Broadridge Financial may have made its mark as the world's largest proxy
distribution and voting firm for beneficial shareholders, but that won't
stop it from quickly expanding into the transfer agency business for
registered shareholders.And not the way current shareholder
recordkeepers do it. "Our transfer agency model is a disruptive one,"
asserted Richard Daly, chief executive of Broadridge in a question and
answer session following his speech at the Securities Industry and
Financial Market Association's technology event in New York on Tuesday
morning. "The ghost transfer agents are fighting is street ownership."
Transfer agents are hired by corporations to service the accounts of
registered shareholders -- those who hold their shares in their own name
on the books of the transfer agent. Among their functions: to issue and
cancel share certificates, mail dividend checks, respond to customer
calls and mail statements. With more investors choosing to hold their
accounts in the name of their bank or brokerage firm, transfer agents
have been faced with dwindling revenues and profits.
"We want to talk to issuers about servicing all of their shareholders
so they can forget about having to pay those annual fees," said Daly.
Broadridge is hired by banks and brokerage firms to mail out proxy
materials and tabulate votes on behalf of beneficial shareholders. The
fees it can charge U.S. corporations are in large part capped by
guidelines set by the New York Stock Exchange. Transfer agents, by
contrast, charge issuers annual fees to service each registered account
including sending proxy materials to registered shareholders. In some
cases, the fees are bundled and are not lowered even if the issuer
decides to use Broadridge to mail its proxy materials to registered
shareholders.
Broadridge wants those issuers to move over their registered accounts
to Broadridge as well. And Broadridge is betting that those accounts
will eventually switch over to Street-name ownership. "I can guarantee
they will never have physical certificates," said Daly, who touted his
firm's sophisticated technology as a key selling point. That technology
includes proxy voting through mobile phones, electronic shareholder
meetings and electronic shareholder forums.
"There is no reason why issuers should spend money running
shareholder meetings in physical locations," said Daly. "It's a matter
of recognizing the inefficiencies of the current process."
Broadridge's acquisition of transfer agency StockTrans in March gave
it control of the transfer agency work for 200 U.S. corporations and
Computershare's proposed takeover of Bank of New York Mellon's
shareholder services unit for $550 million announced in late April could
pave the way for additional business from potentially disgruntled BNY
Mellon clients.
