The Securities Transfer Association Study Looks at a Market-Based Proxy Distribution Model

NEW YORK, Oct. 14 /PRNewswire/ -- The Securities Transfer Association ("STA"), the industry trade association comprised of the transfer agents for over 12,000 large and small public companies in the US, conducted a study to evaluate cost structures of both the current proxy system and ones that might evolve in the future as the Securities and Exchange Commission ("SEC") looks to modernize the proxy mechanics process.

Currently, there is a dominant service provider, Broadridge Financial Services ("Broadridge"), which distributes annual meeting proxy materials to beneficial owners, sometimes known as "street-name accounts" on behalf of brokers and banks, while transfer agents generally distribute proxy materials to the registered shareholders listed on their records, directly on behalf of public companies.  The STA conducted the study to better understand the impact of changes being proposed by the SEC. One of the options under consideration is a system that would facilitate direct communications between issuers and their investors that would operate using free-market pricing principles.

"The STA study shows that a market-based model can result in significant cost savings to both large and small issuers for the delivery of proxy distribution services," said Charles Rossi, President, STA.  "This finding supports the STA's mission of advocating for efficiencies for issuers and their shareholders."

A comparison of several different actual invoices to the rate cards for six different transfer agents uncovered potential savings to issuers of between 20.52% and 71.62%, depending on the number of beneficial or "street name" positions.  "In most instances, savings were substantial, even when the current invoice was compared to the most expensive transfer agent pricing," explained Thomas Montrone, Chairman of the STA's Proxy Working Committee.

The STA's white paper, Estimated Cost Savings of a Market-Based Proxy Distribution Model," shows that the primary differences between the registered and beneficial rates for proxy processing are attributable to both the volume of "street-name" positions and different types of fees charged by Broadridge for services currently being performed at regulated rates.  

To download a copy of the STA's white paper with complete survey results and methodology, go to www.stai.org.

About The STA

The Securities Transfer Association, ("STA"), is an industry trade association, established in 1911, comprising transfer agents that provide services to over 12,000 large and small public companies in the United States.  The STA and its members work closely with issuers of securities on a variety of public policy matters and have been active for many years in advocating for a fair and efficient system for proxy distribution and communications.  Because of its influence on corporate governance matters, the proxy processing system is extremely important to the operation of the capital markets in the United States.

SOURCE The Securities Transfer Association, Inc.

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