The U.S. Securities and Exchange Commission on September 1 proposed a comprehensive modernization of the rules governing registered transfer agents. The initiative marks the first major revision of the framework since the late 1970s and early 1980s, when paper certificates and manual processing dominated securities ownership records.

Transfer agents maintain an issuer’s official shareholder register, process ownership changes, monitor authorized share issuance and often handle dividends, interest payments and other corporate actions. The existing rules were designed for an era of physical certificates and have not kept pace with electronic systems, automated processing or distributed-ledger technology.

Core Elements of the Proposal

The proposed amendments would update requirements for registration, reporting, recordkeeping, transfer processing and the safeguarding of securities and client funds. New standards would also cover the handling of restrictive legends, paying-agent activities and oversight of third-party service providers.

Under the plan, transfer agents that rely on electronic recordkeeping systems would need controls protecting the integrity, availability, reproducibility, redundancy and continuity of records. Systems would have to prevent unauthorized alteration or deletion, maintain detailed audit trails of access and changes, and enable prompt production of records in both human-readable and usable electronic formats. Recovery procedures for damaged or lost information would be mandatory.

Safeguarding rules would shift from a focus on physical certificates to a broader risk-management framework. Firms would be required to adopt written policies addressing theft, loss, misuse, damage, destruction and unauthorized access. Material custody, operational and cybersecurity risks would need to be identified, monitored and mitigated. Client and issuer funds held by a transfer agent would have to be kept in separate bank accounts designated for the benefit of those parties.

Business continuity plans would become mandatory, with periodic testing, review and updating. The use of outside technology or processing companies would not relieve the registered transfer agent of its regulatory responsibilities; additional reporting and oversight requirements would apply to such arrangements.

The agency described its approach as technology-neutral. The rules would not mandate any specific database technology or require the adoption of distributed ledgers. Firms could continue using existing systems provided they meet the proposed standards for security, resilience and accessibility.

Implications for Tokenized Securities and Onchain Records

The proposal arrives as market participants develop systems for blockchain-based ownership records, tokenized fund administration and cross-chain interoperability. Several firms have already obtained transfer-agent registration to support tokenized products, including funds that rely on distributed-ledger technology for recordkeeping.

Ownership of a security continues to depend on the official register maintained by the transfer agent, not merely the presence of a token on a blockchain. Records affect voting rights, dividend entitlements, corporate actions and claims in insolvency. Industry groups have previously urged clear distinctions between issuer-backed tokenized securities and tokens created by unaffiliated platforms that may track prices without conveying registered ownership.

Restrictive legends, which note limits on resale, would be subject to new written policies governing removal requests and related documentation. The standards aim to reduce processing delays while preventing restricted securities from entering public markets without a valid legal basis.

SEC Chairman Paul Atkins stated that the proposal would streamline and modernize the rules to reflect how transfer agents currently operate, including the use of electronic communications and blockchain technology in securities offerings and share transfers.

Commissioner Hester Peirce raised a practical question relevant to digital systems: whether transfer agents should continue to be required to collect names and physical addresses of securityholders or whether other identifiers, such as email and digital wallet addresses, should be permitted.

Scale of Transfer Agent Activity and Next Steps

Data cited in the proposal illustrate the scope of the industry. Of 253 transfer agents that filed Form TA-2 for the 2025 reporting year, 152 acted as recordkeeping agents and 126 provided paying-agent services. Collectively they distributed roughly $5 trillion in dividends and interest payments. Nearly half either used a service company or provided services to another transfer agent.

Processing standards would be aligned more closely with the current T+1 settlement cycle, and registration timelines would be adjusted. Simplified recordkeeping retention periods would apply across most records regardless of format. New compliance-program requirements and tighter controls on restrictive legends are intended to strengthen investor protections and reduce certain fraud risks.

The proposal will be open for public comment for 60 days after publication in the Federal Register. Interested parties, including issuers, transfer agents, technology providers and investors, will have the opportunity to submit feedback before any final rules are adopted.

The initiative forms part of a broader effort by the Commission to update securities-market infrastructure rules. Separate work is underway on custody standards for investment advisers and funds, and the agency has scheduled a roundtable later in September to examine preparations for potential 24-hour trading in U.S. securities markets.

Transfer agents remain central to the integrity of ownership records even as more securities move onto digital platforms. The proposed framework seeks to ensure that regulatory requirements keep pace with technological change while preserving core investor protections.