What is a Registrar?
If you own securities beyond the common brokerages of today, you may have come into contact with a registrar, known in the United States as a transfer agent.
Broadly speaking, a registrar is a recordkeeper.
As it relates to investing, a registrar is an agent—often a bank or trust company—that’s responsible for maintaining records of security owners in exchange for a fee paid by the issuer. That is, a registrar keeps records of who holds stocks or bonds on behalf of a public company and helps to ensure that securities are authentic.
The information a registrar records includes the name, address, and tax identification number or social security number, among other information, of each individual or entity that owns the securities of a company. Most companies appoint a registrar to maintain the register of its shareholders, although some companies set up a registar's department in-house. Outsourcing the registrar function to a professional registrar allows a company to focus on its core business interests.
- A registrar is appointed by a company to maintain records of security owners.
- Many industries outside of the stock market use registrars to keep official records or registers of information.
- A registrar and transfer agent are often the same entity.
Types of Registrars
In general, registrars are agents responsible for keeping a register or official records. A stock registrar is appointed by a company with publicly traded securities to maintain records of individuals and entities that own their stocks and bonds. Registrars also exist outside of the stock market. The term registrar may refer to education, government, medicine, technology, or other industries. Some duties that a registrar might perform include maintaining student records, caring for museum collections, or keeping medical records. A registrar can also mean a certain professor in medicine or a type of technology—such as an Internet domain name registrar.
What is a Transfer Agent?
A transfer agent is an agent that maintains the stock and bond investment records of individuals and entities for a public company and executes transfers of these securities. It also acts as an intermediary for the company. A transfer agent, as it’s commonly known in the United States and Canada, is often a bank or a similar institution assigned by the company. In the United Kindgom, the term used is share registrar.
Typically, a transfer agent acts as both the registrar and also performs the duties of a transfer agent. A transfer agent records changes of ownership, maintains the issuer's security holder records, cancels and issues certificates, and distributes dividends, among other duties. Sometimes a transfer agent is called a stock transfer agent because responsibilities involve managing stocks and bonds.
How Does a Registrar Differ From a Transfer Agent?
Typically, a registrar and the transfer agent are the same entity. While this is not a requirement, generally companies want to employ one entity to provide both the services of a registrar and a transfer agent. The primary function of a registrar, however, is to keep records of bondholders and shareholders after an issuer offers securities to the public, whereas a transfer agent primarily issues and cancels certificates to reflect changes in ownership of the securities of an entity.
What Does a Transfer Agent Do?
A transfer agent or share registrar keeps track of registered shareholders for companies that issue stock and acts as an intermediary for the company. The primary roles of a transfer agent include:
- Performing record keeping of the individuals and entities that own their stocks and bonds. A transfer agent tracks, records, and maintains official records of ownership of an issuer’s securities on behalf of the issuer.
- Issuing certificates to show changes in ownership of securities. A transfer agent is responsible for keeping records of who owns a company's stocks and bonds and how those securities are held. They also keep current records of how many shares or bonds each individual or entity owns. When an investor buys a stock or a bond, a certificate must be issued to document the change of ownership. Most of the time, ownership is recorded through book-entry securities, a system of electronically tracking ownership of stocks and bonds. Instead of issuing a physical certificate, a transfer agent creates an electronic record to show the transfer of ownership of the security.
- Regulating the buying and selling of physical certificates. Some individuals and entities choose to hold physical stock and bond certificates rather than have them held in book-entry form. An individual or entity that wants to sell or transfer a physical certificate needs to provide a transfer agent with a medallion signature guarantee. A medallion signature provides a guarantee that a signature's owner is the legal owner of the security and thus has the power to initiate a transfer of ownership. A medallion signature is required for the transaction to be accepted.
- Communicating with security owners on a company's behalf. A transfer agent often pays out the dividends, interest, or other distributions to investors on behalf of a company. A transfer agent may also process investor mailings such as quarterly and annual reports, exchange stocks and bonds during a merger, and send out proxy materials as required. Proxy materials are documents that public companies must disclose to shareholders so they can make informed decisions.
- Providing service to investors whose stock or bond certificates have been lost, stolen, or destroyed. For investors who choose to hold physical stock and bond certificates, a transfer agent helps the security owner when the stock or bond certificate has been lost, stolen, or destroyed.
Why Does a Company Need a Registrar or Transfer Agent?
Each day, thousands of financial transactions are performed by investors, such as buying and selling stocks and bonds. Dividends are paid to security-holders, and individuals and entities execute numerous non-financial transactions each day, like updating contact information or changing other account details. Such transactions are required to be recorded and accurately maintained on a day-to-day basis. Registrars and transfer agents have significant experience in maintaining a wide range of investors' transactions on a professional basis. Thus, companies choose to partner with registrars and transfer agents to help them perform these tasks.
How Do Brokerages Work With Transfer Agents or Registrars?
While physical stock certificates were how stock exchanges and public listings began a few hundred years back, almost everything is done electronically in the 21st century. For registrars or transfer agents, these records are kept electronically in “book-entry” form. It’s a somewhat misleading way to say that the record-keeping is done electronically, and the owner does not receive a paper certificate.
How do common brokerage firms work with transfer agents or registrars?
Many stocks today are held in “street name.” Street name refers to the practice by most brokerage firms of NOT putting your name and information on a stock certificate or with the transfer agent/registrar. The security is registered in the name of your brokerage firm on the issuer's books while your brokerage firm holds the security and maintains their own records of which clients hold which secuirities. Holding equities in street name simplifies record-keeping and transactions for both your broker and you, though it does mean you will not receive corporate communications directly from the issuer. Your broker-dealer will still credit you with dividend and interest payments related to the security.
Most broker-dealers will hold your securities in street name by default unless you tell them otherwise. Your brokerage firm may then appear as the beneficial owner of the security with the issuer.
Examples of Transfer Agents in the U.S. and U.K.
Below are some of the largest transfer agents in the U.S. and the U.K. based on market share.
Top U.S. Transfer Agents
- American Stock Transfer and Trust
- Broadridge Corporate Issuer Solutions
- Continental Stock Transfer and Trust
- Equiniti Trust (formerly Wells Fargo)
Transfer agents operating in the U.S. are required to register with the U.S. Securities and Exchange Commission or a banking regulator, if the transfer agent is a bank. The U.S. Securities and Exchange Commission has rules and regulations for transfer agents that aim to facilitate accurate and prompt securities transactions and assure the safeguarding of securities and funds.
Top U.K. Share Registrars
- ComputerShare UK
- Equiniti Trust
- Link Asset Services (formerly Capita Asset Services)
The Financial Conduct Authority and the Prudential Regulation Authority, part of the Bank of England, are the financial regulatory bodies responsible for the regulation and supervision of the financial services industry in the United Kingdom. The Prudential Regulation Authority was formed as a successor to the Financial Services Authority. In the U.K., nearly all financial service activities must be authorized by the Financial Conduct Authority.
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