By
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
holdings electronically.
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
certificates.
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
stolen.
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.
Several European
countries, including
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
Scripophily.com, a
certificates. But if many companies go electronic, collectors would
miss out on
the chance to buy new certificates that could later prove
interesting or
valuable.
"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; lynn.cowan@dowjones.com
Corrected
(END) Dow Jones
Newswires