Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--Wall Street's main trade group is campaigning to do
away with paper stock certificates and instead keep track of all investor
The Securities Industry Association is launching a publicity blitz this year
to convince publicly traded companies and their shareholders that a paperless
world will save money and time. Its effort is aided by a
rule adopted this summer that allows listed companies to eschew paper
So far, only one company, AT&T Corp. (T), has dropped paper certificates.
At stake is an estimated $500 million in annual savings for all market
participants, from investors to brokerage firms, according to the SIA. The extra
costs associated with paper stock certificates range from the manpower and time
brokerages and companies spend printing, handling and mailing the certificates
to the extra expense incurred by investors to replace those that are lost or
The Securities Industry Association will evaluate changing its current
three-day trade settlement system to next-day settlement in 2004. It has not set
a definite date to implement a new settlement system.
electronic-only ownership of stocks.
"We hope shareholders will get used to this idea, and other shareholders will
follow," said Donald Kittell, executive vice president of the SIA. "We're up
against many shareholders who love certificates."
Regulators and the SEC in particular are reluctant to mandate electronic book
entry, given the opposition it would face from individual investors, according
to Kittell. So the trade group is developing brochures and talking points to
rally support among companies and investors. It hopes to convince companies
going public to start trading with electronic book entry only, and to sway
existing companies into yanking paper stock certificates during new issues or
other changes, such as AT&T's 1-for-5 reverse stock split in November.
Some companies aren't likely to follow through no matter what Wall Street
says. Walt Disney Co. (DIS), a company whose stock certificates are popular
gifts, said although it's aware of the advantages of a paperless world, getting
rid of certificates would upset too many shareholders.
"We don't want to disenfranchise anyone," said Jim Alden, director of
shareholder services for Disney. "I think it's going to be difficult to move
totally out of that environment."
As for scripophilists - collectors of stock certificates - the end of paper
certificates would probably increase the market value of those in circulation
today by capping the supply, said Bob Kerstein, chief executive of
certificates. But if many companies go electronic, collectors would miss out on
the chance to buy new certificates that could later prove interesting or
"Certificates do so much in capturing the history of the company," said
Kerstein, who was in the process of raising prices for AT&T certificates Monday.
-Lynn Cowan, Dow Jones Newswires; 202-628-9783; firstname.lastname@example.org
(END) Dow Jones Newswires