as of June 30, 2026.383 The proposal would also affect the following parties:

• Issuers. Issuers are the clients of
  transfer agents. As of 2025,384 there were 7,750 registered issuers filing Forms 10–K, 20–F, or 40–F or their variants. As of December 2025, there were 14,130 registered investment funds, excluding business development companies.385 As of 2025, there were 171 business development companies, a type of registered investment company that files Form 10–K and is included in the 7,750 figure above. Unlike securityholders and other third parties, issuers negotiate directly with transfer agents for services and bear primary contractual responsibility for transfer agent fees.
• Broker-dealers. Transfer agents
  process securities transactions at the instruction of broker-dealers, and in the case of trades involving certificated securities generally the physical certificates are received and delivered via brokers. In the fourth quarter of 2025, there were 3,262 registered broker-dealers, of which 153 carried customer accounts (‘‘carrying broker￾dealers’’).386
• Investors and securityholders.
  Investors and securityholders rely on the national clearance and settlement system and transfer agents to process their securities transactions and, unlike issuers, generally lack direct contractual relationships with transfer agents. They may also purchase services such as certificate replacement from transfer agents.
• Other parties. The proposal may
  also affect banks, attorneys, and non￾attorney third parties that provide services to transfer agents.

3. Available Data
   The Commission’s understanding of the transfer agent industry is informed in part by data from several sources. The first data source is transfer agents’ regulatory filings, comprising registration information in Form TA–1 and amendments thereto, annual activity data reported on Form TA–2, and withdrawal information reported on Form TA–W. These filings are available on the SEC’s EDGAR system in a structured eXtensible Markup Language (‘‘XML’’) format.387 The second data source is the Ives Group’s Audit Analytics (‘‘AA’’) data derived from the most recent periodic issuer filings since
4. The AA data include, among other
   things, information about the number and characteristics of issuers served by a subset of transfer agents.388 The Commission’s understanding of the transfer agent industry is further

389See Annual Registered Investment Company Update, available at https://www.sec.gov/files/ annual-registered-investment-company-update￾20260512.pdf. See also Annual Registered Investment Company Update Supporting Data, available at https://www.sec.gov/files/annual￾registered-investment-company-update￾202512.xlsx. 390These entities are identified by comparing registered transfer agents with registered broker￾dealers that filed quarterly FOCUS reports for 2025. 391These entities are identified by comparing registered transfer agents with registered investment advisers as of the end of March 2026. 392 In other words, of the 14 entities that were registered as transfer agents and investment advisers, three also were registered as broker￾dealers. Of the four entities that were registered as transfer agents and broker-dealers, three also were registered as investment advisers. 393One transfer agent did not report a country or state. 394For the analysis of Form TA–2 and TA–W data in this section, we use submissions received through the end of the second quarter of 2026. 395As discussed above, these figures underestimate the number of active transfer agents due to non-filing or filing delays. 396The decrease in the count of Form TA–2 filers from 265 (2024 reporting period) to 253 (2025 reporting period) could be due in part to filing delays. 397These transfer agents are identified based on their responses to Question 4(a) on Form TA–2. informed by decades of supervisory and examination experience of registered transfer agents. Four data limitations may affect the interpretation of the results based on Forms TA–1, TA–2, and TA–W. First, Commission staff have observed that certain transfer agents that file Form TA–1 do not engage in any transfer agent activity. Their inclusion in the Form TA–1 data set may cause the Commission to overestimate the number of active transfer agents. Second, although transfer agents are required to file Form TA–2 by March 31 following each calendar year reporting period, Commission staff have observed that some transfer agents either fail to file or file after the reporting deadline. Third, some transfer agents that exit the industry may not file Form TA–W to withdraw their registration. To the extent that non-filers of Forms TA–W and late or non-filers of Form TA–2 are missing from the Commission’s data, transfer agent counts may be overestimated and estimates of transfer agent activity may be underestimated. Missing data due to late filings may disproportionately affect data concerning small transfer agents. Fourth, the Commission’s supervisory experience indicates that there is variability in the way registered transfer agents calculate the number of individual securityholder accounts reported in response to Question 4(b), which hinders the Commission’s ability to gather and analyze accurate and comparable information. This observed inconsistency is relevant to the baseline analysis which uses data derived from Form TA–2
Question 4(b), among other things. Information concerning the number of issuers that are registered investment company funds, other than business development companies, is derived from the December 2025 Annual Registered Investment Company Update, which uses Form N–CEN data.389 This data set begins in December 2019.
4. Market Structure and Trends
As of June 30, 2026, there were an estimated 327 registered transfer agents. As shown in Table 4, the Commission is the ARA for 272 of the 327 transfer agents (or approximately 83%), while the Office of the Comptroller of the Currency (‘‘OCC’’), the Board of Governors of the Federal Reserve System (‘‘FRB’’), and the Federal Deposit Insurance Corporation (‘‘FDIC’’) serve as the ARA for 24, 21, and 10 transfer agents, respectively. Thus, as many as 55 transfer agents may be subject to oversight and supervision by banking regulators. Entities that are registered as transfer agents also may operate as broker￾dealers or investment advisers. As of June 30, 2026, four entities were registered as transfer agents and broker￾dealers 390 and 14 entities were registered as transfer agents and investment advisers.391 Three entities were registered as transfer agents, broker-dealers, and investment advisers.392
Table 5 presents the geographical
distribution of the 327 transfer agents. The majority of these transfer agents operate within the U.S. (301 out of 327, approximately 92%), with a small number of transfer agents operating outside the U.S. (25 out of 327, approximately 8%).393 New York, California, and Massachusetts are the three states with the most transfer agents.
TABLE 4—TRANSFER AGENTS’
APPROPRIATE REGULATORY AGENCIES ARA Number Percent (%) FDIC ..................... 10 3.1 FRB ....................... 21 6.4 OCC ...................... 24 7.3 SEC ...................... 272 83.2 Total .................. 327 100
TABLE 5—GEOGRAPHICAL
DISTRIBUTION OF TRANSFER AGENTS State Number Panel A. U.S. Transfer Agents
New York .................................... 46
California ..................................... 34
Massachusetts ............................ 24
Florida ......................................... 17
Texas .......................................... 16
TABLE 5—GEOGRAPHICAL DISTRIBU￾TION OF TRANSFER AGENTS—Con￾tinued
State Number
Pennsylvania .............................. 15
Illinois .......................................... 13
Ohio ............................................ 13
New Jersey ................................. 11
Missouri ...................................... 10
Colorado ..................................... 10
All others ..................................... 92
All U.S. Transfer Agents ......... 301
Panel B. Non-U.S. Transfer Agents Country # TAs
Canada ....................................... 16
India ............................................ 4
Germany ..................................... 1
Hong Kong .................................. 1
China .......................................... 1
Philippines .................................. 1
Colombia ..................................... 1
All Non-U.S. Transfer Agents 25
Table 6 reports the number of Form
TA–2 filers for the 10 annual reporting periods between 2016 and 2025.394 For the 2025 reporting period, the Commission estimates that approximately 253 registered transfer agents filed Form TA–2.395 Using the number of Form TA–2 filers as a proxy for industry size, Table 6 indicates that the transfer agent industry has been gradually contracting over this period, with Form TA–2 filers declining from 287 in 2016 to 253 in 2025.396 Table 6 also shows that in 2025, there were 143 transfer agents that received fewer than 1000 items for transfer 397 (representing approximately 57% of Form TA–2 filers for that reporting period).
TABLE 6—NUMBER OF FORM TA–2
FILERS
Year
Number of form TA–2 filers Number of form TA–2 filers with <1,000 items 2016 ................................ 287 160 2017 ................................ 270 140 2018 ................................ 266 137 2019 ................................ 266 139 2020 ................................ 279 159

398 Individual securityholder accounts include accounts in the Direct Registration System (DRS), dividend reinvestment plans and/or direct purchase plans as of Dec. 31 of the reporting period. These are accounts for which the transfer agent maintained master security holder files. See Form TA–2 Question 5(a). 399See Form TA–2 Item 4(a). 400See Form TA–2 Item 4(b). 401See infra Section V.B.7. 402See supra Table 3. 403Recordkeeping transfer agents are identified based on their responses to Questions 6(a) and 6(c) on Form TA–2. Paying agents are identified based on their responses to Question 7(c) on Form TA–
2. 404Calculated as 120 transfer agents that served
as both a recordkeeping transfer agent and a paying agent + 32 transfer agents that served only as a recordkeeping transfer agent = 152 transfer agents. 152/253 = 0.60 or 60%. 405Calculated as 120 transfer agents that served as both a recordkeeping transfer agent and a paying agent + 6 transfer agents that served only as a paying agent = 126 transfer agents. 126/253 = 0.50 or 50%. 406This estimate is based on transfer agents’ response to Question 7(c)(ii) of Form TA–2. 407These results are based on transfer agents’ responses to Questions 2(a)–2(d) of Form TA–2. Reported calculations and row totals reflect rounding. 408Calculated as 23% (percentage of transfer agents that only engaged service companies, Table 8 Column 1) + 11% (percentage of transfer agents that only were engaged as service companies, Table 8 Column 2) + 10% (percentage of transfer agents that both engaged service companies and where themselves engaged as service companies, Table 8 Column 3) = 44%. 409Calculated as 23% (percentage of transfer agents that only engaged service companies, Table 8 Column 1) + 10% (percentage of transfer agents that both engaged service companies and where themselves engaged as service companies, Table 8 Column 3) = 33%. 410Calculated as 11% (percentage of transfer agents that only were engaged as service companies,
Table 8 Column 2) + 10% (percentage of transfer
agents that both engaged service companies and where themselves engaged as service companies,
Table 8 Column 3) = 21%.
TABLE 6—NUMBER OF FORM TA–2
FILERS—Continued
Year
Number of form TA–2 filers Number of form TA–2 filers with <1,000 items 2021 ................................ 269 151 2022 ................................ 275 157 2023 ................................ 267 156 2024 ................................ 265 159 2025 ................................ 253 143 The transfer agent industry is highly concentrated, as shown in Table 7. As of 2025, the 10 largest transfer agents account for approximately 82% of individual security holder accounts,398 84% of all items received for transfer,399 and 87% of securityholder accounts for which the transfer agent maintained master securityholder files.400 Based on AA data since 2024 401 on issuers, the 10 largest transfer agents service approximately 69% of registered issuers; those issuers represent approximately 98% of total market capitalization reported in the sample, which includes both listed and unlisted issues and both foreign and U.S. issues. These concentration levels, and their upward trend over the 2016–2025 period shown in Table 7, suggest limited competitive constraints on the largest transfer agents.
TABLE 7—MARKET SHARE OF THE LARGEST TRANSFER AGENTS 1
Year
Individual accounts
%
Individual accounts
%
Items received for transfer % Items received for transfer % Master security holder files % Master security holder files % Top 5 Top 10 Top 5 Top 10 Top 5 Top 10 2016 ......................................................... 49.7 70.4 55.4 77.4 60.1 73.9 2017 ......................................................... 52.0 72.0 54.5 74.7 62.5 75.5 2018 ......................................................... 52.3 73.4 59.2 73.3 63.4 77.1 2019 ......................................................... 53.8 74.8 58.9 75.1 65.4 78.5 2020 ......................................................... 55.5 77.2 65.4 77.1 66.7 80.4 2021 ......................................................... 57.8 77.2 61.4 76.5 69.0 81.1 2022 ......................................................... 57.9 78.5 69.3 82.6 69.4 81.0 2023 ......................................................... 59.3 80.9 66.8 84.2 72.3 84.7 2024 ......................................................... 61.3 81.9 70.5 86.9 73.1 85.8 2025 ......................................................... 62.5 82.2 66.6 84.5 74.2 87.0 1These estimates are based on an analysis of Form TA–2 data for 2016 through 2025. a. Recordkeeping Transfer Agents and Paying Agents Of the 253 transfer agents filing Form TA–2 for the 2025 reporting period,402 158 (62% of the total) served as either a recordkeeping transfer agent or a paying agent,403 while the remaining 95 transfer agents (38% of the total) served in neither capacity. Out of the 253 transfer agents, 120 served in both capacities, 32 served only as a recordkeeping transfer agent, and six served only as a paying agent. In total, 152 transfer agents served as a recordkeeping transfer agent (60%),404 while 126 served as a paying agent (50%).405 According to Form TA–2 filings for the 2025 reporting period, transfer agents distributed approximately $5.0 406 trillion in securityholder dividends and interest payments. b. Service Companies Transfer agents compete with each other for issuer clients but may also engage other transfer agents as service companies to perform some or all of the principal transfer agent’s activities.
Table 8 reports statistics on service
company use based on Form TA–2 data.407 Transfer agents that neither engage service companies nor are so engaged (Table 8, Column 4) comprise the largest segment of the industry each year, and this segment has grown moderately over time from 50% of transfer agents in 2016 to 56% in 2025. In contrast, the fraction of transfer agents engaging only as principal users of service companies decreased from 29% in 2016 to 23% in 2025 (Table 8, Column 1). The fraction engaged only as service companies decreased from 14% to 11% over the same period (Table 8, Column 2). The fraction serving in both roles increased from 8% in 2016 to 10% in 2025 (Table 8, Column 3). In total during 2025, 44%408 of transfer agents either relied on service companies for at least some functions or acted as service companies themselves, with 33% engaging service companies 409 and 21% engaged as service companies.410 Analyses of Form TA–2 data indicate that transfer agents act as service companies less frequently than they engage service companies. Between the 2016 and 2025 reporting periods,

411The Commission obtained similar results for each individual reporting period. 412 Id. 413Such a transfer agent may also be termed a ‘‘captive,’’ ‘‘affiliated,’’ or ‘‘full internalization’’ transfer agent. See 2015 Concept Release, supra note 4, at 81993. (discussing the concept of internal transfer agent in the context of the mutual fund industry). 414 194 transfer agents = 51 transfer agents covered by Rule 17ad–4(a) + 143 transfer agents covered by Rule 17ad–4(b). 415The capacities considered in these figures and related text are maintaining the master securityholder file or processing transfers for a security. transfer agents reported engaging service companies in 919 filings and being engaged as service companies in 582 filings. Among transfer agents that engaged service companies, the average number of service companies engaged was approximately 1.5, while the median was one.411 Among transfer agents that were engaged as service companies, each was engaged by approximately 3.5 other transfer agents on average, while the median was two.412
TABLE 8—SERVICE COMPANIES
Year
Transfer agent
(1)
Only engages service company (%) (2) Only engaged as service company (%) (3) Engages service company and is engaged as service company (%) (4) Does not engage service company and is not engaged as service company (%) 2016 ......................................................................................... 29 14 8 50 2017 ......................................................................................... 27 14 9 50 2018 ......................................................................................... 29 15 8 48 2019 ......................................................................................... 26 14 9 51 2020 ......................................................................................... 25 13 10 53 2021 ......................................................................................... 24 13 8 54 2022 ......................................................................................... 24 11 9 56 2023 ......................................................................................... 22 10 10 57 2024 ......................................................................................... 23 10 9 58 2025 ......................................................................................... 23 11 10 56
c. Internal Transfer Agents
Transfer agents may differ in breadth of services they offer. An internal transfer agent is a transfer agent that acts or intends to act as a transfer agent solely for its own securities and/or securities of affiliates.413 Because issuers served by internal transfer agents would likely not seek transfer agent services from competing transfer agents (at least for the set of services provided by the internal transfer agents), they effectively represent a captive market segment unavailable to outside competitors. Based on supervisory experience, the Commission estimates that approximately 13% of registered transfer agents are internal transfer agents—a small fraction of the total. One interpretation of this low prevalence is that economies of scale (e.g., arising from investments in information technology) are sufficiently large that most issuers find outsourcing more cost￾effective than self-administration. However, other factors, including regulatory exposure, complexity, and reputational considerations, may also contribute. d. Transfer Agents Covered by Rule 17ad–4 Based on an analysis of Form TA–2 filings for the 2025 reporting year, the Commission estimates that 51 transfer agents would be covered by Rule 17ad– 4(a) (47 transfer agents process Fund Shares and four transfer agents process interests in LPs) and 143 transfer agents would be covered by Rule 17ad–4(b). Of the 143 transfer agents, 57 reported zeros on all applicable questions in their Form TA–2 filings, suggesting either that these registrants outsource all transfer agent activities or are not actively providing transfer agent services to issuer clients. Thus, the estimate of 143 transfer agents is an upper bound estimate of the number of transfer agents that would be covered by Rule 17ad–4(b). All told, up to 194 transfer agents 414 are estimated to be covered by Rule 17ad–4. The Commission requests that commenters provide feedback on the number of transfer agents that are covered by Rules 17ad–4(a) and 17ad–4(b).
5. Transfer Agent Activities
Transfer agent activities can be described by classifying the different types of securities for which registered transfer agents act in various capacities (Figures 6 and 7).415 In 2025, 164 transfer agents reported acting in these capacities for at least one securities issue (65% of the 253 that filed Form TA–2), and corporate equity securities made up the largest average share of issues served (37%), followed by open￾end investment company securities (31%). On average, these two types accounted for approximately 68% of all issues served. The rest of the issues are distributed across corporate debt securities (7%), municipal debt securities (9%), limited partnerships (6%), and other securities (10%). In 2025, 98 (60% of the 164) transfer agents serviced equity securities, 49 (30%) serviced corporate debt securities, 58 (35%) serviced open-end investment company securities, 33 (20%) serviced limited partnership securities, 25 (15%) serviced municipal debt securities, and 49 (30%) serviced other securities.

Figure 6. Share of Security Issues for
Which Transfer Agents Acted in Various Capacities, 2025 1 1This analysis is based on transfer agents’ responses to Question 6 of Form TA–2 filed for the 2025 reporting period. Question 6 asks transfer agents to report the number of securities issues for which they (i) receive items for transfer and maintain the master securityholder files (Question 6(a)); (ii) receive items for transfer but do not maintain the master securityholder files (Question 6(b)); or (iii) do not receive items for transfer but maintain the master securityholder files (Question 6(c)). For each transfer agent, the Commission calculates the total number of issues serviced for each type of security and the corresponding percentage share. The percentages reported in Figure 6 represent averages of percentage shares calculated across transfer agents for which data are available. The Commission has also considered the structure of TA activities based on the reported percentage of individual securityholder accounts in corporate equity securities, corporate debt securities, open-end investment company securities, limited partnership securities, municipal debt securities, and other securities in 2025 (Question 5(d) of Form TA–2) and obtained results consistent with
Figure 6.
EN04SE26.019</GPH>

Figure 7. Number of Transfer Agents
Servicing Securities by Security Type, 2025 1 1This analysis is based on transfer agents’ responses to Question 6 of Form TA–2 filed for the 2025 reporting period. Question 6 asks transfer agents to report the number of securities issues for which they (i) receive items for transfer and maintain the master securityholder files (Question 6(a)); (ii) receive items for transfer but do not maintain the master securityholder files (Question 6(b)); or (iii) do not receive items for transfer but maintain the master securityholder files (Question 6(c)). While Figures 6 and 7 describe the structure of transfer agent activities at the aggregate level, they do not address whether individual transfer agents choose to perform services across all types of securities or whether they choose to perform services for a few types of securities. Table 9 presents statistics on the degree to which transfer agents specialize in specific types of securities based on transfer agents’ responses to Question 6 of Form TA–2 filed for the 2025 reporting period.
Table 9 indicates a high degree of
specialization among transfer agents. Of the 164 transfer agents that responded to Question 6 of Form TA–2, 79 (48% of
164) received items for transfer and/or
maintained master securityholder files for one type of securities. Another 44 transfer agents (27% of 164) received items for transfer and/or maintained master securityholder files for two types of securities. Thus, 75% of the transfer agents focused on, at most, two types of securities. Only five transfer agents (3% of 164) received items for transfer and/ or maintained master securityholder files for five types of securities, and none did for all six. Of the 79 transfer agents that specialized in one type of securities, 37 specialized in corporate equity securities (49% of 79; 38% of 98 transfer agents servicing equity securities); 27 specialized in open-end investment company securities (34% of 79; 47% of 58 transfer agents servicing open-end investment company securities); four specialized in limited partnership securities (5% of 79; 12% of 33 transfer agents servicing limited partnership securities); two specialized in corporate debt securities (3% of 79; 4% of 49 transfer agents servicing corporate debt securities); one specialized in municipal debt securities (1% of 79; 4% of 25 transfer agents servicing municipal debt securities); and eight specialized in other securities (10% of 79; 16% of 49 transfer agents servicing other securities). Transfer agents specializing in one type of securities tend to focus on either corporate equity securities or open-end investment company securities—the same segments served by the greatest number of transfer agents overall—yet specialist firms do not constitute a majority of transfer agents servicing any tracked security type.
TABLE 9—SPECIALIZATION AMONG
TRANSFER AGENTS
Types of securities issues Number of transfer agents Percent 1 ............................ 79 48 2 ............................ 44 27 3 ............................ 24 15 4 ............................ 12 7 5 ............................ 5 3 6 ............................ 0 0 164 100
Figure 8 depicts growth trends in the
different types of securityholder accounts serviced by transfer agents between 2016 and 2025. Over this period, the shares of accounts holding corporate equity securities and open￾end investment company securities have fallen slightly, the share holding limited partnership securities has fallen substantially, while the shares of accounts holding corporate debt and municipal debt securities have increased substantially. The share of accounts holding other securities has nearly doubled in this period from 4.8% in 2016 to 9.3% in 2025. Despite the fluctuations noted above, corporate equity securities and open-end investment company securities together consistently made up approximately three-quarters of individual securityholder accounts each year. EN04SE26.020</GPH>

Figure 8. Trends in the Structure of
Transfer Agent Activity: Share of Individual Security Holder Accounts 1 1This analysis is based on transfer agents’ responses to Question 5(d) of Form TA–2 for the 2016–2025 reporting periods.
Table 10 provides descriptive
statistics on the total number of individual securityholder accounts (‘‘Individual Accounts’’), the number of individual securityholder dividend reinvestment plan and/or direct purchase plan (‘‘DRP/DPP’’) accounts, and the number of individual securityholder DRS accounts. Table 10 shows that over time, the number of Individual Accounts increased from 233 million in 2016 to 281 million in 2025. There has been an increase in the number of DRP/DPP accounts, which rose from 165 million in 2016 to 186 million in 2025, driven by large increases in 2024 and 2025 following a period of trending down. The number of DRS accounts decreased from 22 million in 2016 to 13 million in 2025.
TABLE 10—NUMBER OF SECURITYHOLDER ACCOUNTS FOR WHICH TRANSFER AGENTS PROVIDED DIVIDEND
REINVESTMENT, DIRECT PARTICIPATION, AND DIRECT REGISTRATION SYSTEM SERVICES 1 Year Individual accounts (millions) DRP/DPP (millions) DRS (millions) 2016 ........................................................................................................................... 233 165 22 2017 ........................................................................................................................... 236 163 23 2018 ........................................................................................................................... 227 152 21 2019 ........................................................................................................................... 229 155 18 2020 ........................................................................................................................... 228 151 15 2021 ........................................................................................................................... 238 159 14 2022 ........................................................................................................................... 256 158 14 2023 ........................................................................................................................... 263 161 14 2024 ........................................................................................................................... 270 172 14 2025 ........................................................................................................................... 281 186 13 1This analysis is based on transfer agents’ responses to Questions 5(a)–(c) of Form TA–2 for the 2016–2025 reporting periods. Individual Ac￾counts is defined as the total number of individual securityholder accounts (in millions) including DRS accounts and accounts in, dividend rein￾vestment plans (DRPs) and/or direct purchase plans (DPPs). See Question 5(a) of Form TA–2. DRP/DPP is the total number of individual securityholder DRP and/or DPP accounts (in millions). See Question 5(b) of Form TA–2. DRS is the total number of individual securityholder DRS accounts (in millions). See Question 5(c) of Form TA–2.
6. Withdrawal From Registration
A transfer agent that wishes to withdraw from registration would file Form TA–W with the Commission or their other ARA. Table 11 reports the number of transfer agents that filed Form TA–W with the Commission between 2016 and 2025. The average number of transfer agents filing Form TA–W each year is 14.4, while the EN04SE26.021</GPH>

416The annual number of unique issuers is the number of unique registrants (as identified by Central Index Keys) that filed Forms 10–K, 20–F, or 40–F in a given year and excludes most registered investment companies, which do not file these forms, but does include, for example, business development companies and face amount certificate companies. The number of fund issuers is the number of funds reported in the Annual Registered Investment Company Update data. See supra
Section V.B.3.
417Where percentages are reported, they exclude transfer agents and issuers with missing data. median is 13.5. Over this period, a total of 144 transfer agents filed Form TA–W.
TABLE 11—NUMBER OF TRANSFER
AGENTS FILING FORM TA–W WITH THE COMMISSION Year Number of Form TA–W filers
2016 ...................................... 13
2017 ...................................... 21
2018 ...................................... 13
2019 ...................................... 12
2020 ...................................... 14
2021 ...................................... 18
2022 ...................................... 17
2023 ...................................... 14
2024 ...................................... 11
2025 ...................................... 11
Total .................................. 144
An analysis of Form TA–W filings sheds light on the state and future plans of transfer agents when they withdraw from registration. According to Table 12, of the 144 transfer agents that withdrew from registration between 2016 and 2025, 56 (39% of the total) indicated that they had a successor transfer agent for each issue of securities for which they performed transfer agent activities. Four transfer agents that withdrew from registration (3% of the total) indicated an intention to perform transfer agent activities in the near future. Five transfer agents that withdrew from registration (3% of the total) indicated that they were directly or indirectly involved in legal actions or proceedings or were aware of potential claims against them in connection with their performance of transfer agent activities. One transfer agent that withdrew from registration (1% of the total) reported the existence of unsatisfied judgments or liens against them arising out of their performance of transfer agent activities. The stated reasons for withdrawing from registration are submitted in a free text field and are consequently sometimes ambiguous or incomplete. Based on available data, approximately 20 withdrawals (14% of the total) were due to mergers with or sales of all transfer agent client relationships to non-affiliated firms, of which 16 indicated a successor for all transfer agent clients. This estimate may overstate the number of transfer agent acquisitions; for example, some may have reflected the purchase of a firm that was an internal transfer agent. Additionally, an estimated 35 withdrawals (24% of the total) were of firms that never performed transfer agent activities, had erroneously filed a duplicate registration, or expressed an intention to re-register with a different ARA.
TABLE 12—STATE AND FUTURE PLANS OF TRANSFER AGENTS AT TIME OF TA–W FILING
Number 1 Percent 2
Future activity 3 ........................................................................................................................................................ 4 3 Legal actions or proceedings 4 ................................................................................................................................ 5 3 Judgments or liens 5 ................................................................................................................................................ 1 1 Successor transfer agent 6 ...................................................................................................................................... 56 39 1 Number is the number of transfer agents filing Form TA–W between 2016 and 2025. 2Percent is Number as a percentage of the total number of transfer agents filing Form TA–W between 2016 and 2025. 3This row reports the number of transfer agents that intend to perform in the near future a transfer agent function for any security registered under Section 12 of the Exchange Act or which would be required to be registered except for the exemption from registration provided by para￾graph (g)(2)(B) or (g)(2)(G) of that section. See Question 7(a) of Form TA–W. 4This row reports the number of transfer agents that are directly or indirectly involved in any legal actions or proceedings or are aware of any potential claims against them in connection with their performance of transfer agent activities for any security. See Question 8 of Form TA–W. 5This row reports the number of transfer agents that indicate the existence of unsatisfied judgments or liens against them arising out of their performance of transfer agent activities for any security. See Question 9 of Form TA–W. 6This row reports the number of transfer agents that indicate the existence of a successor transfer agent. See Question 10(a) of Form TA–W.
7. Issuers
Table 13 reports the annual number of
unique registered issuers between 2016 and 2025.416 In particular, the Commission estimates that there were 7,750 registered issuers of principally operating companies and business development companies in 2025. Additionally, the Commission estimates that there were 14,130 funds issued by registered investment companies, excluding business development companies, in December 2025.
TABLE 13—TOTAL NUMBER OF
ISSUERS BETWEEN 2016 AND 2025 Year 1 Number of 10–K/20–F/40–F issuers Number of fund issuers
2016 .......................... 8,173 ..............
2017 .......................... 7,859 ..............
2018 .......................... 7,712 ..............
2019 .......................... 7,624 13,761 2020 .......................... 7,475 13,599 2021 .......................... 7,958 13,749 2022 .......................... 8,737 13,959 2023 .......................... 8,351 14,088 2024 .......................... 7,902 14,438 2025 .......................... 7,750 14,130 1 10–K/20–F/40–F reports full-year numbers. Fund reflects the number of funds in December of each year. This section complements the above analysis of Form TA–2 submissions with AA data, which covers 165 registered transfer agents with a most recent periodic filing date from January 2024 to January 2026, for issuers with most recent periodic filing dates during the same period.417 As shown in Panel A of Table 14, the median transfer agent provides services to five issuers. However, the transfer agent at the 90th percentile services 114 issuers and the transfer agent at the 99th percentile services 1,087 issuers. In addition, 46 transfer agents provide services to only 1 issuer each, while 20 transfer agents provide services to over 100 issuers each to a combined total of 8,250 issuers. When considering issuer revenues and the complexity of issuer shareholder structure, the median transfer agent serves issuers with a median of 180 shareholders of record and $71.4 million in revenue. Similar to the distribution in the number of issuers, the distribution of revenues and shareholders is concentrated in the right tail, with the 90th percentile of transfer agents serving issuers with a median of

418See Questions 11(a)(ii) and 11(a)(iii) of Form TA–2. 3,060 shareholders of record and $1.1 billion in revenue, and the 99th percentile of transfer agents servicing issuers with a median of 56,539 shareholders of record and $37.5 billion in revenue. In addition, the industry for transfer agents is heavily segmented with respect to the types of issuers served by different transfer agents. While the median transfer agent serves no exchange listed issuers, the top decile of transfer agents overwhelmingly serves exchange listed firms (over 85% of their issuer business). The distribution of OTC firms served by transfer agents exhibits similar characteristics. There is also considerable segmentation among transfer agents in the provision of services to funds. While the median transfer agent does not provide services to any investment company issuers, such firms account for all of the issuers served by transfer agents in the top quartile. In total, 89 of the 165 transfer agents in this data set do not serve a single investment company issuer, while 45 transfer agents serve investment company issuers exclusively. By contrast, many transfer agents serve at least some small issuers, though the percentage is highly sensitive to the definition of ‘‘small issuer’’ used. Panel B of Table 14 reports the fraction of small issuers served by transfer agents. Small issuers comprise 0% to 80% of the issuers served by the median transfer agent, depending on the definition of ‘‘small issuer’’ used. Between 18 and 96 transfer agents in the sample serve no small issuers, depending on the definition of ‘‘small issuer’’ used. Regardless of the definition of ‘‘small issuer’’ used, more than 25% of transfer agents service primarily securities issued by small issuers. Note that each of these analyses is independent of the others: for example, the firms serving the most issuers do not necessarily have the highest median number of shareholders or revenues, or the highest percentage of exchange￾listed issues serviced. For example, the median percentage of exchange listed￾issues among the top five transfer agents by issuers served is 82%, with a range of 67–87%, and the median percentage of small issuers served is 40%, 70%, or 44%, depending on the definition of ‘‘small issuer.’’
TABLE 14—CHARACTERISTICS OF ISSUERS SERVICED BY TRANSFER AGENTS
Percentile Issuers 1 Shareholders 2 Revenue ($000s) 3 US exchange 4 (%) OTC 5 (%) Investment company 6 (%) Panel A. Issuer Counts, OTC Issuers, and Investment Company Issuers 1 ............................................................... 1 ........................ 5.4 0 10 ............................................................. 1 13 63.7 0 25 ............................................................. 1 90 7,429 0 50 ............................................................. 5 180 71,422 0 75 ............................................................. 29 1,077 445,990 33 25 100 90 ............................................................. 114 3,060 1,099,628 85 82 100 99 ............................................................. 1,087 56,539 37,491,200 100 1The number of issuers for which information about company name is available in AA. 2The median number of shareholders of record of a corresponding share class for the issuers that a given transfer agent serves. 3The median most recent year revenue for the issuers that a given transfer agent serves. Where the issuer is a bank or a financial institution, revenue includes both interest and non-interest income. In addition, for banks and financial institutions total revenue data generally does not in￾clude write downs or losses of any kind. 4 Issuers are classified as listed on U.S. Exchange if company or shareholder market information includes NASDAQ, NYSE, Bats, or Amex. 5 Issuers are classified as OTC if they are not classified as listed on U.S. Exchange and company or shareholder market information includes OTC or Grey Market. 6Based on information in the Investment Company Act variable (specifying ’34 Act or ’40 Act). PANEL B—SMALL ISSUERS Percentile Small 1 (%) Small (Alt.) 2 (%) Small (Alt. 2) 3 (%) Panel B. Small Issuer
1 ................................................................................................................................. 0
10 ............................................................................................................................... 0
25 ............................................................................................................................... 0 50 0 50 ............................................................................................................................... 23 80 0 75 ............................................................................................................................... 96 100 71
90 ............................................................................................................................... 100
99 ............................................................................................................................... 100
1Percentage of issuers that are non-accelerated filers or small reporting companies according to filings since 2024. 2Percentage of issuers that are non-accelerated filers, small reporting companies, or have most recent reported trailing twelve-month revenues below the emerging growth company threshold according to filings since 2024. 3Percentage of issuers with filings since 2024 and most recent market capitalization under $1 billion according to AA.
8. Database Searches and Account
Remittances
Table 15 reports the percentage of
Form TA–2 filers conducting database searches, the number of accounts searched, the number of lost securityholder accounts for which a different address has been obtained as a result of a database search,418 and the discovery rate (i.e., ratio of the number of lost securityholder accounts for

419As discussed in Section V.B.4.a, recordkeeping transfer agents are identified based on their responses to Questions 6(a) and 6(c) on Form TA–2. 420The decline in 2023 was primarily due to the cessation of operations by the transfer agent which had for several years been by a considerable margin the largest remitter; it filed Form TA–W with the Commission that year. 421See Office of Compliance Inspections and Examinations Risk Alert (February 13, 2019), available at https://www.sec.gov/newsroom/whats￾new/transfer-agent-safeguarding-funds-securities. which a different address has been obtained as a result of a database search to the number of accounts searched) averaged across the 10 reporting periods between 2016 and 2025. On average, 80% of recordkeeping transfer agents 419 that filed Form TA–2 conducted database searches for approximately 3.2 million securityholder accounts and obtained a new address for approximately 2.2 million of these accounts. Recordkeeping transfer agents obtained a new address for a lost securityholder account at an average rate of 68%. On average, 25% of the non-recordkeeping transfer agents that filed Form TA–2 conducted database searches for approximately 160,000 securityholder accounts and obtained a new address for approximately 93,000 of these accounts. Non-recordkeeping transfer agents obtained a new address for a lost securityholder account at an average rate of 58%. These results suggest that recordkeeping transfer agents conducted more database searches than non-recordkeeping transfer agents and obtained a new address for a higher proportion of lost securityholder accounts searched. Among transfer agents, recordkeeping transfer agents are principally involved in complying with Rule 17ad–17’s requirement to search for lost securityholders.
TABLE 15—DATABASE SEARCH BY TRANSFER AGENTS
(1)
Percentage of transfer agents conducting search (2) Number of accounts searched (3) Number of accounts for which different address was obtained (4) Discovery rate = (3)/(2) (%) Recordkeeping Transfer Agent ................................................ 80 3,182,939 2,173,507 68 Non-recordkeeping Transfer Agent ......................................... 25 159,815 92,621 58
Table 16 reports the number of lost
securityholder accounts remitted to states each year from 2016 to 2025 by Form TA–2 filers. During this period, the number of accounts remitted gradually fell from 471,591 in 2016 to 417,270 in 2022, then dropped by more than half to 162,947 in 2023, before settling at 163,204 in 2025.420 The Commission has limited insight into database searches or accounts remitted to states by carrying broker-dealers, for example from responses to customer complaints received by the Office of Investor Education and Assistance and forwarded to broker-dealers; this information is neither systematic nor complete, and overall search or remittance numbers for carrying broker￾dealers are unavailable. The Commission requests comment on this matter.
TABLE 16—LOST SECURITYHOLDER
ACCOUNTS REMITTED TO STATES BY TRANSFER AGENTS Year Number of accounts remitted 2016 ...................................... 471,591 2017 ...................................... 462,622 2018 ...................................... 469,688 2019 ...................................... 504,455 2020 ...................................... 430,890 2021 ...................................... 471,400 2022 ...................................... 417,270 2023 ...................................... 162,947 2024 ...................................... 174,312
TABLE 16—LOST SECURITYHOLDER
ACCOUNTS REMITTED TO STATES BY TRANSFER AGENTS—Continued Year Number of accounts remitted 2025 ...................................... 163,204
9. Segregated Funds
The Commission’s regulatory experience indicates that some transfer agents may maintain issuer, securityholder, and other customer funds in bank accounts separate from any other bank accounts of the transfer agents.421 However, data regarding the prevalence of this practice is not available. The Commission requests commenters to provide feedback on the number of transfer agents that currently adopt this practice.
10. Basis for Removing Restrictive
Legends
As discussed in Section IV.B, transfer agents are often the party responsible for affixing, tracking, and removing restrictive legends. The Commission’s regulatory experience indicates that (i) some transfer agents rely on the advice of counsel in the form of an ‘‘attorney letter’’ or ‘‘opinion letter’’ as the basis for removing restrictive legends and (ii) such opinion letters can come from either the issuer’s in-house counsel or outside counsel. However, data regarding the prevalence of opinion letters as the basis for removing restrictive legends is not available, as is data on the extent to which opinion letters are provided by issuers’ in-house counsel or outside counsel. The Commission requests commenters to provide feedback on these matters. Notwithstanding the foregoing, transfer agents may choose to process a transaction in the absence of an opinion letter. Data regarding the usage of these non-opinion letter methods—to the extent they are used by transfer agents— is unavailable, as is data on the extent to which the use of each method involved transfer agents providing supporting documentation similar to or satisfying the requirements set forth in paragraph (d) of proposed Rule 17ad–
31. The Commission requests
commenters to provide feedback on these matters.
C. Benefits and Costs
This section discusses the benefits and costs associated with the proposed rules and amendments. The proposed amendments to Forms TA–1 and TA–2 are likely to increase the amount and usefulness of information available to market participants about transfer agents. To the degree that issuers currently face information asymmetries about transfer agent quality, incentives, and conflicts, enhanced disclosures— such as those regarding corporate organizational structure and outsourcing arrangements—may reduce adverse selection in the market for transfer agent services by improving issuers’ ability to

422See Julia Black, The Rise, Fall and Fate of Principles Based Regulation (Working Paper Nov. 21, 2010), available at https://ssrn.com/ differentiate among transfer agents based on their capability prior to contracting. Separately, post-contractual conflicts of interest may be more directly addressed by other provisions of the proposal, including the compliance, safeguarding, and restrictive legend rules discussed below. Additionally, to the degree that the proposed amendments may reduce the costs of acquiring information about transfer agent quality, they may also increase market incentives for transfer agents to compete on quality. The Commission is also proposing to amend certain definitions as well as processing, recordkeeping, record retention, prompt posting, and safeguarding requirements. These proposed amendments would update and streamline these definitions and requirements to address technological and market infrastructure changes, industry concerns, and lessons from the Commission’s oversight and monitoring experience. The proposed amendments would also expand existing safeguarding requirements to address a wider range of risks, including through new provisions governing segregation of funds and business continuity planning. The proposed amendments would provide greater clarity to transfer agents regarding their regulatory obligations, promote prompt and accurate clearance and settlement of securities transactions, enhance the resilience of the national clearance and settlement system, strengthen investor protection, increase investor participation in securities markets, and facilitate capital raising. The proposed amendments to Rule 17ad–3 would ensure that issuers receive the early warning needed to resolve serious performance issues affecting their underperforming transfer agents and provide stronger incentives for transfer agents to expeditiously resolve or avoid performance failures. These measures in turn would support prompt and accurate clearance and settlement and strengthen investor protection. The proposed amendments to Rule 17ad–17 would create a new category of securityholders called an ‘‘inactive securityholder’’ (i.e., a securityholder without observed account activity for 18 months); require inactive securityholders to be notified; update the definition of a lost securityholder to address methods of correspondence other than physical mail; and update the definition of an unresponsive payee to address electronic payments. The proposed amendments could help securityholders retain ownership of their investment property, avoid incurring costs associated with premature remittance and liquidation of such property, and receive their entitled payments from issuers. Besides amending existing rules, the Commission is proposing new rules addressing compliance and restrictive legends. These proposed rules would facilitate prompt and accurate clearance and settlement of securities transactions, strengthen investor protection,
increase investor participation in securities markets and facilitate capital raising. The Commission is also proposing to rescind Rule 17ad–4. The proposed rescission of Rule 17ad–4 may strengthen investor protection and promote the prompt and accurate settlement of securities transactions by extending turnaround, processing, and recordkeeping rules to transfer agents and transactions that were previously exempt from these rules. The analysis below addresses the likely economic effects of the proposed and amended rules, including their anticipated and estimated benefits and costs and their likely effects on efficiency, competition, and capital formation. The Commission also discusses the potential economic effects of certain alternatives to the approaches proposed in this release.

1. Cost Passthrough and Incidence
   Transfer agents would incur costs as a result of the proposed rules and amendments and form amendments. Transfer agents may pass on these costs to issuers in the form of higher fees or reduced willingness to offer services to certain types of issuers—for example, issuers from which transfer agents generate less revenue. This effect is particularly relevant given the holdup problem identified in Section V.A. Transfer agents may also pass costs directly to third parties, such as broker￾dealers and securityholders, through increased fees. Given the high concentration documented in Section V.B.4. and the limited substitutability of transfer agents in certain market segments, the Commission expects that transfer agents may have significant ability to pass costs to issuers in concentrated segments, while competitive pressure in less concentrated segments may limit passthrough. To the extent that transfer agents pass on costs associated with the proposed amendments to their issuer clients and third parties, these entities may incur costs as well. Transfer agents’ costs and compliance burdens could in some cases be passed along to issuers and third parties in the form of reduced access to services rather than through increased prices. The Commission does not have data or other information concerning sensitivities of issuers and third parties to fees, how transfer agents account for these sensitivities, or the extent to which transfer agents prefer to keep fees constant. Thus, any potential shift in the supply of transfer agent services and its impact on fees is unknown. The Commission requests commenters provide feedback on these matters.
2. Benefits and Costs of Policies and
   Procedures Approach in Rules 17ad–2, 12, and 30 This section discusses the potential benefits and costs associated with the proposed policies and procedures approach for Rules 17ad–2, 12, and 30 i.e., framing these rules as principles￾based rules. A policies and procedures approach to Rules 17ad–2, 12, and 30 could benefit registered transfer agents by providing them with flexibility in how they effect turnaround, safeguard funds and securities, address cybersecurity and other risks associated with their activities, and comply with applicable laws and regulations. The flexibility stems from the proposed approach’s requirement that registered transfer agents establish, maintain, and enforce written policies and procedures reasonably designed to ensure the performance of these activities. The policies and procedures approach would allow each transfer agent to determine the methodologies that work best to perform these activities in light of current technologies as well as future technological developments; operational and market developments; and the transfer agent’s specific business model, services, risks, and other characteristics. The flexibility afforded by a policies and procedures approach may encourage transfer agents to deploy new technologies and practices that may reduce their costs, while improving their performance. To the extent that transfer agents realize cost savings and pass them on to issuers in the form of lower fees for performing transfer agent services, issuers also may benefit from the flexibility afforded by a policies and procedures approach. In exchange for this additional flexibility, a principles-based rule may require transfer agents to consider the application of its provisions to particular situations to a far greater degree than under a prescriptive rule.422

abstract=1712862 (retrieved from SSRN Elsevier database). 423See supra Section II.A. 424The $1,500 annual estimate is based on the following calculations: $1,393.20 (lawyers at $774 for 1.8 hours) + $154.80 (costs for outside professionals of $154.80) ≈ $1,500. Occupational rates are calculated as described in infra note 533. For additional details on estimates of burden hours and occupations involved, see infra Section VI. Throughout this economic analysis, we have estimated certain costs based on our analysis of the collection of information burdens of the proposed rules for purposes of the Paperwork Reduction Act of 1995 (‘‘PRA’’). As discussed in more detail in
section VI.E, our PRA estimates represent an
average burden for all respondents, both large and small, and the burdens will likely vary among individual respondents based on a number of factors, including the size and complexity of their business. 425See supra Section II.C. 426See Form TA Technical Specification, SEC, available at https://www.sec.gov/submit-filings/ technical-specifications#form_ta. 427See EDGAR Filer Manual Vol. II (Version 77, Mar. 2026) at Section 8.2.25, SEC, available at https://www.sec.gov/submit-filings/edgar-filer￾manual. As a result of framing Rules 17ad–2, 12, and 30 as principles-based rules, transfer agents may devote greater efforts and incur greater costs to understand the application of these rules’ provisions to particular situations, relative to the baseline. The benefits and costs of Rules 17ad– 2, 17ad–12, and 17ad–30 are discussed in more detail in Sections V.C.4.b, V.C.4.h, and V.C.5.a, respectively. The compliance costs of each of these rules are quantified in these respective sections.
3. Benefits and Costs of the Proposed
Amendments to Registration and Annual Reporting Requirements a. Proposed Amendments to Rule 17ac2–1 Under the proposal, Form TA–1 filings and amendments would be effective 45 days after filing, instead of the current 30 days. A longer effective date may reduce the timeliness of transfer agent registrations and may delay new entrants into the transfer agent industry from providing such services to issuers by 15 days. However, as discussed in section II.A, the proposed amendment may provide the Commission with additional time to review the information contained in Form TA–1. Thus, the proposed amendment may enhance Commission oversight over the transfer agent industry. Moreover, the proposal would align the timeline of effectiveness of Form TA–1 filing and amendments with
Section 17A(c)(2) of the Exchange
Act.423 b. Proposed Amendments to Rule 17ac2–2 Under the proposal, filers would be required to file an amended Form TA– 2 within 60 days of discovering any information reported that was materially inaccurate, misleading, or incomplete at the time of filing to correct that information. The proposed amendment would result in better accuracy in data collected and maintained by the Commission. This amendment would result in costs to transfer agents. Upon discovering that it had filed information that was inaccurate, misleading, or incomplete, a transfer agent would face a choice between (1) incurring costs to determine if the information was materially inaccurate, misleading, or incomplete in order to decide whether to file an amended Form TA–2 or (2) incurring any costs of producing and filing an amended Form TA–2 regardless of materiality. Further, transfer agents that have determined that the information was materially inaccurate, misleading, or incomplete would subsequently incur costs to produce and file an amended Form TA– 2. The compliance costs associated with the proposed amendments to Rule 17ac2–2 would impose annual costs of $1,500 424 per transfer agent.
c. Proposed Amendments to Form TA–
1
The Commission is proposing to add a number of questions to Form TA–1 including, among other things, organizational details such as affiliates and the transfer agent’s other registrations, as well as revision of instructions to promote clarity regarding the required information collected in existing questions.425 The Commission also proposes to remove two existing questions concerning registrants’ engagement of and engagement as a service company. The questions being removed from Form TA–1 are duplicative of information that is included in Form TA–2. Benefits There are benefits to both the questions being added to Form TA–1, which would provide valuable information to market participants doing business with transfer agents and the Commission, and to the questions being removed, which may reduce the frequency of filing amendments and the costs of preparing those filings relative to retaining those questions. Information about the geographic scope of the business, the officers and directors of the registrant, and the registrant’s organizational structure and affiliations may help in identifying conflict of interest concerns; assessing governance, safeguarding, and operational risks; assessing the internal division of labor, specialization, and scope; and relating total firm resources to the functions they support. This may contribute to improved transfer agent selection by issuers and increase competition among transfer agents. Identifying transfer agents’ other registrations would better enable the Commission to cross-reference entities already registered with the Commission in other capacities and therefore improve its evaluation of applications and oversight of registered entities. Furthermore, the structured data language in which transfer agents file Form TA–1 would enhance these benefits by making the additional disclosures more efficient to process and analyze. Form TA–1 is currently structured in a custom XML data language and would continue to be under the proposal.426 The custom XML requirement renders the disclosures machine-readable, benefiting users of the disclosures (such as issuers and regulators) by facilitating comparisons across transfer agents and filing periods. The requirement also allows transfer agents to complete a fillable web form that the EDGAR converts into a custom XML document rather than incur the cost of structuring their disclosures themselves.427 The removal of existing Questions 6 and 7 regarding service company arrangements from Form TA–1 may reduce certain costs related to preparing such amendments when required and may result in transfer agents needing to file amendments to Form TA–1 less frequently than if those Questions were retained, particularly if service company arrangements change more frequently than other information submitted on Form TA–1. The proposed amendments to Form TA–1 instructions are expected to result in marginal benefits to registrants, the Commission, and potentially other stakeholders
such as issuers. For example, amended instructions may help to reduce filing errors by specifying that the full legal name of the registering entity must be used and may ease Commission oversight by ensuring that registrants are aware that registration makes them subject to the SEC’s examination authority, including for non-Section 12 issues. Amending the instructions to Question 8 could result in more consistent and complete responses by registrants, facilitating the Commission in its oversight and regulatory roles.

428The $1,500 annual estimate is based on the following calculations: $1,161 (lawyers at $774 for
1.5 hours) + $387 (costs for outside professionals of
$387) ≈ $1,500. Occupational rates are calculated as described in infra note 533. For additional details on estimates of burden hours and occupations involved, see infra Section VI. The burden and cost estimates for Form TA–1 in this release do not reflect a separate burden or cost of structuring disclosures in custom XML, because the forms are fillable web forms on EDGAR that convert disclosures to custom XML. While transfer agents have the option of creating and submitting a custom XML document rather than using the fillable form, the Commission expects any transfer agents that choose this option have sufficient XML experience and infrastructure such that the burden and cost of doing so is de minimis. 429See supra Section II.D. Costs The removal of existing Questions 6 and 7 may result in somewhat delayed visibility into new transfer agents’ use of and employment as service providers, as that information would only be received with the filing of Form TA–2. Additionally, because the service provider information in Form TA–2 is retrospective to the calendar year reporting period, changes in employment of or employment as a service provider would no longer be updated within 60 days of the change as required by existing Questions 6 and 7. However, the Commission does not anticipate that the proposed change in provision of service company arrangement information from Form TA–1 to Form TA–2 will materially impact the Commission’s oversight of transfer agent operations with respect to service company arrangements. The other proposed amendments to Form TA–1 would result in costs to transfer agents primarily related to potential costs of needing to file amendments more frequently. This is because these proposed amendments increase the number of reportable items that could change and in turn increases the likelihood of an amendment to Form TA–1. The proposed amendments to form instructions are expected to result in some costs to registrants. Many of the proposed amendments to instructions require no substantive work from the registrant, such as those amendments specifying that the contact person in Question 1(f) must be authorized to receive compliance correspondence, or actively facilitate the accurate filing of Form TA–1, such as stating the meanings of the abbreviations of ‘‘CCC’’ and ‘‘CIK.’’ The amended instructions for Question 8, specifying who must be listed as a control person, may effectively require additional disclosure from some registrants and consequently additional costs to ascertain and report the information. The proposed amendment may result in duplication of reporting across Forms TA–1 and TA–2, particularly for transfer agents that enter the industry close to the end of the reporting period for Form TA–2. The Commission further recognizes that because amendments to Form TA–1 must be filed within 60 calendar days of reported information becoming inaccurate, incomplete, or misleading, registrants may have to expend resources to
determine on an ongoing basis if changes in internal organization, external affiliations, or registrations necessitate filing an amended Form TA–1, and incur costs to potentially file amendments multiple times per year. We estimate this aspect of the proposed amendment may impose annual compliance costs per transfer agent of $1,500.428 d. Proposed Amendments to Form TA– 2 There are several benefits associated with the proposed additional disclosures in Form TA–2.429 These proposed disclosures may mitigate information asymmetries and conflicts of interest between transfer agents and less informed issuers and investors; allow issuers to make more informed decisions in the selection of transfer agent; and support Commission oversight over transfer agents. Benefits The proposed amendments would require additional disclosures. For example, the proposed amendments would require transfer agents to disclose information related to their number of employees, activities performed, issues serviced, and certain service providers engaged. Such disclosures are expected to improve the ability of issuers and/or the Commission to assess the scope and quality of services offered by transfer agents; operational, outsourcing, and safeguarding risks of each transfer agent; and resources to cover financial responsibilities or liabilities the transfer agent may assume through visibility into transfer agents’ operating structure and business affiliates. Improving visibility into such factors for each transfer agent will also better enable comparison across transfer agents. The proposal would also require transfer agents to provide detailed information about, for example, the number and type of securities serviced and various means of doing so. The proposed amendments would require transfer agents to disclose more granular information about their activities related to already specified types of securities and the same information for newly identified classes of securities currently included within ‘‘other securities,’’ for example, exchange-traded funds. Transfer agents would also be required to disclose amounts paid in various cash and stock distributions and open end investment company security purchases and redemptions. The disclosure of additional information may facilitate oversight of transfer agents and enhance the ability of issuers to understand and compare the businesses of various transfer agents. Furthermore, as discussed in further detail in section V.C.3.c, the custom XML requirement for Form TA–2 will make the added disclosure more readily available for processing and analysis. However, to the degree that such information may be duplicative of information in Form TA– 1, existing requirements to file Form TA–1 and update it may reduce the magnitude of the above benefits of the proposed disclosure of changes in the transfer agent’s business. The proposed form amendments would result in transfer agents no longer being required to report some information. To
conform with proposed Rule 17ad–2, which replaces required monthly turnaround performance with a policies and procedures approach, Question 9 would be revised and transfer agents would no longer report the number of months not in compliance or the number of written notices of noncompliance filed to their ARA. Transfer agents would also no longer be required to report certain information related to the number and type of individual securityholder accounts. The removal of these disclosures may reduce the costs of tracking those metrics and preparing Form TA–2 filings. The proposed amendments to Form TA–2 instructions are expected to result in minor benefits to registrants, the Commission, and potentially other stakeholders such as issuers. For example, the proposed clarification of how to count securityholder accounts in Question 4(b) may result in more accurate and consistent reporting, which would benefit the Commission in its oversight role and potentially other stakeholders by improving comparability between transfer agents’ reported data. Costs The proposed disclosures in Form TA–2 would impose direct and indirect costs on transfer agents—costs that may be passed along to issuers and third parties (e.g., securityholders, broker￾dealers, and other non-issuers) that purchase services from transfer agents. First, these disclosures may provide

430The $3,900 annual estimate is based on the following calculations: $3,483 (lawyers at $774 for
4.5 hours) + $387 (costs for outside professionals of
$387) ≈ $3,900. Occupational rates are calculated as described in infra note 533. For additional details on estimates of burden hours and occupations involved, see infra Section VI. The burden and cost estimates for Form TA–2 in this release do not reflect a separate burden or cost of structuring disclosures in custom XML, because the forms are fillable web forms on EDGAR that convert disclosures to custom XML. While transfer agents have the option of creating and submitting a custom XML document rather than using the fillable form, the Commission expects any transfer agents that choose this option have sufficient XML experience and infrastructure such that the burden and cost of doing so is de minimis. 431See supra Sections III.A and III.B. 432See proposed Rule 17ad–9(h). only noisy signals of transfer agent quality or conflicts of interest and therefore may provide issuers with only a limited ability to make more informed choices when selecting transfer agents. Moreover, these additional disclosure requirements may lead some transfer agents, particularly smaller and less transparent transfer agents, to exit the industry. A more detailed discussion of these effects on efficiency, competition, and capital formation is presented in
Section V.D.
Second, transfer agents would incur direct compliance costs. Compliance with the proposed amendments to Form TA–2, including the amendments to instructions (principally the calculation of the number of securityholder accounts in Question 4(b)), would impose annual costs of $3,900 430 per transfer agent. These compliance costs and other costs, that are less amenable to quantification and discussed below, may be passed on to issuers and third parties.
4. Benefits and Costs of Proposed
Amendments to Definitions, Processing, Recordkeeping, and Safeguarding Rules a. Amendments to Rules 17ad–1 and 17ad–9 and New Definitions to Rule 17ad–9 Proposed amendments to Rules 17ad– 1 and 17ad–9 would amend and create definitions used in transfer agent rules and extend the applicability of definitions in Rule 17ad–1 to additional rules.431 The existing definitions generally reflect the transfer agent market as it was several decades ago when the transfer agent rules were originally adopted and when most settlement involved the cancellation and reissuance of security certificates. The intervening years have brought substantial change to the processing of security transactions, with most certificated securities being held in centralized depositories in street name and substantial activity taking place purely in book entry form. Communications, recordkeeping, and other categories of technology employed in the performance of transfer agent activities have likewise developed substantially. The proposed amendments in large part modernize definitions to reflect the state of the transfer agent market and technology currently in use, as well as to provide improved flexibility in definitions to allow for further developments and innovation. Rule 17ad–1 definitions currently apply to Rules 17ad–2 through 17ad–7. They are proposed to be extended to apply to Rules 17ad–9, 17ad–10, and 17ad–12 and proposed Rules 17ad–30, and 17ad–31. Their applicability to Rule 17ad–4 is proposed to be rescinded in conjunction with its proposed rescission. Rule 17ad–9 definitions currently apply to Rules 17ad–10 through 17ad–13 and are not proposed to be extended to further rules. Benefits The proposed amendments to the definitions in Rules 17ad–1 and 17ad– 9 would provide a number of benefits due to their applicability to existing or proposed rules, or rules with proposed amendments to rule text. The proposed amendments would provide clarity to transfer agents in their operations. The amended definitions would contribute to this by specifying how the tasks which make up most transfer agent activities, the objects that those tasks operate on, and the records which evidence them fall within and work in the transfer agent rules. Notably, this includes specifying that certain rules apply to, for example, securities, positions, or instructions in general, not only to certificates, and to instructions submitted to an electronic system controlled, operated, or enabled by the transfer agent. The proposed amendments would eliminate outdated definitions, which do not reflect present business practices and technology, resulting in more clarity and potentially fewer burdens associated with overcompliance: to the extent that outdated definitions currently cause transfer agents to apply rules more broadly than intended, updated definitions may reduce unnecessary compliance costs. However, the Commission lacks data to estimate the magnitude of this effect. Greater flexibility in the
definitions of terms, such those concerning security or securityholder identifying information, would help the rules remain relevant as markets continue to develop and adjust to technological and other innovations. Such flexibility in definitions could also provide transfer agents and service providers flexibility in how to comply with rules’ requirements. Issuers may also benefit from clearer knowledge of what information transfer agents would collect and maintain as a result of the proposed amendments, which could enable them to better negotiate agreements with transfer agents. The proposed new definitions in Rule 17ad–9—authorized securities, transfer journal, and presentor—are used extensively in both existing and proposed amended rules. Defining these terms will benefit market participants by providing regulatory clarity regarding the rules that reference these terms. The proposed amendments to Rules 17ad–1 and 17ad–9 would change the composition and handling of certain types of records transfer agents are required, or would be required, to keep, including the master securityholder file and control book. Expanding the definition of record difference may result in more timely discovery and resolution of errors by requiring continuous monitoring and correction, rather than limiting the definition of a record difference only to instances where position detail of a security transferred or redeemed does not match the master securityholder file. Similarly, by providing in the proposed amended definition of recordkeeping transfer agent that only a single transfer agent maintains and updates the master securityholder file of a security issue,432 the proposal may reduce the potential for transactions not being posted to the master securityholder file. Specifying that transfer agents have discretion in the technologies and systems used to maintain master securityholder files could contribute to transfer agents using the most efficient available technology, thereby promoting prompt and efficient clearance and settlement. Requiring the tracking of outstanding securities in the control book in addition to the currently required securities authorized and securities issued may likewise better enable transfer agents to monitor for overissuance, particularly by firms that are active in the market for their own securities such as through the accumulation of treasury stock. The proposed amendments to the definition of position detail increase the amount of information taken in, not only by adding an alternative applicable unique identifier to the certificate number if one exists, but also by adding any other information about securityholders and securities sufficient to accurately identify a specific securityholder to the exclusion of other securityholders; effectively deliver

dividends and other payments, legal notices, and other necessary communications; and reasonably enable transfer agent recordkeeping, operations, or the efficient and effective research of record differences. This could improve clearance and settlement by ensuring transfer agents’ ability to communicate with securityholders in real time using contemporary methods to help reduce settlement failures and timely resolve processing discrepancies. This could also improve transfer agents’ functioning as gatekeepers with respect to financial transactions and transfers. For example, the proposed amendments would require sufficient information for lost securityholder searches under Rule 17ad–17 and contribute to an improved success rate for finding lost securityholders when performing searches. Costs Transfer agents would incur costs as a result of the proposed amendments to definitions in Rules 17ad–1 and 17ad– 9 due to their applicability to existing or proposed rules, or rules with proposed amendments to rule text. While some general costs related to proposed amendments to definitions are discussed in this section, costs associated with the proposed amended definitions as they pertain to proposed rules and amendments in this release are mainly considered as part of the costs of these proposed rules and amendments, as discussed further in this section and Section V.C.5. Generally, costs related to proposed amendment definitions will primarily be associated with complying with the major turnaround, posting, recordkeeping, and record retention rules. Costs deriving from proposed amendments to definitions as apply to rules without proposed amendments to rule text are discussed more explicitly in this section. The proposed amendments to the Rule 17ad–1 definition of receipt would contribute to a requirement for faster turnaround time, expanding the scope of instructions which are subject to turnaround rules with downstream effects to posting, recordkeeping, and record retention rules. As discussed in the proposed amendment to Rule 17ad– 2 below, which the definition chiefly affects, requirements for more rapid processing may contribute to increased costs for some transfer agents, but the Commission understands that most turnaround is already accomplished on the timelines required under the new definition and amended Rule 17ad–2. Proposed amendments to Rule 17ad– 9 definitions, notably presentor, position detail, credit, and debit, would have the effect of requiring additional information to be collected, tracked, and stored, and potentially of requiring additional investigation and processing, including due to the specification that non-certificated actions are encompassed in the rules. Requiring more information in position detail could entail one-time costs associated with directly updating forms and systems to gather the new information. Because the requisite information is not specified but instead based on the principle that it be sufficient to
effectively comply with applicable laws and regulations, transfer agents may incur up-front and ongoing costs to determine what information is necessary to adequately comply. The proposed amendments to the definition of record difference may result in more frequent investigations of record differences, as they would include a continuously existing state of discrepancy between the master securityholder file and the transfer journal, which could result in additional ongoing costs. The addition of outstanding securities to the control book is expected to impose costs for transfer agents, but these are expected to be relatively minor as the measure is the arithmetic difference of securities issued, which is already tracked in the control book, and treasury stock, which may already be designated within an issue’s master securityholder file. The proposed amendment to the definition of master securityholder file may result in costs to transfer agents insofar as they do not already maintain the master securityholder file in electronic form. Most transfer agents currently maintain master securityholder files in electronic form and thus any such costs would be minimal. However, those transfer agents which do maintain master securityholder files in paper form would face costs to transfer them to electronic form, including costs to migrate data, to develop systems for updating the new electronic master securityholder files, and to train employees in new processes. These changes could impose significant one-time costs, with ongoing costs of updating the master securityholder file being more limited. The Commission lacks data on the number of transfer agents currently maintaining paper-based master securityholder files and the associated migration costs. These changes may be particularly burdensome for smaller transfer agents servicing fewer issues for many years. Such transfer agents are more likely to have begun master securityholder files in paper format and may be less able to spread out the fixed costs of changing over to electronic master securityholder files over multiple issues. The proposed amendment to the definition of recordkeeping transfer agent clarifies that only one transfer agent may maintain and update the master securityholder file for a security issue. Transfer agents which maintain master securityholder files along with other transfer agents for the same security issue may face one-time costs to adjust contracts and operations, but the Commission expects any ongoing costs related to consolidation of master securityholder files under a single recordkeeping transfer agent to be minimal. The Commission lacks data on the number of transfer agents which maintain master securityholder files jointly with another transfer agent. Additionally, there could be additional costs attributed to rules with rule text that is not proposed to be amended. The Rule 17ad–1 definitions currently and under proposed amendments apply primarily to proposed rules or
to rules with proposed amendments to rule text. The exceptions are Rules 17ad–5 and 17ad–8. No Rule 17ad–1 definitions proposed to be amended apply to Rule 17ad–8. The revised definition of ‘‘receipt’’ is not anticipated to result in material costs to comply with Rule 17ad–5 as, among other reasons, the extended time during which receipt may occur on the business day corresponding to the calendar day of receipt is matched by extended time of the last business day on which a response may be made. The revised definition of ‘‘item’’ is not expected to result in material costs to comply with Rule 17ad–5 independent of related costs to comply with the amended turnaround, recordkeeping, and record retention rules. The proposed Rule 17ad–9 definition amendments apply primarily to the proposed rules and rules with proposed amendments to rule text, with the exceptions of Rules 17ad–11 and 17ad–
13. The Commission does not expect the
proposed amended definitions to result in significant costs related to 17ad–13 because the required independent report concerns transfer agents’ systems of accounting control, procedures for the transfer of record ownership, and safeguarding of securities and funds, which already encompass the activities contemplated by the amended definitions if not their exact form. The proposed expansion of the definition of record difference and the resulting possibility of finding record differences

433An aged record difference is a record difference that has existed for more than thirty calendar days. See Rule 17ad–11(a)(2). 434See 2025 Support Statement for Rule 17ad–11, 90 FR 10983 (February 28, 2025) (‘‘2025 Support Statement for Rule 17ad–11’’). The $84 estimate is based on the following calculation: $83.50 (internal bookkeeping, accounting, and auditing clerks at $167 for 0.5 hours) and no external costs, $83.50

• $0 ≈ $84.
  435Specifically, the rule as amended would require a transfer agent to turnaround all routine items received for transfer during a month within the shorter of one business day or the time period specified by Rule 15c6–1(a) under the Exchange Act. In contrast, existing Rule 17ad–2(a) requires a transfer agent to turnaround at least 90% of all routine items received during a month within three business days. 436 17 CFR 240.15c6–1(a). 437See supra Section V.C.2. stemming from discrepancies between the transaction journal and master securityholder file could increase the number of aged record differences.433 This in turn could increase the number of reports related to aged record differences and the associated costs. Specifically, Rule 17ad–11 requires transfer agents to submit reports to issuers and to their ARA following each calendar month or quarter, respectively, when aged record differences exceed specified thresholds. The cost of incremental reports issued is expected to be $84 per filing.434 The Commission receives an average of one report per year, but does not have information regarding reports received by other ARAs and cannot readily quantify the extent of new record differences that transfer agents may discover as a result of the amended definition or whether those record differences would be unresolved after 30 days at a different rate than existing record differences. The Commission requests comment on these matters. b. Amendments to Rule 17ad–2 The Commission is proposing amendments to Rules 17ad–2(a)–(e) and (h). The proposed amendments to Rules 17ad–2(a) and 17ad–2(b) would (1) raise the performance standard for the turnaround and processing of routine items from at least 90 percent of all routine items to all routine items; (2) amend the time frame for accomplishing turnaround of routine items from the existing three business days to one business day or the time period specified by Rule 15c6–1(a) under the Exchange Act; and (3) impose a written policies and procedure requirement for the turnaround and processing of routine items. The proposed amendments to Rules 17ad–2(c) and 17ad–2(d) would require registered transfer agents to provide the required notifications when they fail to turnaround or process more than three percent of routine items within the time frames specified in proposed Rule 17ad–2(a) and Rule 17ad-2(b), respectively. The proposed amendments to Rule 17ad–2(e) would add a written notification requirement for rejected items and make conforming changes due to the proposed changes to Rule 17ad-2(a) and 17ad–2(b). The proposed amendments to Rule 17ad–2(h) would, among other things, replace the existing filing instructions for each ARA in the rule with email addresses for each ARA to modernize and simplify the filing instructions. In light of the proposed rescission of Rule 17ad–4, the Commission is proposing to delete (1) the turnaround provision in Rule 17ad–2(e)(2) that applies to transfer agents that are exempt
  pursuant to Rule 17ad–4(b) and (2) the existing reference to 17ad–4 in Rule 17ad–2(h). Section V.C.4.d discusses the benefits and costs associated with the proposed rescission of Rule 17ad–4. The proposed amendments to Rule 17ad–2(h) would, among other things, reference Rules 17ad–7, 17ad–11, and 17ad–13. The proposed insertion of Rules 17ad–11 and 17ad–13 in Rule 17ad–2(h) is unlikely to result in incremental benefits or costs because it simply mirrors the reference to Rule 17ad–2(h) in Rules 17ad–11(c) and 17ad–13(a). The benefits and costs associated with the proposed amendments to Rule 17ad–7 are discussed in Section V.C.4.f. This section discusses the benefits and costs associated with the proposed amendments to Rule 17ad–2 other than the proposed deletions in connection with the proposed rescission of Rule 17ad–4 and the proposed insertion of Rules 17ad–11 and 17ad–13 in Rule 17ad–2(h). Benefits The proposed amendments to Rule 17ad–2 would benefit investors by facilitating prompt and accurate clearance and settlement of securities transactions and strengthening investor protection. Transfer agents would benefit from a less burdensome and costly filing obligation as a result of the proposed electronic filing requirement in Rule 17ad–2(h). The proposed amendments to Rule 17ad–2(a) would facilitate prompt and accurate clearance and settlement by requiring a larger percentage of routine items to be turned around over a shorter time frame relative to the baseline.435 The proposed amendments to Rule 17ad–2(b) would also facilitate prompt and accurate clearance and settlement by requiring all applicable items to be processed within the specified timeframes compared to the existing standard of at least 90 percent of all routine items. That said, the beneficial impact on clearance and settlement may be limited. As discussed in Section III.D, the Commission understands that the vast majority of transfer agents regularly turn around and process nearly 100 percent of all applicable items within one business day or less, even for certificated securities, or are readily capable of doing so. Further, the standard securities settlement cycle for most broker-dealer securities transactions is currently one day following the trade date, or T+1.436 The proposed policies and procedures approach could promote the prompt and accurate clearance and settlement of securities transactions by providing transfer agents the flexibility to deploy new technologies and practices that may reduce their costs, while improving their turnaround performance.437 Additionally, should Rule 15c6–1(a) be revised in the future to specify a shorter settlement cycle, Rule 17ad–2(a) as amended would help ensure that transfer agents effect the turnaround of routine items to align with and support any shorter settlement cycle. In the absence of the proposed amendment, transfer agents may not turn around routine items expeditiously to keep up with any such shorter settlement cycle, which
  could delay the clearance and settlement of securities transactions. Thus, Rule 17ad–2(a) as amended would facilitate prompt and accurate clearance and settlement of securities transactions by ensuring that the turnaround of routine items would continue to keep up with the settlement cycle, even if it changes in the future. The proposed amendment would benefit investors by reducing the risk that their transactions cannot be cleared and settled accurately and promptly because of a turnaround delay. If a transfer agent fails to meet the turnaround or processing performance standard, the clearance and settlement of securities transactions is delayed, which exposes investors to market risk and potential losses. Existing Rules 17ad–2(c) and 17ad–2(d) are intended to provide the Commission and other ARAs early warning about turnaround and processing failures, which could be symptomatic of a serious performance issue affecting the transfer agent. However, as discussed in Section III.D, few transfer agents fail to turnaround or process in a timely manner 90 percent of applicable items received each

438See Rules 17ad–2(a) and 17ad–2(b). 439Rule 17ad–4(b), in part, exempts small transfer agents from Rules 17ad–2(a) and 17ad–2(b). See Rule 17ad–4(b), 17 CFR 240.17Ad–4(b). 440See supra Section III.F. month, rendering the existing rules ineffective in providing early warning of potential performance issues. Further, significant increases in the volume of items processed by modern transfer agents raise the costs of performance failures—such as increased market risk to investors—stemming from serious performance issues and underscore the need for effective early warning of such issues. The proposed amendments to Rules 17ad–2(c) and 17ad–2(d) would ensure the Commission and other ARAs receive the early warning the rule is designed to provide, but only in situations where the turnaround or processing failure potentially indicates a serious performance issue. Enhanced supervisory oversight by the Commission and other ARAs in such instances could help ensure speedy resolution of serious performance issues thereby supporting prompt and accurate clearance and settlement and protecting investors. The notification requirement of proposed Rule 17ad–2(e)(2) could enhance investor protection and promote the accurate clearance and settlement of securities transactions by ensuring that turnaround can be accomplished as quickly and efficiently as possible. Absent the proposed notification requirement, an investor (more generally, a presentor) may not be able to quickly cure defects (e.g., missing or incomplete information) that prevent the turnaround of an item, because the transfer agent did not provide notice of those defects. This in turn could delay the settlement of the transaction associated with the item and expose the investor to market risk associated with the delayed settlement of the transaction. By requiring the transfer agent to notify the investor of such defects and the necessary remedial actions, the proposed notification requirement could expedite the curing of defects, facilitate the prompt and accurate clearance and settlement of securities transactions, and in turn shorten the period during which the investor would be exposed to market risk associated with delayed settlement. The proposed electronic filing requirement in Rule 17ad–2(h) would remove transfer agents’ burden of preparing and submitting the required information in paper and submitting multiple copies to different ARA office locations, depending on the ARA. To the extent that the current paper-based filing requirement is costlier than electronic filing, the proposed amendment may reduce transfer agents’ costs of fulfilling their filing obligations and increase their efficiency. The proposed requirement may also facilitate Commission oversight of the filings by streamlining the process of tracking, reviewing, storing, and retrieving the email submissions made by transfer agents. More effective Commission oversight would strengthen investor protection and facilitate the prompt and
accurate clearance and settlement of securities transactions. Costs The proposed amendments to Rule 17ad–2 would impose costs on transfer agents. To comply with the proposed amendments to Rules 17ad–2(a) and 17ad–2(b), transfer agents would incur costs to establish, maintain, and enforce written policies and procedures reasonably designed to ensure turnaround and processing of all applicable items received within the timeframes specified in these amended rules.438 To the extent that transfer agents have existing written policies and procedures, they may choose to modify these existing written policies and procedures to comply with the proposed amendments––as opposed to creating these written policies and procedures de novo—which could reduce the costs associated with the proposed amendments. As discussed in Section III.D, the Commission understands that the vast majority of transfer agents regularly turn around and process nearly 100 percent of all applicable items within one business day or less, even for certificated securities, or are readily capable of doing so. Accordingly, transfer agents would incur very limited, if any, costs to comply with the proposed amendments to Rules 17ad– 2(a) and 17ad–2(b), with the possible exception of small transfer agents. With respect to small transfer agents that would be required to comply with amended Rules 17ad–2(a) and 17ad–2(b) as a result of the proposed rescission of Rule 17ad–4(b),439 the Commission understands that even the smallest transfer agents today have access to automated processes and electronic recordkeeping systems. Further, the securities markets and the national clearance and settlement system in which transfer agents operate have become more automated, efficient, and interconnected, which has increased the ability of all transfer agents, regardless of size, to meet the minimum performance standards set forth in amended Rules 17ad–2(a) and 17ad– 2(b), among other things.440 These factors may mitigate in particular small transfer agents’ costs of complying with these rules. A subset of transfer agents, potentially including small transfer agents, may incur costs to acquire the operational capability to turnaround and process all routine items received within the timeframes specified in these amended rules. The Commission requests commenters provide feedback on the number of transfer agents that may incur such costs and the magnitude of such costs. To comply with the proposed amendments to Rules 17ad–2(c) and 17ad–2(d), transfer agents may incur costs to build a system that monitors when their performance triggers the proposed three percent notification threshold for turnaround and processing, respectively. Transfer agents likely have such systems in place to comply with existing Rules 17ad–2(c) and 17ad–2(d) and would choose to update their systems to incorporate the proposed notification thresholds rather than build de novo monitoring systems. For these transfer agents, the costs of
updating their systems likely would be minimal. Transfer agents that would be newly subject to amended Rules 17ad– 2(c) and 17ad–2(d) because of the proposed rescission of Rule 17ad–4 likely do not have such monitoring systems and may incur costs to build them. The Commission requests commenters provide feedback on the number of transfer agents that may incur such costs and the magnitude of such costs. The proposed amendments to Rules 17ad–2(c) and 17ad–2(d) could increase the number of notices filed by transfer agents to the extent that the amended notification thresholds are crossed more often than the existing thresholds. Transfer agents would incur compliance costs associated with preparing and filing these additional notices. These compliance costs would fall primarily on transfer agents lacking the operational capability to avoid triggering the notification requirements such as smaller, less well-resourced transfer agents. The Commission requests commenters provide feedback on the change in the number of notice filings and the associated costs, as well as the type and number of likely filers. To comply with proposed Rule 17ad– 2(e)(2), transfer agents may choose to update their internal policies and procedures to ensure that they provide written notifications about rejected items to the relevant presentors within the time specified by the proposed rule.

441See supra Section III.I.2.
442See supra Section III.I.2.
443The $34,000 initial estimate is based on the following calculations: $25,542 (lawyers at $774 for 33 hours) + $8,514 (costs for outside professionals of $8,514) ≈ $34,000. The $8,500 annual estimate is based on the following calculations: $6,385.50 (lawyers at $774 for 8.25 hours) + $2,128.50 (costs for external services of $2,128.50) ≈ $8,500. Occupational rates are calculated as described in infra note 533. For additional details on estimates of burden hours and occupations involved, see infra
Section VI.
Because the proposed rule does not specify a method of providing written notifications and in light of the widespread availability of near￾instantaneous electronic communications in the transfer agent industry,441 transfer agents will likely use their existing methods of communicating with presentors (such as email communications) to provide the written notifications within the time specified in the proposed rule and not incur costs to establish any new communication methods. As discussed in Section III.D, the proposed rule would require transfer agents to provide the written notification only for items rejected by the transfer agent. This means that, if the transfer agent is not responsible for the rejection, then the transfer agent would not be required to provide a written notification to the presentor and incur any associated costs. Transfer agents would incur very little, if any incremental costs to comply with the proposed electronic filing requirement in Rule 17ad–2(h). Given the widespread availability of near￾instantaneous electronic communications in the transfer agent industry,442 transfer agents likely already possess the operational capability to comply with the proposed requirement. To the extent that the current paper-based filing requirement is costlier than electronic filing, the proposed amendment may reduce transfer agents’ costs of fulfilling their filing obligations. The compliance costs related to the proposed amendments would impose initial costs of $34,000 and annual costs of $8,500 per transfer agent.443
c. Amendments to Rule 17ad–3
The Commission is proposing to amend Rule 17ad–3 in light of the proposed amendments to Rule 17ad– 2(c) and (d). The Commission is proposing to amend the threshold in Rule 17ad–3(b) from 75 percent to 95 percent so that any registered transfer agent that fails, for each of two consecutive months, to turn around at least 95 percent of routine items within the time specified in Rule 17ad–2(a) or to process at least 95 percent of all applicable items within the time specified in Rule 17ad–2(b) would be subject to the limitations on expansion in Rule 17ad–3(a) and required to notify the chief executive officer of each issuer for which the transfer agent acts. The proposed amendments to Rule 17ad–2(c) and (d) also alter the operation of Rule 17ad–3(a). Specifically, any transfer agent that fails to timely turnaround or process more than three percent of all routine items received during a month for three consecutive months is prohibited from taking on new issues or providing new services for existing issues. In contrast, under existing Rule 17ad–2(c) and (d), the limitations on expansion would apply if the transfer agent fails to timely turnaround or process at least 90 percent of all routine items received during a month for three consecutive months. Benefits As discussed in Section V.C.4.b, if a transfer agent fails to meet the turnaround or processing performance standard, the clearance and settlement of securities transactions is delayed, which exposes investors to market risk and potential losses. Rule 17ad–3 along with existing Rules 17ad–2(c) and 17ad– 2(d) are intended to provide issuers, the Commission and other ARAs early warning about turnaround and processing failures, which could be symptomatic of a serious performance issue affecting the transfer agent. However, as discussed in Section III.E, the vast majority of transfer agents regularly turnaround and process nearly 100 percent of all routine items within one business day or less, or are readily capable of doing so, and modern transfer agents process significantly more items per month than did transfer agents in 1977 when Rules 17ad–2 and 17ad–3 were adopted. These changes render Rule 17ad–3 ineffective in providing early warning of potential performance issues and raise the costs of performance failures—such as increased market risk to investors— stemming from serious performance issues and underscore the need for effective early warning of such issues. If a transfer agent’s issuer clients do not receive effective early warning of potential performance issues, they are unable to expedite the resolution of such issues with the transfer agent. Further, early warning that is rarely triggered renders largely inert Rule 17ad–3’s limitations on expansion provisions and the associated prospect of lost revenue and damaged reputation experienced by an underperforming transfer agent. This weakens the transfer agent’s incentives to expeditiously address performance failures and also weakens the
incentives of all transfer agents to deploy sufficient resources (e.g., enhanced operational controls, upgraded systems, or increased staffing) to avoid performance failures. The proposed amendment to Rule 17ad–3(b) would ensure transfer agents’ issuer clients receive the early warning about significant operational failures the rule is designed to provide, but only in situations where the turnaround or processing failure potentially indicates a serious performance issue. This would enable issuer clients to use their contractual relationships with underperforming transfer agents to help ensure speedy resolution of serious performance issues, return them to compliance with the performance standards thereby supporting the prompt and accurate clearance and settlement and protecting investors. As a result of the proposed amendments to the turnaround failure thresholds in Rule 17ad–2(c) or (d), the limitations on expansion provisions of Rule 17ad–3 would trigger more frequently—all things being equal—and thus provide stronger incentives for underperforming transfer agents to expeditiously address performance failures and for all transfer agents to deploy sufficient resources to avoid performance failures. This in turn would support the prompt and accurate clearance and settlement and strengthen investor protection. Costs To the extent that the limitation on expansion provisions are triggered more often relative to the baseline, affected transfer agents would lose revenue as a result of the limitation. They may also suffer damage to their reputation if current and prospective clients interpret the limitation as an indication of inferior ability to perform transfer agent activities. This in turn could result in a further loss of business and revenue. These costs would fall primarily on transfer agents lacking the operational capability to avoid triggering the limitations on expansion provisions such as smaller, less well-resourced, transfer agents. The Commission requests that commenters provide feedback on whether the limitations on expansion provisions would trigger more, less, or remain unchanged in light of the proposed amendments to Rule 17ad–2(c) and (d) and the proposed amendment to Rule 17ad–3(b). Commenters are also requested to provide feedback on the type and

444The $670 annual estimate is based on the following calculations: $501 (bookkeeping, accounting, and auditing clerks at $167 for 3 hours)

• $167 (costs for outside professionals of $167) ≈
  $670. Occupational rates are calculated as described in infra note 533. For additional details on estimates of burden hours and occupations involved, see infra Section VI. 445See CFR 240.17Ad–4(a) (stating that Rule 17ad–2 (regarding turnaround and processing), Rule 17ad–3 (regarding restrictions on expansion in certain circumstances of non-compliance), and Rules 17ad–6(a)(1) through (7) and (11) (regarding books and records requirements) shall not apply to transfer agents that process interests in LPs, Fund Shares, or DRIPs.) 446See 17 CFR 240.17Ad–4(b). Rule 17ad–4(b) provides an exemption for certain small transfer agents by exempting a registered transfer agent from the turnaround, processing, recordkeeping, and other provisions of Rules 17ad–2(a), (b), (c), (d) and (h); 17ad–3; and 17ad–6(a)(2) through (7) and (11), provided the transfer agent has received fewer than 500 items for transfer and fewer than 500 items for processing within a consecutive six month period and provided that the transfer agent has filed proper notice of its exempt status with its ARA or has prepared a document certifying that the transfer agent qualifies as exempt (with respect to those ARAs where filing is not required.) 447Regulation of Transfer Agents, Exchange Act Release No. 13293 (Feb. 24, 1977), 42 FR 12191, 12195 (Mar. 3, 1977). 448See supra note 213. 449See Exchange Act Rule 17ad–13, 17 CFR 240.17Ad–13 and 2015 Concept Release, supra note 4, at 81966. 450See supra Sections V.C.4.b and V.C.4.c and infra Section V.C.4.e, respectively for a discussion of the benefits associated with the proposed amendments to Rules 17ad–2, 17ad–3, and 17ad– 6. 451See proposed Rule 17ad–2(a), (b), and (e). 452See supra Section V.C.2. number of transfer agents likely to be affected. To the extent that the notification requirement of the rule is triggered more often as a result of the proposed 95 percent threshold, affected transfer agents would incur compliance costs to notify the chief executive officers of their issuer clients. These compliance costs would fall primarily on transfer agents lacking the operational capability to avoid triggering the notification requirements such as smaller, less well￾resourced transfer agents. The notification requirement would impose annual costs of $670 per transfer agent.444 These costs would be mitigated because the rule requires the transfer agents to send copies of the written notices filed pursuant to Rule 17ad–2(c) or (d), as applicable, rather than prepare different notices. Transfer agents that anticipate triggering the limitations on expansion provisions given the current state of their operational capability may choose to deploy sufficient resources (e.g., enhanced operational controls, upgraded systems, or increased staffing) to avoid performance failures and incur costs as a result. Transfer agents that are likely to respond in this way are those for which the costs associated with deploying sufficient resources are less than the
  costs associated with the limitations on expansion, i.e., lost revenue and damaged reputation. Specifically, larger and fast growing transfer agents may be more inclined to deploy sufficient resources to prevent performance failures. Larger transfer agents typically possess the necessary capacity, while for fast-growing transfer agents, restrictions on expansion tend to impose relatively higher costs. d. Rescission of Rule 17ad–4 Rule 17ad–4 provides limited exemptions from certain transfer agent rules. Specifically, Rule 17ad–4(a) provides an exemption for transfer agents that process interests in limited partnerships (‘‘LPs’’), Fund Shares, or DRIPs from turnaround, processing, recordkeeping and other provisions.445 Rule 17ad–4(b) provides an exemption for certain small transfer agents by exempting a registered transfer agent from the turnaround, processing, recordkeeping, and other provisions.446 The Commission is proposing to rescind Rule 17ad–4 in its entirety. The original rationale for the rule was that it was not necessary or appropriate to require smaller transfer agents for thinly-traded issues to comply with the minimum performance standards and recordkeeping provisions, nor was it necessary or appropriate to apply those standards and provisions to processes that, as the Commission understood at that time, were significantly different from the transfer of ownership of stocks and bonds on issuers’ records.447 However, modern technological capabilities and a dramatic increase in the risks posed by transfer agents’ activities to an interconnected electronic national clearance and settlement system are such that the rule’s original rationale is no longer justified. Accordingly, the Commission proposes to rescind Rule 17ad–4. As a result, transfer agents that previously were subject to the exemption afforded by Rule 17ad–4 would now have to comply with turnaround, processing, limitations on expansion, and recordkeeping rules. The Commission is also proposing to remove paragraph (d)(2) from Rule 17ad–13, which provides that a registered transfer agent is exempt from the requirements of Rule 17ad–13 if it is an exempt transfer agent pursuant to Rule 17ad–4(b) and, if it performs transfer agent functions for Fund Shares, it maintains master securityholder files consisting of fewer than 1,000 shareholder accounts, in the aggregate, for each of such issues for which it performs transfer agent functions.448 As a result, small transfer agents that previously were covered by Rule 17ad–4(b) would now have to comply with Rule 17ad–13 and, among other things, file with the Commission and its ARA an annual report prepared by an independent accountant concerning the transfer agent’s system of internal controls and related procedures for the transfer of record ownership and the safeguarding of related securities and funds based on an annual study and evaluation made in accordance with generally accepted auditing standards.449 Benefits The proposed
  rescission of Rule 17ad–4 is expected to strengthen investor protection and facilitate the prompt and accurate settlement of securities transactions by extending Rules 17ad–2, 17ad–3, and 17ad–6, as proposed to be amended, to transfer agents processing interests in LPs, DRIPS, and Fund Shares, and certain small transfer agents. Elsewhere in this release,450 the Commission discusses in detail how the proposed amendments to Rules 17ad–2, 17ad–3, and 17ad–6—as applied to all transfer agents—would strengthen investor protection and the prompt and accurate settlement of securities transactions. The following is a summary of these discussions. First, the processing performance standards of Rule 17ad–2 would ensure that transfer agents turn around and process routine and non-routine items promptly and accurately.451 Second, Rule 17ad–2’s proposed policies and procedures approach could promote the prompt and accurate clearance and settlement of securities transactions by providing transfer agents the flexibility to deploy new technologies and practices that may reduce their costs, while improving their turnaround performance.452 Third, the proposed amendments to Rules 17ad–2(c) and 17ad–2(d) would ensure the Commission and other ARAs receive the early warning the rule is designed to provide, but only in situations where the turnaround or processing failure potentially indicates a serious performance issue. Enhanced supervisory oversight by the Commission and other ARAs in such instances could help ensure speedy resolution of serious performance issues thereby supporting prompt and accurate clearance and settlement and protecting investors. Fourth, the notification requirement of proposed Rule 17ad– 2(e)(2) could expedite the curing of

453See supra Section V.B.4.d. The aggregate quantifiable compliance costs for Rules 17ad–2, 17ad–3, and 17ad–6 (see infra Section V.C.6) include the costs that would be incurred by these 194 transfer agents. 454See supra Sections V.C.4.b and V.C.4.c and infra Section V.C.4.e, respectively for a discussion of the compliance costs associated with the proposed amendments to Rules 17ad–2, 17ad–3, and 17ad–6. 455See Rules 17ad–2(a) and 17ad–2(b). 456Rule 17ad–4(b), in part, exempts small transfer agents from Rules 17ad–2(a) and 17ad–2(b). See Rule 17ad–4(b), 17 CFR 240.17Ad–4(b). 457See supra Section III.F. defects, facilitate the prompt and accurate clearance and settlement of securities transactions, and in turn shorten the period during which the investor would be exposed to market risk associated with delayed settlement. Fifth, the proposed amendment to Rule 17ad–3(b) would ensure transfer agents’ issuer clients receive the early warning about significant operational failures the rule is designed to provide, but only in situations where the turnaround or processing failure potentially indicates a serious performance issue. This would enable issuer clients to use their contractual relationships with underperforming transfer agents to help ensure speedy resolution of serious performance issues, return them to compliance with the performance standards thereby supporting the prompt and accurate clearance and settlement and protecting investors. Sixth, to the extent that the limitations on expansion provisions of Rule 17ad– 3 trigger more frequently because of the amended turnaround failure thresholds in Rule 17ad–2(c) or (d), there would be stronger incentives for underperforming transfer agents to expeditiously address performance failures and for all transfer agents to deploy sufficient resources to avoid performance failures. This in turn would support the prompt and accurate clearance and settlement and strengthen investor protection. Seventh, the proposed amendments to Rule 17ad–6 may help to promote safe, efficient, prompt, and accurate settlement transactions to the extent that the greater availability of information to ARAs helps improve the detection and curing of transfer agents’ deficiencies. This effect is expected to fall primarily on smaller transfer agents. Eighth, by simplifying recordkeeping requirements, the proposed amendments to Rule 17ad–6 may ease transfer agents’ administrative burden, allowing them to focus more on performing their critical functions. If administrative burden currently constrains transfer agents’ ability to devote resources to their critical functions, this reallocation may indirectly improve the performance of these functions. Extending Rule 17ad–13 to small transfer agents that were previously covered by Rule 17ad–4(b) would strengthen investor protection and promote the prompt and accurate settlement of securities transactions. The annual report requirement of Rule 17ad–13(a) could help detect and correct
material inadequacies in the transfer agent’s internal control system, which in turn would restore the transfer agent’s ability to promptly and accurately transfer record ownership and safeguard securities and funds. The notification requirement of Rule 17ad– 13(b) would provide early warning to the transfer agent’s ARA about material inadequacies in the transfer agent’s internal control system. Enhanced supervisory oversight by the Commission and other ARAs in such instances could help ensure speedy correction of such inadequacies and restore the affected transfer agent’s ability to discharge its transfer and safeguarding obligations. If the discovery of material inadequacies impairs a transfer agent’s reputation and prospects for future business, the rule may provide incentives for transfer agents to deploy sufficient resources to avoid material inadequacies in their internal control systems. This in turn would support the prompt and accurate clearance and settlement and strengthen investor protection. That said, this effect may be limited for smaller transfer agents, which are more likely to lack the resources to bolster their internal control systems. Costs The proposed rescission of Rule 17ad–4 would impose certain costs on those registered transfer agents that were previously covered by the rule. Specifically, the Commission estimates that up to 194 registered transfer agents that process interests in limited partnerships, DRIPs, and Fund Shares, and certain small transfer agents would be required to comply with Rules 17ad– 2, 17ad–3, and 17ad–6, as proposed to be amended, and likely would incur compliance costs.453 Elsewhere in this release,454 the Commission discusses the compliance costs incurred by all applicable registered transfer agents in connection with proposed amendments to Rules 17ad–2, 17ad–3, and 17ad–6. The following is a summary of these discussions. With respect to the proposed amendments to Rule 17ad–2, transfer agents would incur the following compliance costs. First, to comply with the proposed amendments to Rules 17ad–2(a) and 17ad–2(b), transfer agents would incur costs to establish, maintain, and enforce written policies and procedures reasonably designed to ensure turnaround and processing of all applicable items received within the timeframes specified in these amended rules.455 Transfer agents with existing written policies and procedures may choose to modify them as opposed to creating written policies and procedures de novo, which could reduce their compliance costs. Second, as discussed in Section V.C.4.b, transfer agents would incur very limited, if any, costs to comply with the proposed amendments to Rules 17ad–2(a) and 17ad–2(b), with the possible exception of small transfer agents. With respect to small transfer agents that would be required to comply with amended Rules 17ad–2(a) and 17ad–2(b) as a result of the proposed rescission of Rule 17ad– 4(b),456 the Commission understands that even the smallest
transfer agents today have access to automated processes and electronic recordkeeping systems. Further, the securities markets and the national clearance and settlement system in which transfer agents operate have become more automated, efficient, and interconnected, which has increased the ability of all transfer agents, regardless of size, to meet the minimum performance standards set forth in amended Rules 17ad–2(a) and 17ad– 2(b), among other things.457 These factors may mitigate in particular small transfer agents’ costs of complying with these rules. A subset of transfer agents, potentially including small transfer agents, may incur costs to acquire the operational capability to turnaround and process all routine items received within the timeframes specified in these amended rules. The Commission requests commenters provide feedback on the number of transfer agents that may incur such costs and the magnitude of such costs. Third, to comply with the proposed amendments to Rules 17ad– 2(c) and 17ad–2(d), transfer agents may incur costs to build a system that monitors when their performance triggers the proposed three percent notification threshold for turnaround and processing, respectively. Transfer agents likely have such systems in place to comply with existing Rules 17ad–2(c) and 17ad–2(d) and would choose to update their systems to incorporate the proposed notification thresholds rather than build de novo monitoring systems. For these transfer agents, the costs of updating their systems likely would be

458See supra Section III.I.2.
459As the Commission estimated previously, transfer agents would incur external costs associated with the fees charged by independent accountants to perform the study, prepare the report, and retain the required records on an annual basis pursuant to Rule 17Ad–13. On average, an independent accountant is estimated to spend 120 hours to perform these tasks. The annual internal time burden associated with filing the report with the Commission is estimated to be minimal. See Securities and Exchange Commission, Supporting Statement for the Paperwork Reduction Act Information Collection Submission for Rule 17Ad– 13 (July 18, 2024), available at https:// www.reginfo.gov/public/do/ PRAViewDocument?ref_nbr=202407-3235-016. The $40,000 annual estimate is based on the following calculations: $0 + $39,600 (costs for accountants and auditors at $330 for 120 hours) ≈ $40,000. Based on an analysis of Form TA–2 filings for the 2025 reporting year, the Commission estimates that 16 registered transfer agents would be covered by Rule 17ad–13(d)(2). These transfer agents would have to comply with Rule 17ad–13 as a result of the proposed rescission of Rules 17ad–4(b) and 17ad– 13(d)(2). Occupational rates are calculated as described in infra note 533. minimal. Transfer agents that would be newly subject to amended Rules 17ad– 2(c) and 17ad–2(d) because of the proposed rescission of Rule 17ad–4 likely do not have such monitoring systems and may incur costs to build them. The Commission requests commenters provide feedback on the number of transfer agents that may incur such costs and the magnitude of such costs. Fourth, the proposed amendments to Rules 17ad–2(c) and 17ad–2(d) could increase the number of notices filed by transfer agents to the extent that the amended notification thresholds are crossed more often than the existing thresholds. Transfer agents would incur compliance costs associated with preparing and filing these additional notices. Fifth, to comply with the proposed amendment to Rule 17ad– 2(e)(1) and proposed Rule 17ad–2(e)(2), transfer agents may choose to update their internal policies and procedures to ensure that they adhere to the revised requirements when addressing routine items that failed to be timely turned around or processed and non-routine items, respectively. Sixth, transfer agents would incur very little, if any incremental costs to comply with the proposed electronic filing requirement in Rule 17ad–2(h). Given the widespread availability of near￾instantaneous electronic communications in the transfer agent industry,458 transfer agents likely already possess the operational capability to comply with the proposed requirement. To the extent that the current paper-based filing requirement is costlier than electronic filing, the proposed amendment may reduce transfer agents’ costs of fulfilling their filing obligations. With respect to the proposed amendments to Rule 17ad–3, transfer agents would incur the following compliance costs.
First, to the extent that the limitations on expansion provisions are triggered more often relative to the baseline, affected transfer agents would lose revenue as a result of the limitation. They may also suffer damage to their reputation if current and prospective clients interpret the limitation as an indication of inferior ability to perform transfer agent activities. This in turn could result in a further loss of business and revenue. Second, to the extent that the notification requirement of the rule is triggered more often as a result of the proposed 95 percent threshold, affected transfer agents would incur compliance costs to notify the chief executive officers of their issuer clients. These costs would be mitigated because the rule requires the transfer agents to send copies of the written notices filed pursuant to Rule 17ad–2(c) or (d), as applicable, rather than prepare different notices. Third, transfer agents that anticipate triggering the limitations on expansion provisions given the current state of their operational capability may choose to deploy sufficient resources (e.g., enhanced operational controls, upgraded systems, or increased staffing) to avoid performance failures and incur costs as a result. With respect to the proposed amendments to Rule 17ad–6, transfer agents would incur the following compliance costs. To the extent that the proposed amendments to Rule 17ad–6 increase the number of documents and records that transfer agents would be required to make and keep current relative to the baseline, they would incur costs to do so. The magnitude of these costs would depend in part on the size and scope of the transfer agents’ business activities. Alternatively, transfer agents could respond to the proposed amendments by restructuring their business activities to reduce the additional number of documents and records that they would be required to make and keep current. Transfer agents may choose to restructure their business activities if the associated costs are less than the cost savings associated with the reduction of documents and records that would have to be made and kept current. As a result of the proposed rescission of Rules 17ad–4(b) and 17ad–13(d)(2), small transfer agents that were previously exempt under Rule 17ad– 4(b) would now have to comply with Rule 17ad–13. Each transfer agent would incur annual compliance costs of $40,000 associated with retaining an independent accountant to study and report on the transfer agent’s internal accounting control system.459 The annual report requirement of Rule 17ad–13(a) may impose additional costs. A focus on audited internal controls as a result of this requirement could adversely affect transfer agents’ performance, if it distracts them from promptly and accurately performing their transfer agent activities. e. Amendments to Rule 17ad–6 The Commission proposes implementing changes to existing Rule 17ad–6 that will (1) simplify the rule text, specify what recordkeeping
requirements apply to uncertificated securities, and appropriately capture the records necessary for modern transfer agents to perform their regulated functions; (2) conform to other amendments in this proposal as appropriate; and (3) supplement the existing record maintenance, retention, and preservation activities by adding recordkeeping requirements relating to maintaining a master securityholder file, control book, and transfer journal. Benefits The proposed amendments to Rule 17ad–6 may benefit issuers and investors by helping to promote safe, efficient, prompt, and accurate settlement transactions and strengthen investor protection. The proposed amendments to Rule 17ad–6 would require transfer agents to make and keep current certain new records and information. For example, proposed Rule 17ad–6(a)(10) would require each transfer agent to make and keep current a master securityholder file, control book, and transfer journal (or registrar journal if the transfer agent acts as an outside registrar) for each securities issue for which the transfer agent is authorized to act on behalf of the issuer, including all records, documents, and information that compose such master securityholder file, control book, or transfer journal (or registrar journal). The proposed amendments to Rule 17ad–6 would also remove existing requirements to make and keep current certain other records and information. For example, the Commission is proposing to remove paragraph (a)(2)(vi) of Rule 17ad–6, which requires registered transfer agents to make and keep routine items that have been in their possession for more than four business days. To the extent that the proposed amendments result in a net increase in the number of documents and records that transfer

460The $1,000 initial estimate is based on the following calculations: $783.23 (bookkeeping, accounting, and auditing clerks at $167 for 4.69 hours) + $260.94 (costs for outside professionals of $260.94) ≈ $1,000. The $3,100 annual estimate is based on the following calculations: $2,348.02 (bookkeeping, accounting, and auditing clerks at $167 for 14.06 hours) + $782.81 (costs for outside professionals of $782.81) ≈ $3,100. Occupational rates are calculated as described in infra note 533. For additional details on estimates of burden hours and occupations involved, see infra Section VI. The burden hours associated with the proposed amendments to Rules 17ad–6 and 17ad–7 are estimated jointly, see infra Section VI. 461See proposed Rule 17ad–7. 462See supra Section III.H.2. The Commission is also proposing to delete paragraphs (b), (d), and (i) of Rule 17ad–7 because they would now be subsumed by amended paragraph (a). 463See proposed Rule 17ad–7(g). 464See proposed Rule 17ad–7(h)(1) and (2). agents would be required to make and keep relative to the baseline, the expanded set of documents and records would provide more information to the transfer agents’ ARAs to examine the transfer agents for compliance with transfer agent rules. The Commission’s supervisory experience suggests that this effect falls primarily on smaller transfer agents; the effect on larger transfer agents would likely be minimal because they already keep and maintain most of the documents and records contemplated by the proposed amendments. To the extent that greater information helps ARAs better detect deficiencies in the transfer agents’ activities and transfer agents to remedy such deficiencies, the proposed amendments may help to promote safe, efficient, prompt, and accurate settlement transactions, which would benefit issuers and investors. The proposed amendments would, among other things, simplify and streamline recordkeeping requirements. For example, the Commission is proposing to amend Rule 17ad–6(a)(1) to require every registered transfer agent to make and keep current ‘‘records’’ rather than ‘‘a receipt, ticket, schedule, log or other record.’’ Simpler and more streamlined recordkeeping requirements could reduce transfer agents’ administrative burden, thereby freeing up time and effort that could be redirected towards improving the performance of their critical functions. To the extent that administrative burden currently constrains transfer agents’ ability to devote resources to their critical functions, this reallocation may indirectly improve the performance of these functions. However, the Commission lacks data to assess the materiality of this indirect effect. Enhanced performance of transfer agents’ critical functions would support the prompt and accurate clearance and settlement of securities transactions and strengthen investor protection, thereby benefiting issuers and investors. Costs Transfer agents would incur costs as a result of the proposed amendments to
Rule 17ad–6. Section V.C.1 discusses the potential for transfer agents to pass on such costs to issuers and third parties. To the extent that the proposed amendments to Rule 17ad–6 increase the number of documents and records that transfer agents would be required to make and keep current relative to the baseline, they would incur costs to do so. The magnitude of these costs would depend in part on the size and scope of the transfer agents’ business activities. A transfer agent that provides a wide array of services to a large number of clients would likely be required to make and keep current many more documents and records than a transfer agent that provides a limited set of services to a small handful of clients. Thus, the former would likely incur greater costs than the latter to make and keep current additional documents and records. Alternatively, transfer agents could respond to the proposed amendments by restructuring their business activities to reduce the additional number of documents and records that they would be required to make and keep current. Transfer agents may choose to restructure their business activities if the associated costs are less than the cost savings associated with the reduction of documents and records that would have to be made and kept current. The compliance costs related to the proposed amendments to Rule 17ad–6, which are jointly estimated with those associated with the proposed amendments to Rule 17ad–7, would impose on each transfer agent initial costs of $1,000 and annual costs of $3,100.460 f. Amendments to Rule 17ad–7 The Commission is proposing amendments to Rule 17ad–7 to, among other things, establish a single, uniform retention period of six years for most transfer agent records, streamline and modernize the rule’s provisions governing electronic recordkeeping, and require transfer agents to turn over to the issuer or its designee certain records related to that issue within fifteen (15) calendar days of ceasing to perform transfer agent activities for that issue.461 Benefits The proposed amendments to Rule 17ad–7 could benefit issuers and investors by supporting the prompt and accurate clearance and settlement of securities transactions and strengthening investor protections. A number of the proposed amendments would expand the set of records that would be available for examination by the transfer agent’s ARA. First, the proposed amendments to Rule 17ad–7(a) would expand the set of records that must be maintained to include all records required to be made or kept by a transfer agent under the Exchange Act. In contrast, existing Rule 17ad–7 requires the retention of a more limited set of records.462 Second, proposed Rule 17ad–7(g) would expand the set of records that must be promptly provided to Commission or ARA representatives from records stored on electronic storage media or micrographic media (as required under Rule 17ad–7(f)(5)) to any record required to be maintained, retained, or preserved
under this section or otherwise subject to examination under
section 17(b) of the Exchange Act.463
Third, proposed Rules 17ad–7(h)(1) and (2) would help ensure that transfer agent records stored on third-party servers or other storage mechanisms could be readily examined by Commission or other ARA representatives and that copies of such records would be promptly provided to such representatives.464 Existing Rule 17ad–7 does not address transfer agent records stored on third-party servers or other storage mechanisms. By requiring the retention of a larger set of records that are available for examination relative to the baseline, the proposed amendments could increase the amount of information about a transfer agent’s activities over the retention period, which could increase the likelihood of the Commission or another ARA identifying and having the transfer agent remedy deficiencies, thereby improving transfer agents’ performance of their activities. Enhanced performance by transfer agents would support the prompt and accurate clearance and settlement of securities transactions and strengthen investor protection, thereby benefiting issuers and investors. The proposed amendments to Rule 17ad–7(f) would, among other things, update the rule’s electronic recordkeeping requirements to align with modern standards related to electronic records, information security, and audit trails. The proposed electronic recordkeeping requirements could help ensure that transfer agent records—such as records of securities ownership—are accurate and complete and maintained securely, which would

465As discussed in Section III.H.3, the proposed requirements are intended to, among other things, accommodate the types of electronic recordkeeping systems that are used by modern transfer agents that may have moved beyond the types of optical storage systems and micrographic media that were common when Rule 17ad–7 was adopted over two decades ago. 466See proposed Rule 17ad–7(i). 467 Id. 468See 2015 Concept Release, supra note 4, at 81978 and supra Section III.H.4. 469See supra Section III.H.2. 470As the Commission estimated previously, a transfer agent spends 500 hours per year to comply with Rules 17ad–6 and 17ad–7, with the work being done by internal compliance staff. See Securities and Exchange Commission, ‘‘Supporting Statement for the Paperwork Reduction Act Information Collection Submission for Rules 17ad–6 and 17ad– 7’’ (Feb. 29, 2024), available at https:// www.reginfo.gov/public/do/ PRAViewDocument?ref_nbr=202402-3235-015. To comply with proposed Rule 17ad–7(a), a transfer agent is estimated to spend an additional 0.5 percent of the previously estimated 500 hours, i.e.,
0.005 × 500 = 2.5 hours, with the work being done
by internal compliance staff. The Commission estimates that 25 percent of this internal burden will be incurred initially, while the remaining 75 percent will be incurred annually. The $480 initial estimate is based on the following calculations:
$483.75 (lawyers at $774 for 0.625 hours) + $0 (costs for outside professionals of $0) ≈ $480. The $1,500 annual estimate is based on the following calculations: $1,451.25 (lawyers at $774 for 1.875 hours) + $0 (costs for outside professionals of $0) ≈ $1,500. Occupational rates are calculated as described in infra note 533. facilitate the prompt and accurate clearance and settlement of securities transactions and strengthen investor protection. However, these benefits may be limited because, based on the Commission’s supervisory experience, most transfer agents use electronic recordkeeping systems that largely comply with the proposed electronic recordkeeping requirements.465 The proposed amendments to Rule 17ad–7, in part, would simplify and streamline transfer agents’ record retention requirements. First, the Commission is proposing to eliminate provisions related to micrographic media because micrographic media are no longer used by transfer agents today. Second, requirements related to a transfer agent’s use of a third party for maintaining and preserving records (paragraphs (f)(6) and (g) of Rule 17ad–
7) would be consolidated into a new
paragraph (h)(1) of Rule 17ad–7, which would be simpler for transfer agents to follow. Third, proposed Rule 17ad–7(a) would, in part, eliminate the existing, multi-tiered approach to retention periods and differing ‘‘easily accessible’’ windows tied to specific subsets of records and replace these requirements with a retention period of not less than six years, the first two years of which in an easily accessible place. Also, prescriptive requirements to maintain duplicates and indexes or keep in escrow a copy of the physical and logical format of electronic storage (paragraphs (f)(2)(v) and (f)(5)(ii) of Rule 17ad–7) would be rescinded, allowing transfer agents greater flexibility in meeting the requirements of retaining readily producible and recoverable records. Simpler and more streamlined record retention requirements could reduce transfer agents’ administrative burden, thereby freeing up time and effort that could be redirected towards improving the performance of their critical functions. Enhanced performance of transfer agents’ critical functions would support the prompt and accurate clearance and settlement of securities transactions and strengthen investor protection, thereby benefiting issuers and investors. Rule 17ad–7(h) provides that when a registered transfer agent ceases to perform transfer agent activities for an issue, the responsibility of such transfer agent under Rule 17ad–7 to retain the records required to be made and kept current under Rule 17ad–6(a)(1), (6), (9), (10), and (11), (b) and (c) shall end upon delivery of such records to the successor transfer agent. The Commission proposes revising this provision to allow these records to be delivered to the issuer or the issuer’s designee.466 In addition, the Commission proposes to add a requirement for registered transfer agents to provide, or otherwise make available, to the issuer or the issuer’s designee all records required to be made and kept current under Rule 17ad– 6(a)(1), (6), (9), (10), and (11), (b) and (c) related to an issue within 15 calendar days of ceasing to perform transfer agent activities for that issue.467 Finally, the Commission is proposing to renumber Rule 17ad–7(h) as Rule 17ad–7(i). These proposed amendments may have salutary effects on investor protection and the clearance and settlement of securities transactions. As a preliminary matter, interruptions to the provision of transfer agent services can harm investors because such interruptions can, for example, delay the transfer of ownership, issuance of securities, processing of shareholder requests, and processing of payments. Such interruptions can also impede the prompt and accurate clearance and settlement of securities transactions given transfer agents’ role in supporting these activities. The proposed amendments could help ensure the uninterrupted provision of transfer agent services because transfer agents would be required to deliver, provide, or otherwise make available to the issuer or
its designee (such as a successor transfer agent) all relevant master securityholder files, transfer journals, control books, records of cancelled securities certificates, and other key records related to an issue within fifteen (15) calendar days of ceasing to perform transfer agent activities for that issue. In particular, the proposed amendments could help to prevent holdup problems that could arise, for instance, if the departing transfer agent unilaterally demands a termination fee payment from the issuer in exchange for the handing over of securityholder records to the successor transfer agent.468 The successor transfer agent could then commence its work and help ensure the uninterrupted provision of transfer agent services. Further, by specifying the issuer or the issuer’s designee as the recipient of these records from the departing transfer agent, the proposed amendments would provide flexibility to the issuer in who should receive these records. Such flexibility could be beneficial if the departing transfer agent is ready to deliver these records, but the successor transfer agent has not been engaged. In such cases, the proposed amendments would help ensure that these records are delivered to the issuer or a non-transfer agent designee, who can subsequently transfer them to the successor transfer agent. The proposed amendments could help minimize the risk of losing records during a change in transfer agent, which in turn could help ensure the uninterrupted provision of transfer agent services. Costs The Commission recognizes that the proposed amendments to Rule 17ad–7 would impose compliance costs on transfer agents. First, proposed Rule 17ad–7(a) would increase the retention period for certain subsets of records and expand the set of records that must be maintained to include all records required to be made or kept by a transfer agent under the Exchange Act.469 To comply with this rule, transfer agents would incur costs to retain the subset of records for a longer period than under the baseline. Transfer agents would also incur costs to retain records covered by the proposed rule that are not already retained under the baseline. Each transfer agent would incur initial costs of $480 and annual costs of $1,500 to comply with this rule.470 The Commission requests that commenters provide feedback on these costs. Second, transfer agents may have to update their internal systems or recordkeeping protocols to comply with the proposed amendments. Such costs

471See proposed Rule 17ad–7(i).
472See supra note 460 and supra Section V.C.4.e. 473The $1,000 initial estimate is based on the following calculations: $1,008 (lawyers at $504 for 1 hour) + $504 (costs for outside professionals of $504) ≈ $1,000. We assume that the drafting of the written agreement is a one-time burden and the third-party service provider would not incur any annual recurring burdens thereafter. We further assume that lawyers (both in-house and outside) will draft the written agreement at the private sector hourly rate of $504 to reflect the fact that the third￾party service providers do not operate primarily in the securities industry. Occupational rates are calculated as described in infra note 533. 474See 17 CFR 240.15c6–1(a); see also proposed Rule 17ad–2. 475See proposed Rule 17ad–10(c)(1). 476See proposed Rule 17ad–10(d). could be mitigated because proposed Rule 17ad–7(f)(2) is technology neutral and accommodates the types of electronic recordkeeping systems that are used by modern transfer agents. Although the Commission understands that registered transfer agents have moved away from using micrographic media to store records, a transfer agent may choose to use micrographic media as long as the usage is in compliance with Rule 17ad–7 as proposed to be amended. Third, to comply with proposed Rule 17ad–7(g), transfer agents would incur costs to promptly provide to Commission or ARA representatives any records that have to be retained, but are not stored on electronic storage media or micrographic media. The magnitude of such costs likely would vary across transfer agents based on the extent to which a transfer agent uses electronic storage media, micrographic media, or more generally electronic recordkeeping systems to store and retrieve records. For example, a transfer agent that currently uses electronic recordkeeping systems to store and retrieve all its records likely would incur little or no additional costs to comply with proposed Rule 17ad–7(g). Fourth, to comply with the proposed requirement to make available certain records to the issuer or its designee within 15 calendar days of ceasing transfer agent activities,471 departing transfer agents may incur costs related to data preparation, staff time, and legal review. If these costs exceed what transfer agents would incur under voluntary contractual arrangements, they represent compliance costs, weighed against the benefit of mitigating holdup problems. Fifth, to the extent that transfer agents choose to employ the services of third parties to comply with the proposed amendments to Rule 17ad–7, the costs associated with the employment of these third parties would be part of the compliance costs incurred by transfer agents. The compliance costs associated with the proposed amendments to Rule 17ad–7, which are jointly estimated with those associated with the proposed amendments to Rule 17ad–6, would impose on each transfer agent initial costs of $1,000 and annual costs of $3,100.472 To comply with
proposed Rule 17ad– 7(h)(1), transfer agents would obtain from their third-party service providers and file with the Commission or their other ARA a legally binding written agreement that covers terms stipulated in the proposed rule. Third-party service providers likely would incur costs to draft such written agreements. Each third-party service provider would incur initial costs of $1,000 to draft a legally binding agreement per transfer agent.473 Pursuant to the exception in the proposed rule, third-party service providers could avoid these costs if they allow their transfer agent clients to have and maintain independent access to the kept records at all times. The Commission does not have data on the number of third-party service providers that provide electronic recordkeeping systems, servers or other storage mechanisms to transfer agents for record retention nor does the Commission have data on how many of such third-party service providers provide their clients with independent access to the kept records at all times. As such, the aggregate cost associated with the proposed written agreement requirement cannot currently be estimated. The Commission requests commenters provide feedback on these matters. g. Amendments to Rule 17ad–10 The Commission proposes amending Rule 17ad–10 to specify that the rule applies to both certificated and uncertificated securities equally, align the ‘‘prompt’’ posting timeframe to the modern settlement cycle,474 and modernize the rule text by replacing references to physical processes, hard copy records, and mail with technology neutral terms and standards. Benefits The proposed amendments to Rule 17ad–10 may benefit investors by strengthening investor protection in the areas of overissuances and accurate ownership records. They could benefit issuers and investors by supporting the prompt and accurate clearance and settlement of securities transactions. Overissuances reduce the accuracy of ownership records and could prevent securityholders from receiving all appropriate corporate distributions and communications. Because overissuances can occur for both certificated and uncertificated securities, the associated risks of missed corporate distributions and communications can affect the holders of either type. However, existing Rule 17ad–10(g) applies to certificates and does not explicitly address uncertificated securities. The Commission is proposing Rule 17ad–10, in part, to address this gap. Specifically, proposed Rule 17ad–10(i) would specify that overissuance can occur for both certificated and uncertificated securities. Further, Rule 17ad–10(g) would be amended to provide that a registered transfer agent’s requirement to buy in securities to cure an overissuance applies to both certificated and uncertificated securities. These clarifications would enhance investor protection by helping to ensure that transfer agents exert efforts to cure overissuances of not only certificated securities, but also
uncertificated securities. This in turn would help reduce the risk that holders of uncertificated securities fail to receive all appropriate corporate distributions and communications. To the extent that transfer agents in practice do cure overissuances of both certificated and uncertificated securities, the benefit associated with proposed Rule 17ad– 10(i) and the proposed amendments to Rule 17ad–10(g) could be limited. The Commission also is proposing to shorten the timing requirements for co￾transfer agents to provide records of debits and credits to the recordkeeping transfer agent 475 and respond to inquiries regarding such records from the recordkeeping transfer agent.476 Proposed Rule 17ad–10(c)(1) would reduce the amount of time by which co￾transfer agents shall provide a record of debits and credits to the recordkeeping transfer agent following transfer of each security from two business days to one business day. Proposed Rule 17ad– 10(d), would reduce the amount of time by which co-transfer agents shall respond to all inquiries from the recordkeeping transfer agent regarding such records from within five business days of receipt of an inquiry to within one business day of receipt of an inquiry. The proposed shortening of these timing requirements could facilitate the timely maintenance of accurate ownership records. This in turn would help reduce the risk that securityholders fail to receive all appropriate corporate distributions and communication, thereby strengthening investor protection. The magnitude of this benefit cannot be assessed because the Commission lacks data on the frequency with which existing timing

477However, all securities transferred, purchased, redeemed or issued prior to record date, but posted subsequent thereto, shall be posted as of the record date. See proposed Rule 17ad–10(a)(2)(i). 478See Rule 17ad–10(a)(2)(i) through (iii). 479See supra Section III.I.2. 480See supra Section III.J. 481See, e.g., Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants and Capital and Segregation Requirements for Broker￾Dealers, Exchange Act Release No. 86175 (Jun. 21, 2019), 84 FR 43872, 44025 (Aug. 22, 2019) and Financial Responsibility Rules for Broker-Dealers, Exchange Act Release No. 70072 (July 30, 2013), 78 FR 51824, 51912 (Aug. 21, 2013). requirements for co-transfer agents contribute to ownership record errors. The Commission requests commenters to provide feedback on this matter. The proposed amendments to Rule 17ad–10(a)(2) would simplify and streamline recordkeeping transfer agents’ obligation to post to the master securityholder file by standardizing posting deadlines. Specifically, Rule 17ad–10(a)(2), as proposed to be amended, would require all recordkeeping transfer agents to post position detail to the master securityholder file within the shorter of one business day or the time period specified by Rule 15c6–1(a) under the Exchange Act.477 In contrast, existing Rule 17ad–10 478 sets forth posting deadlines that vary from 30 calendar days to five business days depending on the type of recordkeeping transfer agent. The proposed amendments could expedite the posting of position details to master securityholder files, relative to the baseline. Further, a single posting deadline could simplify recordkeeping transfer agents’ workflows and improve their efficiency, which in turn could further expedite updates to the master securityholder files. Faster posting to the master securityholder files by recordkeeping transfer agents would support the prompt and accurate clearance and settlement of securities transactions and strengthen investor protection, thereby benefiting issuers and investors. Costs The Commission recognizes that the proposed amendments may impose compliance costs on transfer agents to the extent that updates to internal systems or protocols to cure overissuances are necessary to comply with the proposed amendments. These costs could be limited to the extent that transfer agents in practice are complying with Rule 17ad–10 to account for both certificated and uncertificated securities. Other compliance costs could be mitigated by the technology currently employed by transfer agents. Transfer agents that serve as co-transfer agents might have to invest in more efficient systems to comply with the proposed timing requirements in Rules 17ad– 10(c) and 17ad–10(d); however, because the Commission is replacing ‘‘dispatch’’ or ‘‘mail’’ with the technology-neutral term ‘‘provide,’’ co-transfer agents may use existing electronic communication systems to meet the new
standard, limiting incremental costs. Separately, recordkeeping transfer agents might have to invest in more efficient systems to comply with the proposed posting deadline. However, because manual, mail-dependent processes associated with the prompt posting of certificate detail have given way to near￾instantaneous electronic communications and automated processes and workflows,479 recordkeeping transfer agents likely already possess the operational capability to comply with the proposed posting deadline and would not need to change their systems. The Commission requests that commenters identify situations in which co-transfer agents and recordkeeping transfer agents would be unable to meet the proposed timing requirements and posting deadline, respectively. If such situations exist, the Commission further requests that commenters provide feedback on the number of co-transfer agents and recordkeeping transfer agents that may incur costs to acquire operational capability to meet their respective proposed requirements and the magnitude of such costs. h. Amendments to Rule 17ad–12 The proposed amendments to Rule 17ad–12 would reframe the existing safeguarding rule as a comprehensive risk management rule.480 Under the proposed amendments, transfer agents would be required to have written policies and procedures reasonably designed to ensure the safeguarding of funds and securities in their possession or control and to identify, measure, monitor, and mitigate any material operational and other risks associated with the transfer agent’s activities. The proposed amendments also would require transfer agents to establish, maintain, and enforce a written business continuity plan and to hold issuer, securityholder, and other third-party funds in segregated bank accounts. Benefits The proposed amendments to Rule 17ad–12 would benefit issuers, investors, and securities markets. Absent the proposed amendments, the operation of market forces alone may not ensure that all transfer agents have comprehensive risk management and business continuity plans. Transfer agents may underinvest in comprehensive risk management and business continuity planning because the costs of inadequate risk management and business continuity planning (e.g., operational failures, investor losses, and systemic disruption) fall disproportionately on issuers, investors, and the broader market rather than on the transfer agents themselves. Transfer agents, issuers, and investors may overlook the benefits of comprehensive risk management and business continuity planning, as well as the costs of not having them for three reasons. First, transfer agents’ risk management plans are generally not made public, limiting pressure from issuer clients and investors to improve these plans. Second, adverse events such as cybersecurity breaches and business disruptions are relatively rare and not necessarily made public when they occur. This may discourage adequate investment in risk management and
business continuity planning by transfer agents. Third, findings from regulatory examinations are generally not shared publicly, providing limited guidance for improving business continuity plans across the transfer agent industry. Together, these conditions reduce market forces that would otherwise incentivize adequate investment in comprehensive risk management and business continuity planning. Risks to securities and funds in transfer agents’ possession, control, or custody may stem not only from theft, loss, or destruction, but also from other sources such as misappropriation, unauthorized access, operational failures, cybersecurity breaches, and insolvency. The proposed comprehensive risk management plan and operational risk requirements may reduce the risk of losses to investors that may stem from a broad range of risks and may buttress the resilience of the national clearance and settlement system. In addition, safeguarding and segregation requirements for financial intermediaries protect customers’ securities and funds, including from losses related to the intermediary’s proprietary business activities.481 If transfer agents (other than those that are also registered as a broker-dealer or investment adviser) lend funds belonging to issuers, securityholders, or other third parties, this practice may inadvertently subject those entities to counterparty risk if borrowers fail to return the funds. The proposed