The U.S. Securities and Exchange Commission proposed a broad modernization of the rules and forms governing registered transfer agents, reflecting electronic communications, automated recordkeeping, blockchain technology and the expanded range of services they provide. The proposal would amend registration and annual reporting requirements, update core definitions and processing standards, rescind existing exemptions, and introduce new rules on compliance programs and restrictive legends. Transfer agents would need policies and procedures designed to turn around all routine items within the shorter of one business day or the applicable securities settlement period, with corresponding one-day standards for posting transactions to master securityholder files. The proposal would also require electronic master securityholder files, generally establish a six-year record-retention period, strengthen electronic recordkeeping controls and require specified records to be transferred to an issuer or its designee within 15 calendar days after services cease. Existing processing and recordkeeping exemptions for certain smaller transfer agents, limited partnership interests, dividend reinvestment plans and open-end fund shares would be removed. The safeguarding framework would expand to cover custody, operational and cybersecurity risks, require third-party funds to be held separately in bank accounts designated for the benefit of customers, and mandate business continuity plans tested at least annually. A new compliance rule would require written policies approved by the transfer agent’s governing body at least annually and after material changes. A separate rule would restrict the removal of restrictive legends and other facilitation of unregistered transactions unless the transfer agent has a reasonable basis to believe Section 5 of the Securities Act is not being violated. Transfer agents, brokers and dealers would also have to notify securityholders after 18 months without observed account activity to address escheatment risks.
2026-09-01U.S. Securities & Exchange Commission
U.S. Securities and Exchange Commission proposes transfer agent rule overhaul, including one-day processing and new compliance safeguards
The U.S. Securities and Exchange Commission proposed a comprehensive modernization of registered transfer agent rules, including one-day processing and posting standards, six-year record retention and expanded reporting. The package would add compliance, safeguarding, cybersecurity and business continuity requirements while removing several existing exemptions. It would also regulate restrictive legend removal and require notifications to securityholders after 18 months of inactivity.