Attachment B ALIA Proposed Amendment to S. 2058 1. Exclusion from the Terms "Clearing Agency" and "Transfer Agent" - Section 2 "SEC. 2. * * * (22) * * *The term 'clearing agency' does not include ... and (iii) any person who performs such functions solely with respect to variable contracts or policies issued by insurance companies; _/ (24) * * * The term 'transfer agent' does not include any person who performs such functions solely with respect to variable contracts or policies issued by insurance companies. The reference to "life insurance companies or their registered 2. Exclusion from Provisions with respect to Transfer Agents - Section 6 "SEC. 6. The Securities Exchange Act of 1934 is further amended by inserting after Section 17A (added by Section 5 of this Act) the following new Section: TRANSFER AGENTS SEC. 17B(a) * * * (3) The provisions of this section shall apply only to securities and to persons performing the function of transfer agent with respect to securities which are registered under section 12 of this title or which would be required to be so registered except for the exemption from registration provided in subsection (g) (2)(B) or (g)(2)(G) of that section. The provisions of this section shall not apply to variable contracts or policies issued by insurance companies. 11 Attachment C ALIA Proposed Amendment to S. 2058 Participation of Life Companies in Securities Depositories or Clearing Agencies Section 5 "SEC. 17A. * * * (c) An applicant shall not be registered as a clearing agency unless the Commission finds that (2) the rules of the clearing agency provide that all (A) registered brokers or dealers or members of a national securities exchange, (B) other registered clearing agencies, (C) registered investment companies, (D) insurance companies, (E) banks (as defined in section 2(a)(5) of the Investment Company Act of 1940), and (F) such other persons or classes of persons as the Commission may from time to time designate by rule as appropriate to the development of an integrated national system for the prompt and accurate processing and settlement of securities transactions are eligible to become participants in such clearing agency, subject only to such other rules of the clearing agency or securities depository as are expressly permitted under this paragraph. " SEC. 7. Section 12 of the Securities Exchange Act of 1934 (15 U.S. C. 781) is amended by inserting after subsection (i) the following new subsection: "(j) It shall be unlawful for an issuer, any class of whose securities is registered under this section or which would be required to be so registered except for the exemption from registration provided by paragraph (2)(B) or (2)(G) of subsection (g), by the use of any means or instrumentality of interstate commerce, or of the mails, to issue, either originally or upon transfer, any such securities in a form or with a format which contravenes such rules and regulations as the Commission may prescribe as necessary or appropriate for the prompt and accurate processing of transactions in securities. The provisions of this subsection shall not apply to variable contracts or policies issued by insurance companies." CORPORATE TRANSFER AGENTS ASSOCIATION NEW YORK, N. Y. July 10, 1973 The Hon. Harrison A. Williams, Jr. Chairman, Sub-Committee on Securities Committee on Banking, Housing and Urban Affairs United States Senate Washington, D. C. 20510 Dear Senator Williams: Thank you for the opportunity to submit a statement concerning S.2058. My Statements are general, however, I will be happy to clarify any comment on which you or your staff might require more detail. S.2058 provides for division of regulatory responsibilities between the Securities and Exchange Commission and other Federal agencies. We feel it would be wise to give one agency, the Securities and Exchange Commission, the power and authority over all transfer agencies for the sake of uniformity and to better protect the investing public. The bill also provides for operational compatibility of transfer agents with other persons involved in the securities handling process. Such a requirement could cost all issuer corporations, banks, brokers, clearing houses and depositories dearly to convert already developed highly sophisticated systems and could cause the Securities Industry to abort plans and methods already developed by joint industry committees. Regulation of the form and format of securities is fraught with peril. Many corporations each have hundreds of thousands of certificates outstanding, numerous of which will not be presented for transfer in a lifetime. In addition, corporations have many thousands of dollars of certificate supplies on hand. A drastic change in form and format would cost American shareholders millions of dollars and could cause delays in processing since dual facilities would have to be maintained to handle old and new certificate formats. We appreciate the opportunity to comment on the proposed legislation and offer our assistance in any way possible. Very yours, EJB; cmn EJEROWN % Phillips Petroleum Company New York, N. Y. 10005 Reference is made to your letter of June 29, 1973, concerning an invitation for The First National Bank of Boston to submit a written statement concerning S. 2058; a bill to amend the Securities Exchange Act of 1934 to provide for the regulation of clearing agencies and transfer agents and for other purposes. The First National Bank of Boston believes the elimination of the stock certificate is an achievable goal and has developed the Transfer Agent Depository System (TAD), which provides both the system and method to achieve this goal. This system is designed to function in a similar manner to that of a checking account in a commercial bank. Ownership of money is reflected in a commercial bank's demand deposit accounts by means of electronic characters stored on magnetic tapes and is transferred from one person to another with the use of a check. Likewise, ownership of capital stock or debt equity is reflected on the Transfer Agent's computers in electronic characters on a magnetic tape. Although the systems cannot function identically, we have incorporated many of the features of demand deposit accounts into our Transfer Agent Depository system. We applaud the work of the New York Stock Exchange and the Central Certificate Service, now the Depository Trust Company, in fulfilling what we believe to be the interim goal of immobilizing the stock certificate. We follow with great interest the work of the National Coordinating Group for Comprehensive Securities Depositories, and hopefully will participate with them in further developing the TAD concept. This concept will be a considerable aid in completing the interim goal, the immobilization of the stock certificate. The TAD concept as developed in this Bank allows for the book entry of ownership of stock certificates, and allows the transfer of ownership, the acceptance and processing of deposits and withdrawals, as well as the handling of deposited securities pledged as loan collateral. I have included a detailed description of our plan, the brochure "T.A.D/Tomorrow's Way Today" which outlines in some detail how the TAD system operates. Boston, Massachusetts 02106 - Telephone 434-6566 (Area Code 617) |