The Securities Industry Association is pushing for the Securities and Exchange Commission to approve rule proposals that would require listed securities provide an electronic delivery option to investors. The proposal would create new rules for the New York Stock Exchange and the American Stock Exchange and would amend an existing rule at the Nasdaq Stock Market. If approved by the SEC, it would become effective for new listings on Jan. 1. All other listings would have to be eligible by Jan. 1, 2008. The proposal requires that listings be able to be transferred through a clearing agency and delivered by a Direct Registration System (DRS), which would be operated by a securities depository.
The SIA argued in a comment letter June 27 that the proposal would reduce the number of physical transaction confirmations the industry delivers and speed up market transactions. “The SIA...has long advocated for the elimination of physical certificates and we have sought the support of the [SEC] in achieving this,” the comment letter stated. Under the DRS system, securities could be transferred between broker/dealers and transfer agents and recorded in book-entry form, the SIA letter stated. Investors would receive an account statement from the issuer or transfer agent verifying ownership of the security. Spokespersons for the SIA and Nasdaq did not return calls by press time. Spokespersons for Amex and NYSE Regulation were not prepared to comment by press time, and an SEC spokesman declined to comment.