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Trust Examination Manual

Section 11- Registration and Reporting Requirements

FDIC Registration Requirements

An FDIC supervised financial institution serving as transfer agent for securities that are registered under Section 12(g) of the 1934 Act or that are registered on a national securities exchange must register as a transfer agent.  An institution is considered a transfer agent when it: 1) performs transfers of securities; 2) is named as transfer agent; or 3) will perform transfers of securities or will be named transfer agent for a securities issue requiring registration.  For FDIC supervised financial institutions, the SEC registration requirement is implement in FDIC Part 341, "Registration of Securities Transfer Agents".  The provisions of Part 341 apply to all FDIC registered transfer agents, even those granted the "small transfer agent" exemption.

Part 341, FDIC Rules and Regulations - Registration of Securities Transfer Agents

FDIC Part 341 requires all insured nonmember banks, or subsidiaries of such banks, that act as transfer agents for qualifying securities, to register as a transfer agent with the FDIC.  For the purposes of Part 341, qualifying securities are those registered on a national securities exchange or registered under Section 12(g)(1) of the 1934 Act. Refer to Registration of Transfer Agents and Chart which summarizes the registration requirements for various categories of securities.  For the purposes of Part 341, a financial institution is a transfer agent if it:

  • Countersigns qualifying securities upon issuance
  • Monitor the issuance of qualifying securities upon issuance
  • Registers the transfer of qualifying securities
  • Exchanges or converts qualifying securities
  • Transfers record ownership of qualifying securities by bookkeeping entry with physical issuance of a securities certificate
  • Acts as a Co-transfer agent for qualifying securities
  • Acts as a Registrar or Co-Registrar for qualifying securities

Refer to Section 341.2(a)

Note: Examiners should be careful not to confuse mutual fund sub-accounting with the function of mutual fund transfer agent.  Mutual fund sub-accounting services involve a trust department establishing an omnibus account with a mutual fund.  All the transactions with the mutual fund for the benefit of the trust accounts administered by the trust department are effected through the trust department's omnibus account.  From the mutual fund's perspective, the owner of record of the mutual fund shares purchased for the benefit of the trust department's individual accounts is the trust department that established the omnibus account. In such cases, the trust department performs the sub-accounting services, whereby purchases and sales of mutual fund shares are allocated to the individual trust accounts involved.   Mutual fund sub-accounting does not involve transferring ownership of record, since it is the trust department that is the owner of record of the shares purchased via the omnibus account.

FDIC supervised transfer agents register with the FDIC by submitting Form TA-1, "Transfer Agent Registration and Amendment Form."   As discussed in further detail below, Part 341 requires the initial registration of FDIC supervised transfer agents, updating amendments to Form TA-1 when any of the information contained therein is no longer accurate, and deregistration of transfer agents that cease to perform the transfer agent services defined in the regulation.

Initial Registration

FDIC supervised institutions must register with the FDIC immediately upon acting as transfer agent for qualifying securities. See Section 341.3.  Institutions register by filing Form TA-1 with the FDIC's Washington Office.  Registration becomes effective 30 days after the date that Form TA-1 is filed with the Washington Office, unless the FDIC accelerates, denies, or postpones registration. Section 17A(c)(4)(A) of the 1934 Act provides for the postponement of registration for a period of not more than 15 days.  The postponement can be extended beyond 15 days after the prospective registrant is given notice and opportunity for hearing, if the FDIC concludes that a postponement is necessary to protect the public interest and for the protection of investors.

The information provided in Form TA-1 must be accurate, and, as discussed in the next section, must be updated when changes occur. Among the information provided by the registrant in the Form TA-1 is the address of the registrant's Main Office and its mailing address, as well as the address of the principal location where transfer agent processing activities will be conducted and all other locations where transfer agent processing activities will be conducted. Registrants also indicate whether they will act as transfer agent for own institution securities or securities of affiliates.  In addition, registrants indicate whether they have contracted an outside organization to perform transfer agent services or whether the registrant will perform such services for other registered transfer agents.

Form TA-1 is available upon request from the Special Activities Section of the Supervision and Applications Branch FDIC, Washington, D.C. 20429, as well as on the FFIEC website.

Examples - Initial Registration

Example #1 (Section 12 Securities)

An organization is currently acting as a transfer agent for a securities issue that is registered under federal securities law or listed on a national exchange.

No securities may be transferred until the organization registers as a transfer agent. To transfer such securities without registration is a violation of Section 17A of the Securities Exchange Act of 1934. The registration requirement is immediate.

Example #2 (Securities That Are Not Yet Registered)

An institution is transfer agent for a stock issue which has more than 500 shareholders and meets the applicable asset threshold requiring registration of the stock. However, the stock has not yet become registered.

As soon as the stock itself has become registered, the stock must utilize a registered transfer agent. See When Transfer Agent Registration Must be Accomplished for further guidance.

Example #3 (Corporate Bonds)

An institution acts as corporate trustee of five bonds issued by a church and two small local companies. Normally, the trustee's duties include acting as registrar and performing transfer agent-type work.

Since the bonds are not listed on a securities exchange, the transfer agent registration requirements do not apply.

Example #4 (Municipal Bonds)

An institution acts solely as trustee of one or more municipal bond issues. No other securities are transferred. Normally, the trustee's duties include acting as registrar and performing transfer agent-type work.

Since municipal debt securities are exempted from Section 12 of the Securities Exchange Act of 1934, the transfer agent registration requirements do not apply. The institution should not register as a transfer agent. In this context, "municipal" includes industrial revenue or industrial development bonds and similar issues.

Example #5 (Holding Company Stock)

A bank is a registered transfer agent because it transfers its own stock. The bank forms a holding company and exchanges bank stock for holding company stock. The holding company stock certificate does not declare who the transfer agent is; only the holding company's name appears on the stock certificate.

In such a case, the presumption must be that the issuer (the bank holding company) is the transfer agent of its own stock. The holding company should register with the Federal Reserve Board in Washington as a transfer agent. The bank should not be a registered transfer agent because the holding company is presumed to transfer its own stock.

Amendments to Registration

All information provided by the registrant on Form TA-1 must be kept current.  Section 341.4 requires registrants to file an amending Form TA-1 within 60 days of the date on which any of the information reported on Form TA-1 becomes inaccurate, misleading, or incomplete.  Registrants do so by filing Form TA-1 and indicating that the filing is an amendment of the registrants existing Form TA-1.  Items on Form TA-1 that typically involve amending Form TA-1 include:

  • The name of the financial institution
  • The location of the financial institution's headquarters
  • The locations where transfer agent activities are conducted
  • The financial institution's mailing address
  • The institution's telephone number, including area code changes
  • The types of securities transferred

If the institution files an amendment to Form TA-1 before its initial registration becomes effective, the initial registration is postponed for 30 days following the date the amendment was filed, unless the FDIC accelerates, denies or postpones the registration.

Examples - Amendments to Registration

Note #1 - Headquarters Address (Item 5)

This is intended to provide the actual Main Office location of the registrant. In most cases, it will be the official Main Office as shown by bank regulators. The intention is to indicate where the Registrant's primary executive and administrative headquarters is located.

For example, many banks with headquarters in downtown areas are shown by bank regulators as having the official Main Office in a suburban location. The purpose was to enhance the bank's ability to establish branches. In such a situation, the downtown location would be reported on Form TA-1, not the suburban location.

Note #2 - Affiliates Securities (Item 10)

Question 10 is a Yes/No question. A "Yes" indicates that the bank transfers only its own securities (stock, notes, bonds), and/or the securities of an affiliate. A "No" answer indicates that some type of outside securities are transferred, such as municipal bonds. The answer to this item must be scrutinized in light of the institution's transfer agent activities to determine whether an amendment is needed.

Note #3 - Affiliates Securities (Item 10)

All securities transferred by the bank, in all departments and locations, are covered by Question 10. If a bank registered because it transfers its own stock, but its trust department separately acts as transfer agent for some bonds, Question 10 should be answered "No." Outside securities are also being transferred.

Note #4 - Affiliates Securities (Item 10)

Part 341 does not require a filing of a list of the securities that are transferred. Therefore, changes in the issues transferred do not require amendments. The only time an amendment would be required in such a situation is when the response to Question 10 on Form TA-1 changes. If the bank transfers only its own stock, the question is answered "Yes." If a holding company is formed, and the bank transfers only holding company stock, the question is still answered "Yes", so no updating amendment would be required.

Note #5 - Signatures (Items 14 & 15)

An updating amendment is not required merely because the person who signed the previous Form TA-1 filing is different from the person who would sign an amendment now.

Deregistration of Registered Transfer Agent

When an FDIC supervised registered transfer agent terminates all securities transfer activities, or ceases to transfer qualifying securities, Section 341.5 requires the institution to deregister as a transfer agent.  The cessation of transfer agent services must be complete before deregistering.  For example, if a registered transfer agent stops performing certain securities transfer functions, but still performs other transfer agent activities, deregistration would not be appropriate.

In addition, when the financial institution is no longer supervised by the FDIC it must deregister with the FDIC. For example, if the financial institution changes to a national charter or becomes a member of the Federal Reserve, the financial institution would be required to register with the appropriate regulatory agency, e.g. the OCC or the Federal Reserve, and deregister with the FDIC.  In fact, registration as a transfer agent with another federal bank regulatory agency automatically cancels a financial institution's registration with the FDIC, See 341.5(d). Deregistration is also required when an FDIC supervised financial institution goes out of existence.  For example, when a financial institution merges with another financial institution which will be the surviving entity, or when a financial institution is closed due to failure. Even in the later case, the closed institution is required to deregister.

Occasionally, the FDIC will discover that a FDIC supervised registered transfer agent is no longer in existence or has ceased to do business as a transfer agent.  In the case of a financial institution that is still in business, the FDIC will request that the institution deregister.  Section 341.5(c), however, gives the FDIC the authority to deregister any FDIC supervised registered transfer agent that is no longer in existence or that has stopped doing business as a transfer agent.

To deregister, FDIC supervised registered transfer agents complete a "Request For Deregistration" Form, FDIC Form 6342/12, and send the signed original and three copies to the FDIC's Washington Office.  The deregistration request is not sent to the SEC. The "Request For Deregistration" form can be obtained from the Special Activities Section of the Supervision and Applications Branch, Division of Supervision and Consumer Protection, FDIC, Washington, D.C. 20429.  Examiners can access the form on the Special Activities Section website, via the Registered Transfer Agent link.

Voluntary Registration of Transfer Agents

Despite the deregistration requirements of 341.5, the FDIC has, on a selective basis, allowed FDIC supervised financial institutions to retain their registration while acting as transfer agents for non-registered securities.  The FDIC has also allowed FDIC supervised financial institution's to register as a transfer agent while in the process of being named as a transfer agent of a pending issue.  The reason for allowing such registration is the additional safeguards that registration offers securityholders, since registered transfer agents are held to the SEC's performance standards.  Inactive transfer agents, however, are not allowed to retain their registration as a transfer agent and must deregister.

In contrast to the voluntary registration of securities, which is not uncommon, voluntary registration by transfer agents is uncommon.  Registration as a transfer agent carries the burden of satisfying the SEC's operational requirements, which can be burdensome for a small transfer agent with only limited transfer activity, even allowing for the SEC's "small transfer agent" exemption.  A transfer agent may, however, wish to maintain voluntarily its registered status, for instance if the transfer agent has given assurances, contractual or otherwise, to the issuers of the securities it transfers that the transfer agent will be registered.

SEC Reporting Requirements Form TA-2

In 1986, the Securities and Exchange Commission adopted Rule 17Ac2-2 under the 1934 Act. In 2000, the SEC made important revisions regarding who must file Form TA-2 and when Form TA-2 must be submitted, as well as updating some of the data that must be reported on the TA-2.

Rule 17Ac2-2 requires all registered transfer agents to file an annual report of their business activities on Form TA-2.   By filing Form TA-1, registered transfer agents provide the SEC and the appropriate Federal regulatory agency with important information about the scope and volume of transfer agent operations.  For example, registered transfer agents report the number and types of transfer agent accounts administered, the number of items received, information on buy-ins and record differences, the identity of any service companies engaged by the registered transfer agent, the identify of any transfer agent for whom the registered transfer agent performs transfer agent function, information concerning turnaround performance, information on lost securityholder accounts, etc. Form TA-2 is an essential resource in assisting the FDIC in its oversight of registered transfer agents, as well as an important source of information for examiners for pre-examination planning.   As a consequence, it is important that examiners review a registered transfer agent's TA-2 and ensure that the information reported therein is accurate.

Who Must File

As a result of the 2000 revisions to the TA-2, every transfer agent registered as of December 31 is required to file Form TA-2 for that year.  The amount of detail that a registered transfer agent must report on the TA-2 varies depending upon the volume and nature of transfer agent activity.   Reporting requirements vary as follows:

  • A registered transfer agent that received fewer than 1,000 items for transfer during the reporting period and that did not maintain master securityholder files for more than 1,000 individual securityholder accounts as of December 31 of the reporting period is required to complete Questions 1 through 5, 11, and the signature section of Form TA-2

  • A named transfer agent that engaged a service company to perform all of its transfer agent functions during the reporting period is required to complete Questions 1 through 3 and the signature section of Form TA-2

  • A named transfer agent that engaged a service company to perform some but not all of its transfer agent functions during the reporting period must complete all of Form TA-2 but should enter zero (0) for those questions that relate to functions performed by the service company on behalf of the named transfer agent

When to File

Form TA-2 is a calendar year report and must be received by March 31 of the following calendar year.  The SEC no longer sends a reminder notice to each registrant, as the TA-2 form and related instructions are available on the Internet at:  http://www.sec.gov under "Forms."  Registrants file form TA-2 directly with the SEC at:

Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549-0013

Registrants file the original and two copies of Form TA-2.  The original must be signed manually and the remaining TA-2's copies of the signed original. The registrant must keep an exact copy of its submission in its records.  The SEC may reject a Form TA-2 that does not comply with applicable requirements.

Notice of Assumption or Termination of Transfer Agent Services

In 1992, the SEC adopted Rule 17Ad-16, which requires registered transfer agents to provide written notice, referred to as depository notifications, to registered securities depositories upon terminating or assuming transfer agent services on behalf or an issuer of securities. Additionally, registered transfer agents must notify registered securities when the registrant's name or address changes.

As noted earlier, timely securities transfer is necessary for the efficient functioning of the national system for the clearance and settlement of securities transactions.  Delays in effecting the transfer of securities ownership causes problems for securities depositories, depository participants, and their customers.  When a securities transfer request is sent to the wrong transfer agent or to an incorrect address, the request must then be returned to the requesting party and the correct transfer agent or address must be determined, thereby delaying the requested securities transfer.  In some cases, securities certificates have been lost when not returned to the requesting party. As cited in the SEC's Final Rulemaking:

Transfer delays cause acute problems for the three registered securities depositories - The Depository Trust Company ("DTC"), Philadelphia Depository Trust Company ("Philadep") and the Midwest Securities Trust Company ("MSTC")- that hold a large number of certificates for safekeeping and have a large daily volume of certificate transfers. These delays also affect depository participants (e.g., banks and broker-dealers) and their customers (i.e., shareholders) in the form of increased delays, costs, and risks.

The depositories hold securities certificates in their nominee name in safekeeping for the benefit of participants and their customers. When a participant deposits securities into a depository, the depository usually credits the participant's account for the deposit and sends the certificates to the issuer's transfer agent with instructions to transfer the certificate into the depository's nominee name. Whenever transfer delays occur, the depository faces an increased risk of lost certificates. The depository also has increased potential liability because it credits participants' accounts on the day certificates are presented for deposit. If deposited certificates presented for transfer are counterfeit or reported as stolen, the depository would be subject to credit and market risk because it could not take corrective action until after the certificates have been resubmitted to the new transfer agent or delivered to the transfer agent's new address. The costs of unannounced transfer agent changes can be significant for depositories and broker-dealers.

Depository Notifications Required

Depository notifications are required when a registered transfer agent:

  • Changes its name

  • Changes the location of, or the mailing address for its securities transfer activities

  • Assumes the responsibility for transferring a securities issue, including municipal bonds

  • Terminates transferring a securities issue, including municipal bond

Note: Depository notifications are not required when an outstanding issue of bonds mature or are called.

Depository notifications are required when the change in name, address or the assumption of securities transfer responsibilities results from a merger with or acquisition of another transfer agent.  Similarly, depository notifications are required when the termination of securities transfer responsibility is the result of a merger with or acquisition of the registered transfer agent with another transfer agent, or if the register transfer agent ceases operations, e.g. in a closed bank scenario.

Notifications must be sent to the appropriate qualified registered securities depository.  Under Section 17Ad-16, a qualified registered securities depository is a clearing agency, registered under Section 17A of the 1934 Act, that performs clearing agency functions and that has rules and procedures for maintaining, updating, and providing appropriate access to the information it receives pursuant to depository notifications. The appropriate qualified registered securities depository is the depository designated by the SEC.  The SEC has designated the Depository Trust Company, "DTC", in New York as the appropriate qualified registered securities depository.  So, essentially, all depository notifications must be sent to DTC in New York.  

The DTC is the world's largest securities depository with more than $20 trillion worth of securities in custody. In 1995, DTC processed $41 trillion of securities through its book-entry settlement system. DTC is a national clearing house for the settlement of trade in corporate and municipal securities and performs securities custody-related services for its participating banks and broker-dealers. DTC is owned by members of the financial industry and by their representatives who are its users. DTC is 35.1 percent owned by the New York Stock Exchange on behalf of the Exchange's members. It is operated by a separate management and has an independent Board of Directors. It is a limited purpose trust company and is a member of the Federal Reserve.

Depository notifications must be provided ten calendar days prior to the effective date of the action giving rise to the depository notification, or, in the case of a termination of securities transfer services, the effective date of the termination if the transfer agent is notified less than ten calendar days before the effective date.  Depository notifications must be delivered by means of secure communication, which includes telegraph, overnight mail, facsimile, or any other form of secure communications.

Contents of Depository Notifications

Depository notifications must contain the following information:

  • If the notification was required because of a change in the registrant institution's name or address, the notice must contain:
    • The institution's full current name, address, telephone number, and Financial Industry Number Standard (FINS) Number; and
    • The location where certificates are received for transfer. [SEC Rule 17Ad-16(b)]
  • If the notification was required because the registrant began to transfer any new issue(s) of securities, or merged with/acquired another transfer agent, the notice must contain:
    • The institution's full current name, address, telephone number, and FINS Number; and
    • The securities issuer's name; and
    • The issue(s) handled and their CUSIP number(s). [SEC Rule 17Ad-16(b)]
    • If the registrant organization stopped transferring any individual issue(s) of securities (including municipal bond issues), the notification must contain:
    • The institution's full current name, address, telephone number, and FINS Number; and
    • The securities issuer's name; and
    • The issue(s) previously handled along with the CUSIP number(s); and,
    • If known, the successor transfer agent's name, address and telephone number. If it is not known who the successor transfer agent will be, the notification must include the name and address of a contact at the issuer.[SEC Rule 17Ad-16(a)]

    The transfer agent must maintain depository notifications for a period of not less than two years, the first six months in an easily accessible place.

    Note: The use of an outside transfer agent service provider to perform all securities transfer functions, i.e. a private label arrangement, does not change a named transfer agent's responsibility for delivering depository notifications when a change of name or address has occurred at the named transfer agent, or when a named transfer agent terminates or assumes the responsibility as a named transfer agent.  Third-party transfer agent service providers in turn are responsible for delivering depository notifications for such changes affecting their operations, i.e. if the third-party transfer agent service provider changes its name or address, etc.

     

    Last Updated 05/10/2005

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