Exchanges and SEC Extend DRS Deadline to March 31 from Jan. 1
The deadline for making all equity issues listed on the Nasdaq Stock Market, the American Stock Exchange, the New York Stock Exchange and NYSE Arca eligible for a direct registration system (DRS) has been extended until March 31, 2008, from the original January 1, 2008, deadline. The Securities and Exchange Commission (SEC) has approved the extension.
Under the exchanges’ rule, all equity issues listed on the exchanges, as well as regional exchanges, must be made eligible for a direct registration system. Currently, The Depository Trust Company (DTC) is the only registered clearing agency administering a direct registration system.
DRS provides investors with the option to hold their securities in non-certificated form directly on the records of an issuer or transfer agent, and allows transfer agents and brokers to move shares between each other electronically. Shares also can be held in “street name” through a broker or bank.
Fewer non-compliant issues
In approving the extension in its rule change, the SEC said that since the exchanges first proposed the DRS requirement in August 2006, the number of non-compliant DRS issues had dropped from 5,000 in May 2007 to fewer than 1,000 as of December 14, 2007.
“Nonetheless, there has been some confusion regarding the steps the listed companies need to complete to become compliant with these requirements,” the SEC stated in announcing the deadline extension (Release No. 34-57062, Dec. 28, 2007).
“As a result, certain listed companies are still in the process of completing the necessary steps, which could include modifying their by-laws or having their boards take other actions, to become eligible. In addition, in some cases, even though a listed company has completed all actions required to be taken by the company to become compliant, the company’s transfer agent is still completing the process necessary for the transfer agent to facilitate the company’s DRS eligibility.”
“The exchanges,” the SEC said, “believe that this short extension will allow those companies whose securities are not yet DRS eligible to become fully compliant with the listing standards and will avoid the investor confusion that could be caused by a number of companies temporarily not being in compliance with their exchange’s listing standards while they complete the DRS eligibility process.” @