It’s common for many issuers and shareholders to have questions when it comes to ETC eligibility and what’s involved. Issuers aren’t always aware of what’s required when it comes to the time and cost commitment. When it comes to considering DTC eligibility, there are a few answers to commonly asked questions to ensure you understand what to expect.
What’s Required for DTC Eligibility?
DTC eligibility requires submitting an application that is sponsored by a DTC participant. It’s important to understand you cannot apply directly to the DTC for eligibility. All issuers need to file through a market maker and avoid going through FINRA. The DTC application process can become more efficient and smoother with the services of Issuer Solutions, which allows the issuer to shift more of their focus to growing and expanding their business. Keep in mind all participants are broker firms, but not all broker firms are participants of the DTC. The process of applying for eligibility includes obtaining a transfer agent, getting sponsored by a DTC participant, completing the eligibility package, verifying accuracy and waiting to be notified of legal opinion requirement.
How Long Do I Need to Wait for DTC Eligibility?
The timeframe and process of obtaining DTC eligibility depend on the participant who is sponsoring the application. In some cases, many requirements must be met to be approved. The average timeframe is two to six weeks.
Why is it Important for the Shares to Be DTC Eligible?
The shares that are DTC eligible are traded electronically, which makes it easy to avoid having to produce a physical stock certificate when settling the trade and transaction. It becomes an easier process that is more efficient without delays. It also makes it easier to attract investors because the shares of the issuer must be DTC eligible.
If you want to learn more about DTC eligibility, visit the Colonial Stock website to learn more about our services.
