80 FR 79491 - Proposed Revisions to the FDIC's Rules and Regulations Requiring the Registration of Securities Transfer Agents

FEDERAL DEPOSIT INSURANCE CORPORATION

Federal Register Volume 80, Issue 245 (December 22, 2015)

The FDIC is proposing 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. First, the proposed amendments would require 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 proposed amendments would revise the definition of qualifying securities to reflect statutory changes to the '34 Act made by the Jumpstart Our Business Startups Act (JOBS Act). The proposed amendments are consistent with the FDIC's continuing review of its regulations under the Economic Growth and Regulatory Paperwork Reduction Act of 1996.

[Federal Register Volume 80, Number 245 (Tuesday, December 22, 2015)]
[Proposed Rules]
[Pages 79491-79493]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-31941]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 341

RIN 3064-AE41


Proposed Revisions to the FDIC's Rules and Regulations Requiring 
the Registration of Securities Transfer Agents

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The FDIC is proposing 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. 
First, the proposed amendments would require 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 
proposed amendments would revise the definition of qualifying 
securities to reflect statutory changes to the '34 Act made by the 
Jumpstart Our Business Startups Act (JOBS Act). The proposed amendments 
are consistent with the FDIC's continuing review of its regulations 
under the Economic Growth and Regulatory Paperwork Reduction Act of 
1996.

DATES: Comments must be received by February 22, 2016.

ADDRESSES: You may submit comments, identified by RIN 3064-AE41, by any 
of the following methods:
     Agency Web site: http://www.fdic.gov/regulations/laws/federal/. Follow instructions for submitting comments on the Agency Web 
site.
     Email: [email protected]. Include the RIN 3064-AE41 on the 
subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street NW., 
Washington, DC 20429.
     Hand Delivery: Comments may be hand-delivered to the guard 
station at the rear of the 550 17th Street Building (located on F 
Street) on business days between 7:00 a.m. and 5:00 p.m.
    Public Inspection: All comments received must include the agency 
name and RIN for this rulemaking. All comments received will be posted 
without change to http://www.fdic.gov/regulations/laws/federal/, 
including any personal information provided. Paper copies of public 
comments may be ordered from the FDIC Public Information Center, 3501 
North Fairfax Drive, Room E-1002, Arlington, VA 22226 by telephone at 1 
(877) 275-3342 or 1 (703) 562-2200.

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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    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

[[Page 79492]]

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 proposed rule 
would 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. Description of the Proposed Rule

a. Section 341.1 Scope

    The proposed 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 would make it clear that part 341 
would apply 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 
proposed rule would define 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 proposed rule would reconcile the regulatory definition of 
qualifying securities with the statutory amendments to the '34 Act 
required by the JOBS Act. The proposed rule would define 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) of the '34 
Act would be included in the definition of qualifying securities. 
(Section 12(g)(2)(B) of the '34 Act 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 proposed 
definition of qualifying securities would include: (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 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 proposed definition of ``qualifying securities'' would cite 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 proposed rule would remove the delegations of authorities 
related to the registration 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 proposed removal of 
the delegations of authority from the regulation would not change the 
existing delegation; it would simply move 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 proposed rule would also make certain technical corrections to 
part 341, such as revising outdated citations and updating the name of 
the FDIC division granted delegated authority to act on disclosure 
matters.

III. Request for Comment

    The FDIC invites comment on all aspects of the proposed rule. 
Specifically, should the rule include the definition of ``qualifying 
securities'' instead of referring to the exemptions in the `34 Act?

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 proposed rule and 
determined that it would 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 proposed rule, to prepare an 
Initial Regulatory Flexibility Analysis describing the impact of the 
proposed 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 proposed 
rule would not have a significant economic impact on a substantial 
number of small entities. For the reasons provided below, the FDIC 
certifies that the proposed rule would not have a significant economic

[[Page 79493]]

impact on a substantial number of small entities. Accordingly, an 
initial regulatory flexibility analysis is not required.
    The proposed rule would 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 if the proposed rule were adopted as a final rule. 
Therefore, the proposed rule would likely reduce burden on small 
entities by increasing the number of entities that could deregister 
with the FDIC. As such, the proposed rule would 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 invites comment on how to make this proposed rule 
easier to understand. For example:
     Has the FDIC organized the material to suit your needs? If 
not, how could the FDIC present the rule more clearly?
     Are the requirements in the rule clearly stated? If not, 
how could the rule be more clearly stated?
     Do the regulations contain technical language or jargon 
that is not clear? If so, which language requires clarification?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the regulation easier to 
understand? If so, what changes would achieve that?
     Is this section format adequate? If not, which of the 
sections should be changed and how?
     What other changes can the FDIC incorporate to make the 
regulation easier to understand?

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 proposes to amend 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. Amend Sec.  341.2 by revising 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. Amend Sec.  341.3 by revising 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. Amend Sec.  341.5 by revising 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.
* * * * *


Sec.  341.7  [Removed]

0
6. Remove Sec.  341.7.

    By order of the Board of Directors.

    Dated at Washington, DC, this 15th day of December, 2015.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2015-31941 Filed 12-21-15; 8:45 am]
BILLING CODE 6714-01-P