Registration of Securities Transfer Agents, 27295-27298 [2016-10529]

Agencies

• FEDERAL DEPOSIT INSURANCE CORPORATION

[Federal Register Volume 81, Number 88 (Friday, May 6, 2016)]
[Rules and Regulations]
[Pages 27295-27298]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-10529]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 341

RIN 3064-AE41


Registration of Securities Transfer Agents

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rulemaking.

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SUMMARY: On December 22, 2015, the FDIC published a notice of proposed 
rulemaking in the Federal Register for public comment to amend its 
regulations requiring insured State nonmember banks, or subsidiaries of 
such banks, that act as transfer agents for qualifying securities under 
section 12 of the Securities Exchange Act of 1934 ('34 Act) to register 
with the FDIC (proposed rule). The FDIC is now issuing that proposed 
rule as final and without change (final rule). The final rule requires 
insured State savings associations and subsidiaries of such State 
savings associations that act as transfer agents for qualifying 
securities to register with the FDIC, similar to the registration 
requirements applicable to insured State nonmember banks and 
subsidiaries of such banks. Second, the final rule revises the 
definition of qualifying securities to reflect statutory changes to the 
'34 Act made by the Jumpstart Our Business Startups Act (JOBS Act). The 
final rule is consistent with the FDIC's continuing review of its 
regulations under the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996.

DATES: This final rule is effective July 1, 2016.

FOR FURTHER INFORMATION CONTACT: Judy Gross, Senior Policy Analyst, 
(202) 898-7074, jugross@fdic.gov; or Rachel Ackmann, Counsel, (202) 
898-6858, rackmann@fdic.gov.

SUPPLEMENTARY INFORMATION: 

I. Background

    The '34 Act provides that an entity must register as a transfer 
agent if it functions as a transfer agent with respect to any security 
registered under section 12 of the '34 Act (Section 12) or if it would 
be required to be registered except for the exemption from registration 
provided by Section 12(g)(2)(B) or Section 12(g)(2)(G).\1\ A transfer 
agent registers by filing an application for registration with the 
appropriate regulatory agency.\2\ Prior to the enactment of the Dodd-
Frank Wall Street Reform and Consumer Protection Act \3\ (Dodd-Frank 
Act), the FDIC was the appropriate regulatory agency only for a state-
chartered (State) insured bank that is not a member of the Federal 
Reserve System and a subsidiary of any such bank, and the Office of 
Thrift Supervision (OTS) was the appropriate regulatory agency for a 
State or federal savings association.\4\
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    \1\ 15 U.S.C. 78q-1(c)(1).
    \2\ 15 U.S.C. 78q-1(c)(2).
    \3\ Public Law 111-203 (2010).
    \4\ 15 U.S.C. 78c. Additionally, the FDIC has authority to make 
such rules and regulations as may be necessary to implement the 
provisions in the '34 Act related to the registration of transfer 
agents of any institution for which it is the appropriate regulatory 
agency. 15 U.S.C. 78w(a).

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[[Page 27296]]

    In 2010, the Dodd-Frank Act provided for a substantial 
reorganization of the regulation of State and Federal savings 
associations and their holding companies. On July 21, 2011, (the 
``transfer date'' established by section 311 of the Dodd-Frank Act), 
the powers, duties, and functions formerly assigned to, or performed 
by, the OTS were transferred to (i) the FDIC, as to State savings 
associations; (ii) the Office of the Comptroller of the Currency (OCC), 
as to Federal savings associations; and (iii) the Board of Governors of 
the Federal Reserve System, as to savings and loan holding companies. 
The Dodd-Frank Act also amended the '34 Act to define the FDIC as the 
appropriate regulatory agency for insured State savings associations, 
and subsidiaries thereof, along with insured State nonmember banks, and 
subsidiaries thereof.\5\
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    \5\ Public Law 111-203, Section 376(a) (2010).
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    In 2012, the JOBS Act increased the thresholds at which securities 
must be registered under Section 12(g)(1) with the Securities and 
Exchange Commission (SEC).\6\ As amended by the JOBS Act, Section 
12(g)(1) generally requires securities' issuers to register their 
securities when the issuer has total assets exceeding $10,000,000 and a 
class of equity security (other than an exempted security) held of 
record by either--(i) 2,000 persons or (ii) 500 persons who are not 
accredited investors (as such term is defined by the SEC).\7\
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    \6\ Public Law 112-106 (2012).
    \7\ 15 U.S.C. 78l(g)(1)(A).
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    The JOBS Act also amended Section 12(g)(1) to provide that in the 
case of an issuer that is a bank or a bank holding company, the 
issuer's securities must be registered when the issuer has total assets 
exceeding $10,000,000 and a class of equity security (other than an 
exempted security) held of record by 2,000 or more persons.\8\
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    \8\ 15 U.S.C. 78l(g)(1)(B).
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    Part 341 of the FDIC's regulations (part 341) implements Section 12 
of the '34 Act by requiring State nonmember banks and subsidiaries 
thereof that are transfer agents of qualifying securities to register 
with the FDIC.\9\ (Part 341 does not currently include requirements for 
State savings associations or their subsidiaries.) Part 341 defines 
``qualifying securities'' as securities registered on a national 
securities exchange; or securities issued by a company or bank with 500 
or more shareholders and $1 million or more in total assets, except for 
securities exempted from registration with the SEC by Section 12(g)(2) 
(C, D, E, F and H).\10\ The second prong of the definition of 
qualifying securities, regarding securities issued by a company or bank 
with 500 or more shareholders and $1 million or more in total assets, 
is derived from the statutory requirements in Section 12(g)(1) for 
registering securities with the SEC.\11\ As a result of the amendments 
to the '34 Act made by the Dodd-Frank Act and the JOBS Act, the current 
exclusion of State savings associations and subsidiaries thereof and 
the regulatory definition of qualifying securities currently found in 
part 341 is inconsistent with the statutory threshold for registration 
requirements now provided in Section 12(g)(1).
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    \9\ 12 CFR part 341.
    \10\ 12 CFR 341.2.
    \11\ 15 U.S.C. 78l.
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    The OTS did not issue a rule regarding the registration of 
securities transfer agents. Instead, the OTS issued a memorandum to 
covered financial institutions informing such institutions that because 
of statutory changes in the Financial Services Regulatory Relief Act of 
2006,\12\ savings and loan associations, their subsidiaries, and 
savings and loan holding companies should register as transfer agents 
with the OTS rather than the SEC.\13\ Therefore, this final rule does 
not rescind any regulation issued by the OTS that was transferred to 
the FDIC following the transfer date.
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    \12\ Public Law 109-301 (2006).
    \13\ OTS CEO Memorandum Number 258 (July 27, 2007), available at 
https://www.occ.gov/static/news-issuances/ots/ceo-memos/ots-ceo-memo-258.pdf.
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II. Proposed Rule

    On December 22, 2015, the proposed rule was published in the 
Federal Register for public comment. In it, the FDIC proposed 
amendments to its regulations requiring insured State nonmember banks, 
or subsidiaries of such banks, to register with the FDIC if they act as 
transfer agents for qualifying securities under Section 12. The FDIC 
did not receive any comments on the proposed rule. The FDIC is now 
issuing the proposed rule as final and without change.

III. Description of the Final Rule

a. Section 341.1 Scope

    The final rule is part of the FDIC's continuing efforts to enact 
rule changes required by the Dodd-Frank Act and more recent statutory 
changes, such as the JOBS Act, and makes it clear that part 341 applies 
to insured State nonmember banks, insured State savings associations, 
and the subsidiaries of such institutions. Expanding the scope of part 
341 to include State savings associations is consistent with provisions 
of the Dodd-Frank Act and serves to increase regulatory consistency for 
all FDIC-supervised institutions. To that end, the final rule defines 
the term ``covered institution'' to include an insured State nonmember 
bank, an insured State savings association, and the subsidiaries of 
such institutions.

b. Section 341.2 Definitions

    The final rule reconciles the regulatory definition of qualifying 
securities with the statutory amendments to the '34 Act required by the 
JOBS Act. The final rule defines qualifying securities as (1) 
securities registered on a national securities exchange pursuant to 
Section 12(b) (15 U.S.C. 78l(b)) or (2) securities required to be 
registered under Section 12(g)(1) (15 U.S.C. 78l(g)(1)), except for 
securities exempted from registration with the SEC by Section 12(g)(2) 
(C, D, E, F, and H). As such, securities exempted from registration 
with the SEC by Sections 12(g)(2)(B) and (G) are included in the 
definition of qualifying securities. (Section 12(g)(2)(B) includes 
securities issued by an investment company registered pursuant to 
section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8), and 
Section 12(g)(2)(G) refers to securities of certain insurance 
companies.) Therefore, the final rule defines qualifying securities as: 
(a) Securities registered on a national securities exchange; (b) 
securities issued by (1) a company with total assets in excess of $10 
million and a class of equity securities (other than exempted 
securities) held of record by either: (i) 2,000 persons, or (ii) 500 
persons who are not accredited investors or (2) a bank or bank holding 
company with total assets exceeding $10 million and a class of equity 
securities (other than exempted securities) held of record by 2,000 or 
more persons; (c) securities issued by investment companies registered 
pursuant to section 15 U.S.C. 80a-8; and (d) securities issued by 
insurance companies exempt from registration under Section 12(g)(2)(G).
    The definition of ``qualifying securities'' cites to Section 
12(g)(1) instead of reciting specific quantitative standards to ensure 
that the FDIC's regulations remain consistent with any future statutory 
changes to Section 12(g)(1) .

c. Section 341.7 Delegations of Authority

    The final rule removes the delegations of authorities related to 
the registration

[[Page 27297]]

of securities transfer agents from the rule. In the past, the FDIC has 
taken steps to remove delegations of authority from its regulations in 
order to provide the agency greater flexibility in the decision-making 
process.\14\ The removal of the delegations of authority from the 
regulation does not change the existing delegation; it simply moves the 
delegation from the FDIC's regulations. Interested parties may access 
the FDIC's current delegations of authority on the agency's Web site at 
www.fdic.gov.
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    \14\ 67 FR 79246 (Dec. 27, 2002).
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d. Technical Corrections

    The final rule also makes certain technical corrections to part 
341, such as revising outdated citations and updating the name of the 
FDIC division from which covered institution should request relevant 
forms.

IV. Regulatory Analyses

A. Paperwork Reduction Act
    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (PRA), the agencies may not conduct or sponsor, and a 
respondent is not required to respond to, an information collection 
unless it displays a currently valid Office of Management and Budget 
(OMB) control number.\15\ The FDIC has reviewed the final rule and 
determined that it does not introduce any new collection of information 
pursuant to the PRA.
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    \15\ 44 U.S.C. 3501-3521. The current OMB Control Numbers for 
state nonmember banks filing the transfer agent registration and 
amendment form is OMB Control No: 3064-0026. The current OMB Control 
Numbers for state savings associations filing the transfer agent 
registration and amendment form is OMB Control No: 3064-0027.
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B. Regulatory Flexibility Act Analysis
    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA), 
requires an agency, in connection with a final rule, to prepare a final 
regulatory flexibility analysis describing the impact of the final rule 
on small entities (defined by the Small Business Administration for 
purposes of the RFA to include banking entities with total assets of 
$550 million or less) or to certify that the final rule does not have a 
significant economic impact on a substantial number of small entities. 
For the reasons provided below, the FDIC certifies that the final rule 
does not have a significant economic impact on a substantial number of 
small entities. Accordingly, a final regulatory flexibility analysis is 
not required.
    The final rule does not affect a substantial number of small 
entities.\16\ Currently only 17 entities are registered with the FDIC 
as registered transfer agents. Additionally, the FDIC has not received 
any new registrations for several years. In fact, over the last 10 
years, 18 entities have deregistered as transfer agents (the most 
recent deregistration was in 2014). Furthermore, if any currently 
registered transfer agent does not meet the threshold requirements, it 
could deregister. Therefore, the final rule will likely reduce burden 
on small entities by increasing the number of entities that could 
deregister with the FDIC. As such, the final rule does not have a 
significant economic impact on a substantial number of small entities.
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    \16\ In 2010, the OTS estimated that 5 savings associations 
would be required to register as transfer agents. 75 FR 22184 
(2010).
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C. Plain Language
    Section 722 of the Gramm-Leach-Bliley Act requires the FDIC to use 
plain language in all proposed and final rules published after January 
1, 2000. The FDIC sought to present the proposed rule in a simple and 
straightforward manner and specifically requested comments from the 
public on how it might make the proposed rule easier to understand. The 
FDIC did not receive any suggestions on the use of plain language. The 
FDIC has drafted the final rule in a similar manner to the proposed 
rule.

List of Subjects in 12 CFR Part 341

    Banks, banking; Reporting and recordkeeping requirements; Savings 
associations; Securities.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

    For the reasons stated in the preamble, the Federal Deposit 
Insurance Corporation is amending part 341 of chapter III of Title 12, 
Code of Federal Regulations as follows:

PART 341--REGISTRATION OF SECURITIES TRANSFER AGENTS

0
1. The authority citation for part 341 continues to read as follows:

    Authority:  Secs. 2, 3, 17, 17A and 23(a), Securities Exchange 
Act of 1934, as amended (15 U.S.C. 78b, 78c, 78q, 78q-1 and 78w(a)).


0
2. Revise Sec.  341.1 to read as follows:


Sec.  341.1  Scope.

    This part is issued by the Federal Deposit Insurance Corporation 
(the FDIC) under sections 2, 3(a)(34)(B), 17, 17A and 23(a) of the 
Securities Exchange Act of 1934 (the Act), as amended (15 U.S.C. 78b, 
78c(a)(34)(B), 78q, 78q-1 and 78w(a)) and applies to all insured State 
nonmember banks, insured State savings associations, or subsidiaries of 
such institutions, that act as transfer agents for securities 
registered under section 12 of the Act (15 U.S.C. 78l), or for 
securities exempt from registration under subsections (g)(2)(B) or 
(g)(2)(G) of section 12 (15 U.S.C. 781(g)(2)(B) and (G)) (securities of 
investment companies, including mutual funds, and certain insurance 
companies). Such securities are qualifying securities for purposes of 
this part.

0
3. In Sec.  341.2, revise paragraphs (h) and (i) to read as follows:


Sec.  341.2  Definitions.

* * * * *
    (h) The term covered institution means an insured State nonmember 
bank, an insured State savings association, and any subsidiary of such 
institutions.
    (i) The term qualifying securities means:
    (1) Securities registered on a national securities exchange (15 
U.S.C. 78l(b)); or
    (2) Securities required to be registered under section 12(g)(1) of 
the Act (15 U.S.C. 78l(g)(1)), except for securities exempted from 
registration with the SEC by section 12(g)(2) (C, D, E, F, and H) of 
the Act.

0
4. Sec.  341.3, revise paragraph (a) and the last sentence in paragraph 
(c) to read as follows:


Sec.  341.3  Registration as securities transfer agent.

    (a) Requirement for registration. Any covered institution that 
performs any of the functions of a transfer agent as described in Sec.  
341.2(a) with respect to qualifying securities shall register with the 
FDIC in the manner indicated in this section.
* * * * *
    (c) * * * Form TA-1 may be completed electronically and is 
available from the FDIC at www.fdic.gov or the Federal Financial 
Institutions Examination Council at www.ffiec.gov, or upon request, 
from the Director, Division of Risk Management Supervision (RMS), FDIC, 
Washington, DC 20429.

0
5. In Sec.  341.5, revise the last sentence in paragraph (b) to read as 
follows:


Sec.  341.5  Withdrawal from registration.

    (b) * * * A Request for Deregistration form is available 
electronically from www.fdic.gov or by request from the Director, 
Division of Risk Management Supervision (RMS), FDIC, Washington, DC 
20429.
* * * * *

[[Page 27298]]

Sec.  341.7  [Removed]

0
6. Remove Sec.  341.7.

    By order of the Board of Directors.

    Dated at Washington, DC, this 26th day of April, 2016.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2016-10529 Filed 5-5-16; 8:45 am]
 BILLING CODE 6714-01-P