agent [and registrar] with other persons involved in the securities handling process. In this area, we recognize that it is desirable to have a single agency set standards to assure that the various systems and facilities involved in the securities transfer function are compatible and that the Commission may be best suited for this purpose. However, we wish to point out that this section of S.3412 gives to the Commission extremely broad powers. To the extent that the Commission uses this broad power to

mandate the use, for example, of one of several potentially competing systems, its action could be a deterrent to continued private initiative to develop an even more imaginative and efficient system for the transfer of securities. In fact, the mere possibility that the Commission would set specific standards which could make obsolete the significant expenditures already made and developments now under way could substantially affect private initiative in this field.

Before concluding, I would like to briefly comment on certain other features of the proposed legislation. We have reviewed the statement filed on behalf of the American Society of Corporate Secretaries which deals, in part, with Section 8 of S.3412. That section would give to the Securities and Exchange Commission the power to

prescribe the form and format of stock certificates. We share the opinion of the Society that such a power, unless carefully circumscribed with precise statutory guidelines and equally carefully implemented with the cooperation of all affected, would wreak havoc in the very system sought to be improved and cause untold expense for American business and millions of individual stockholders.

We have also examined the provisions of the several bills which deal with regulation of "clearing agencies". Although S.3297 and S.2551 would appear to lump clearing agencies and depositories together, the definition of the term clearing agency in S. 3412 properly distinguishes between the functions performed by each. We do not propose to testify as to the regulation of clearing agencies because the member banks of the Association do not perform in the United States any of the activities of a clearing agency, as so defined.

The New York Clearing House Association and its individual member banks have contributed a tremendous amount of time, money and effort to create effective systems for processing, transferring and settling securities transactions. We worked with the New York Stock Exchange and its Stock Clearing Corporation in the creation of Central Certificate Service which, as noted earlier,

represents a significant step towards minimizing the
physical transfer of stock certificates.
As your

The

Chairman knows, the creation of a privately owned
securities depository has been the principal endeavor
of the Banking and Securities Industry Committee.
New York Clearing House Association was one of the
moving forces behind the organization of BASIC. Two
representatives of member banks serve on it and Mr.
John Meyer, former Chairman of one of our member banks,
serves as its chairman. Representatives of BASIC will

appear before you tomorrow to discuss regulation of
securities depositories. For this reason, I will not
devote any part of my testimony to that subject.

In conclusion, I should like to emphasize that our principal goal in testifying today is to urge upon you the need to recognize that authority to regulate the internal operations of a bank, whether it be with respect to its commercial lending, trust, transfer agent, registrar or any other function, should be left where it belongs with the appropriate bank supervisory authorities. As noted previously, it would be a relatively simple matter for these agencies to adopt formal rules and regulations embodying standards and procedures which they presently apply in reviewing the stock transfer and registrar operations

of banks as part of their periodic examinations. elaborate, duplicative set of Commission rules and regulations is either necessary or desirable.

No

We would be happy to provide the Subcommittee and its staff with any assistance which may be requested in order to implement what we trust have been constructive suggestions in our testimony today. Thank you for your attention. I would be pleased to try and answer your questions.

Hon. HARRISON A. WILLIAMS, Jr.,

NEW YORK CLEARING HOUSE,

New York, N.Y., June 16, 1972.

Committee on Banking, Housing and Urban Affairs,
Senate Office Building, Washington, D.C.

DEAR SENATOR WILLIAMS: In view of our testimony on May 10th and the material I send in my letter of May 12th, I thought that you would be interested in seeing the latest report from the New York Stock Exchange's Stock Clearing Corporation.

1 All figures subsequent to this date will represent percentage of return in 4 days.

Senator WILLIAMS. Mr. Thomas Stanley and Mr. Henry Van Dam. Mr. Stanley is president of the Stock Transfer Association and Mr. Van Dam is president of the Corporate Transfer Agents Association.

Now, some of the lack of understanding I obviously have, I am sure, is going to be clarified.

STATEMENT OF THOMAS W. STANLEY, PRESIDENT, THE STOCK TRANSFER ASSOCIATION, INC., AND VICE PRESIDENT, MORGAN GUARANTY TRUST CO. OF NEW YORK; ACCOMPANIED BY CLAYTON M. NICHOLSON, VICE PRESIDENT, CHEMICAL BANK AND THE STOCK TRANSFER ASSOCIATION, INC.; EDWARD J. MCNAMARA, ASSISTANT SECRETARY AND ASSISTANT TREASURER, BETHLEHEM STEEL CORP., AND SECRETARY, THE STOCK TRANSFER ASSOCIATION, INC.; FRANCIS T. CHRISTY, CHRISTY, FREY & CHRISTY; AND ROBERT S. APPEL, CHRISTY, FREY & CHRISTY Mr. STANLEY. Mr. Chairman and members of the subcommittee. My name is Thomas W. Stanley. I am president of the Stock Trans