by Alex Broudy, Technical & Financial Writer Oct 13, 2022
This article is intended for businesses using a transfer agent, or considering switching transfer agents.
Who is DTC?
The Depository Trust and Clearing Corporation (DTC) is a post-trade clearing and settlement company that services financial companies such as broker-dealers, banks, and transfer agents. The main function of DTC is to act as a securities depository for its own broker-dealers and banks, and to facilitate the transfer and settlement of securities between other broker-dealers, banks, and transfer agents. This is done using a combination of three DTC-approved methods.
Traditionally, securities are transferred either through the Fast Automated Securities Transfer (FAST) contract platform using Deposit/Withdrawal at Custodian (DWAC) or using Direct Registration System (DRS).
Fast Automated Securities Transfer (FAST) is a contract between DTC and transfer agents which eliminates the movement of physical securities. FAST-enabled transfer agents are able to custody securities between DTC and other FAST transfer agents. By enabling transfer agents to act as custodians, the FAST program can reduce physical transfer costs and increase efficiency for the transfer and settlement of securities. There are two programs which facilitate this effort through FAST.
Deposit/Withdrawal at Custodian (DWAC) is a method of electronically transferring new shares or certificates to and from DTC using the transfer agent to distribute shares. Using DWAC with FAST, DTC participants are able to request the movement of shares to or from the transfer agent electronically.
Direct Registration System (DRS) is a system which allows securities to be held in book-entry form at the transfer agent without having a physical certificate. With DRS, the registered shareholder can transfer DRS shares electronically through FAST. Unlike DWAC, DRS shares have already been issued and are held on the books of the transfer agent. Once DWAC-approved, FAST transfer agents can apply to become DRS approved.
How Do I Obtain FAST Status?
Complete and return FAST - DWAC application
We submit your application to the DTC
DTC reviews the application for a general period of 7-10 days
Once approved, you’re DWAC FAST! If you’re not approved, you may apply in 90 days for no additional fee
If you would like to be DRS FAST, repeat steps 1-2
DRS FAST is generally a same day approval
To expedite your application:
Fully report on time without missing any reports.
Limit corporate actions and officer changes to the last 3-5 years.
Check if the company and/or officers are involved in lawsuits. If so, a detailed explanation may be required.
Avoid Reg 504D issuances or other unregistered resales.
Update OTC Markets so that there are no “Halt” or “Yield” statuses.
Reapply in 2 to 3 months if the company is rejected
Understanding Direct Registration System (DRS)
DRS offers simplicity and efficiency to both your shareholders and your organization. DRS is a system that allows securities to be held in “book- entry” form without having a physical certificate issued as evidence of ownership. These shares are, instead, registered electronically in our record keeping system. Holders of securities in DRS (book-entry form) have all the traditional rights and privileges as holders of securities in certificate form. Shareholders benefit because DRS:
Eliminates the need for shareholders to safeguard and store certificates.
Allows shareholders to avoid the significant cost of surety bonds by eliminating the effort involved in replacing physical certificate(s) that might be lost, stolen or destroyed.
Permits electronic security transactions between your broker or dealer and Securitize Transfer as transfer agent.
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