The Depository Trust Company (DTC) is a repository through which stocks are transferred electronically between brokers and agents and provides electronic recordkeeping and clearinghouse services. DTC was established to reduce the volume of physical stock certificate transfers involved in the trading of securities. DTC holds eligible securities for financial institutions such as brokerage firms and banks, collectively referred to as “participants.” Participants then may request debits and corresponding credits to their DTC accounts to affect transfers. In this manner DTC facilitates transfers of securities on behalf of shareholders, via their brokers or transfer agents.

Becoming DTC eligible means that your securities are qualified for deposit into the DTC, allowing for smooth transaction processing between brokers and transfer agents. Once DTC eligible, companies can apply for additional services through the DTC such as their FAST system and DWAC transactions.

TThe FAST system enables participants to provide electronic custody, transfer, deposit and withdrawal services to beneficial holders more quickly and efficiently. For the FAST system, DTC establishes an account with transfer agents for each issue. These accounts are registered to Cede & Co., DTC’s nominee, and represent, on the transfer agents’ books, the sum total of shares for that issue held by DTC’s participants. Participants maintain corresponding books representing their shareholder accounts held in street name.

Transfer agents like Computershare can then make requests to debit or credit these accounts: the balance on the transfer agents’ books is increased and decreased on a daily basis, and participant accounts are adjusted accordingly by DTC. Transfer agents and issuers must meet specific DTC criteria in order to utilize FAST.

DTC’s Deposit Withdrawal at Custodian (DWAC) program is used to transfer shares between an issuer’s shareholder register (where such shares are held outside of DTC) and broker accounts (within the DTC system) for new offerings, stock buybacks or transactions such as stock options and employee plan grants and vestings, or general day-to-day shareholder activity. Issuers, or their advisors, may help facilitate DWAC transactions by providing instructions to the broker or custodian who initiates the transaction, and the transfer agent, who matches up the instructions and accepts the DWAC transaction. DWAC transactions offer the advantage of real-time share movement but are manually intensive to process.

A company cannot apply for DTC eligibility on their own. The application requires the sponsorship of a DTC participant. Companies should seek sponsorship from their corporate advisors, such as the underwriter to their IPO or capital raising event. If you do not have access to this service from a corporate advisor, please contact Computershare, as your named Transfer Agent, to discuss the alternative options available.