SEC proposes updating 1970s-era transfer agent rules

The SEC proposed changes to its transfer agent rules to reflect current technology. The SEC said the rules have not been significantly updated since they were proposed in the late 1970s. The proposal addresses electronic communications and blockchain technology used in securities offerings and share transfers. SEC Chair Paul Atkins said the proposal would streamline and modernize the rules. The proposal would update terminology in light of technological advances. It would also update rules governing electronic systems. Transfer agents maintain securities ownership records and handle corporate actions such as mergers and dividend distributions. Transfer agents also support clearing and settlement. The SEC said some market participants are exploring blockchain-based systems for maintaining ownership records. The SEC said firms using tokenized securities, distributed ledger technologies, and smart contracts must manage risks involving blockchain data integrity and security. The SEC said firms using artificial intelligence or automated technologies must maintain proper controls and oversee automated processes. Injective recently became an SEC-registered transfer agent. Injective said the registration provides a regulated way to track ownership of tokenized assets and their transfers. Securitize and tZERO are also registered transfer agents. SEC Commissioner Hester Peirce supported the proposal before her expected departure from the agency in the next several weeks. Comments are due in 60 days.