[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, [email protected]; or Rachel Ackmann, Counsel, (202)
898-6858, [email protected].
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
http://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