Many shareholders are confused by the transfer agent’s role in the securities market in relationship to the broker, clearing firm, DTCC, and the issuer. To clarify some of the different roles, here are some definitions for “transfer agent” from the following reputable sources:

Securities and Exchange Commission (SEC): “Companies that have publicly traded securities typically use transfer agents to keep track of the individuals and entities that own their stocks and bonds. Most transfer agents are banks or trust companies, but sometimes a company acts as its own transfer agent.

Transfer agents perform three main functions:

  1. Issue and cancel certificates to reflect changes in ownership. For example, when a company declares a stock dividend or stock split, the transfer agent issues new shares. Transfer agents keep records of who owns a company’s stocks and bonds and how those stocks and bonds are held—whether by the owner in certificate form, by the company in book-entry form, or by the investor’s brokerage firm in street name. They also keep records of how many shares or bonds each investor owns.
  2. Act as an intermediary for the company. A transfer agent may also serve as the company’s paying agent to pay out interest, cash and stock dividends, or other distributions to stock- and bondholders. In addition, transfer agents act as proxy agent (sending out proxy materials), exchange agent (exchanging a company’s stock or bonds in a merger), tender agent (tendering shares in a tender offer), and mailing agent (mailing the company’s quarterly, annual, and other reports).
  3. Handle lost, destroyed, or stolen certificates. Transfer agents help shareholders and bondholders when a stock or bond certificate has been lost, destroyed, or stolen. If this has happened to you, read our publication entitled Stock Certificates, Lost, Stolen. Also, if you hold securities in your own name and want to transfer or sell them, you may need to get your signature “guaranteed” before a transfer agent will accept the transaction. For information about transferring your securities, please read “Signature Guarantees: Preventing the Unauthorized Transfer of Securities” in our Fast Answers databank.”

Wikipedia: “A stock transfer agent or share registry is a company, usually a third party unrelated to stock transactions, which cancels the name and certificate of the shareholder who sold the shares of stock, and substitutes the new owner’s name on the official master shareholder listing. Stock transfer agent is the term used in the United States and Canada. Share registry is used in the United Kingdom, Australia and New Zealand. Transfer secretary is used in South Africa.[1] Shares are issued in “street name” which is the term given to securities held in the name of a brokerage on behalf of a customer, usually done to facilitate subsequent transactions. Shares held in “Street name,” usually Cede & Co. or DTC, refers to beneficial shareholders who maintain their ownership through a brokerage. Street name holders are the opposite of registered holders.”

Investopedia: “A trust company, bank or similar financial institution assigned by a corporation to maintain records of investors and account balance and transactions, to cancel and issue certificates, to process investor mailings and to deal with any associated problems (i.e. lost or stolen certificates). A transfer agent works closely with a registrar to ensure that investors receive interest payments and dividends when they are due and to send monthly investment statements to mutual fund shareholders.


Share via
Copy link
Powered by Social Snap