Unclaimed property and T+2 to feature at SSA conference

Unclaimed property, speedier settlements and virtual meetings are among the issues facing shareholder services professionals and will be tackled at the Shareholder Services Association’s (SSA) 45th annual conference in Florida next month.

The SEC in March adopted rule changes to shorten by one business day the standard settlement cycle for most broker-dealer securities transactions from the present three business days, known as T+3, to two business days, known as T+2. This means that, as of September 5, when an investor buys a security, the brokerage firm will have to receive payment from the investor no later than two business days after the trade is executed. When an investor sells a security, the investor will have to deliver to the brokerage the investor’s security no later than two business days after the sale.

A panel at the conference in Bonita Springs, Florida moderated by Kevin Burns, senior manager with Computershare, will look at what issuers need to do in the run-up to the September compliance deadline. From an operational perspective, SSA executive director Abby Cowart says T+2 will pose an array of challenges in making sure companies’ systems are ready and in regards to regulatory filings.

T+2 is ‘a big question mark,’ Kim Bouch, vice president and shareholder services manager at Old National Bancorp, tells Corporate Secretary. Her firm uses a third-party brokerage to conduct sales and purchases of stock, and is looking at its own procedures and documentation – such as prospectuses – to make sure it is ready. Although she expects the deadline to come and go without too much trouble, she also expects talk to turn immediately to achieving T+1. The problem there, she explains, is the continuing requirement for physical certificates, which cannot be processed as quickly as T+1 would demand.

The financial services industry broadly supports the SEC rule change. The Securities Industry and Financial Markets Association, for example, writes in a comment letter filed last December that a T+2 settlement cycle will reduce credit, market and liquidity risks, promote financial stability and mitigate systemic risks to the financial system. In a separate letter, however, the Consumer Federation of America says the change is an improvement but is ‘woefully insufficient to properly protect market participants’ from such risks, and calls for a move to a T+1 standard based on straight-through processing.


ON THE AGENDA
The SSA gathering will feature two sessions on the topic of unclaimed property. They come at a time when a number of states, including Delaware, Arkansas and South Dakota, are seeking to boost their revenues by reducing the time accounts can lie dormant before they take the contents – with some planning to liquidate these holdings immediately upon receipt, Cowart tells Corporate Secretary. ‘We have been arguing for states to maintain the length of dormancy periods,’ she says.

Also on the conference agenda is virtual shareholder meetings, a topic that has attracted controversy. Companies argue that virtual meetings save money and enable shareholders to join in wherever they are based. Critics argue that they can insulate issuers from tough questioning.

For example, New York City comptroller Scott Stringer in April said he would be urging more than 15 companies to host in-person annual general meetings (AGMs) rather than continuing to use ‘virtual-only’ versions (CorporateSecretary.com, 4/5). According to his office, the number of corporations hosting virtual-only meetings either online or over the phone has risen over the past six years by more than 700 percent, from 19 in 2010 to 155 last year.

‘I think there’s a good mix of those that still have AGMs in person but with new technology you’ll see more [firms] move to fully virtual or dual [virtual and in-person] meetings,’ Cowart says. ‘Shareholders may not be able to voice their opinions like they should, but it’s such a cost saving to the company [to have virtual meetings] so the benefit goes back to the shareholders. I think technology will develop that allows shareholders to fully participate in virtual meetings.’

Succession planning will also be under discussion next month. Bouch notes that when the lead in-house transfer agent official at a bank leaves, the company will outsource the function, in part because the outgoing employees’ shoes can only be filled by a person with very specific experience and skills. But outsourcing can be avoided if a proper succession plan is implemented, for example by having a successor in place and preparing for some time before the team leader departs, she says.


SSA 2017 Annual Conference
July 18-20
​Bonita Springs, Florida