Transfer agents hold a curious place in the relationship between organizations and their investors.
While their responsibilities are easily defined, their execution requires precision, careful data management and a meticulous awareness of compliance and security requirements. It’s no wonder that many organizations choose to off-load that responsibility to specialist companies who are willing to take on both the workload and the risks associated with it.
Technological developments made in recent years have reduced settlement times and increased efficiencies, but a close examination of the processes involved behind the scenes with a traditional transfer agent reveals that, even today, much of the process is still dependent on manual and paper-based processes.
When examined through the lens of digitization, it simply looks old fashioned. The financial world is ready for — and is already embracing — the next natural step.
Imagine that the process of transferring ownership of a security could be confirmed and transacted digitally in minutes, without commission fees or paperwork, while still maintaining end-to-end compliance and guaranteeing user security. Further, imagine that transaction being automatically triggered once specific criteria are met, and then being recorded in a way that is transparent and immutable to all parties concerned.
These processes are already possible through digital securities built on blockchain technology operated by U.S. Securities and Exchange Commission (SEC)-registered digital transfer agents. Effectively, the underlying asset is irrevocably represented by secure, digital securities whose ownership can be efficiently transferred in a way that is simply not possible with traditional TA services.
The very process of doing this also creates the possibility of new areas of ownership transfer, such as partial — or even micro — ownership of real estate, fine art or, in fact, any other asset using the same entirely secure system.
Once an asset is represented by digital securities, a process known as digitization, its status can be identified at any time through the transparency of the blockchain. This creates an environment where real-time reporting is possible and perfect accuracy is guaranteed.
In addition, since transfers of ownership for digital securities can be settled instantly, there is no need to wait weeks or incur arcane costs such as buying stamps or paying Fedex.
Digitization also carries one final advantage that, until recently, had probably been overlooked. Unlike legacy systems, the digital process removes the need for face-to-face interactions and the handling of physical paperwork, effectively making its operation immune to certain black swan events such as the recent pandemic.
Digital securities are incredibly versatile once created. Since they represent underlying value, these digital securities can be traded on the secondary market through exchanges designed entirely for that purpose, while still maintaining the security and finality of each transaction.
The world is becoming increasingly digital at an exponential rate. While digital securities are still relatively young, the technology is proven and the process is already approved at a regulatory level. In time, it is likely that most, if not all, assets will be represented in this digital form.
These factors open the door for forward-thinking organizations to future-proof their systems and provide an inexpensive way to begin the transition to the coming digital wave.
Thankfully, moving to a digital transfer agent is a straightforward process. At Securitize, the first SEC-registered transfer agent in the digital securities space, we can provide you with an end-to-end transition process, designed to save time and money from the outset.
This site is operated by Securitize, Inc. (“Securitize”), which is not a registered broker-dealer. Securitize does not give investment advice, endorsement, analysis or recommendations with respect to any digital securities. All digital securities powered by Securitize’s technology are offered by, and all information related thereto is the responsibility of, the applicable issuer of such digital securities. Neither Securitize nor any of its officers, directors, agents and employees makes any recommendation or endorsement whatsoever regarding any digital securities powered by Securitize’s technology. Nothing on this website should be construed as an offer, distribution or solicitation of any digital securities. Securitize does not provide custodial services in connection with any digital securities powered by Securitize’s technology.