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Question

Difficulty: EasyBroker-Dealers, Investment Advisers, and Intermediaries

An institution is hired by a publicly traded corporation to maintain official records of security owners, handle the re-issuance and cancellation of stock certificates, and distribute dividend payments to shareholders. Which market intermediary performs these functions?

  1. Transfer agentAnswer
  2. B
    National Securities Clearing Corporation (NSCC)
  3. C
    Investment adviser
  4. D
    Prime broker

Answer

Transfer agent
A transfer agent is appointed by an issuing company to maintain records of who owns its stocks and bonds, process the change of ownership when securities are sold, cancel old certificates, issue new ones, and distribute interest and dividend payments.

Step-by-Step Solution

1
Identify the primary functions described in the scenario.
The core tasks are maintaining shareholder records, issuing/canceling certificates, and processing corporate dividend distributions.
Recognizing issuer-side administrative functions isolates the role from investor-side or broker-side services.
2
Match these functions to the correct financial market intermediary.
The transfer agent is the specific intermediary contracted by corporations to handle investor ownership records and corporate distributions.
Transfer agents ensure accurate tracking of who owns a company's stock and bonds.

Key Concept

Role and responsibilities of a transfer agent
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Topics

Broker-Dealers, Investment Advisers, and Intermediaries

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