Dominic Jones_'s  Instablog

The following throwaway paragraph appeared near the bottom of an article out of Australia this morning. It appears to quote Stuart Crosby, CEO of global transfer agent business Computershare Limited. (CMSQF.PK):

The company’s North American staff are involved in consultations with the Securities and Exchange Commission about the reform of American shareholder communications regulation, which would offer a further expansion of the North American business.

If you've been following the debate over broker voting and proxy access, you'll know that the SEC, under considerable pressure from companies and many others, is looking into reforming the NOBO/OBO system that has given Broadridge Financial Solutions (NYSE:BR) a moat of sorts around its near-monopoly investor communications business.

Under this system, companies mostly don't know who their shareholders are because their stock is held in the name of brokerage firms or banks, so-called Street Name.

While shareholders can agree to have their information divulged to companies whose stock they own (called Non-Objecting Beneficial Owners), about 70% of accounts are designated as Objecting Beneficial Owners (OBOs), meaning that companies (or competing brokers) are not able to know who they are.

Broadridge has contracts with almost all brokerage firms and banks to send investor materials to OBOs, and companies pay the costs for them to do so.

The lack of choice and fixed costs has long rubbed companies the wrong way. Many would like to see a change to the NOBO/OBO system or at least a change in the default from OBO to NOBO. (Yeah, I know, it's needlessly complex).

According to a NYSE survey a few years back, most OBOs have no idea that companies don't have their names, and they're not opposed to companies getting the information.

Now the SEC is looking at changes to the system, which could result in many OBOs becoming NOBOs. This would open up the OBO business to Broadridge's transfer agent competitors, especially Computershare.

Given the high levels of animosity (that's putting it mildly) towards Broadridge in the issuer community, I expect that many will look to give their expanded NOBO business to the transfer agents which handle their non-Street Name or "registered shareholder" communications.

CEO Crosby seems to think so, too.

Disclosure: None