Restricted Deposits Service

The Restricted Deposit Service allows DTC participants to use the depository to handle the removal of restrictions on securities. DTC provides a negotiability and documentation review of deposited restricted securities, images and delivers them to transfer agents, and arranges for their prompt transfer into unrestricted securities. Restricted securities generally are securities purchased in private placements directly from an issuer before the company is public. They may also be stock acquired through a corporate reorganization or acquisition, in return for services, or from an original shareholder.

Who can use the service

The service is available to all DTC participants.

Benefits

The Restricted Deposit Service provides a number of benefits:

Rapid turnaround processing through transfer agents. The most common transaction, a sale of securities transferred by an agent participating in DTC's FAST program, in which the agent maintains a "balance" certificate for DTC, is usually done within three days. All transfers are generally handled in an average of just over four days.
Negotiability examination and documentation review is provided as an essential part of the service, minimizing mistakes or returns for missing documents.
All types of restricted securities are handled, including partial and full sales, breakdowns, legend removals, gifting, and distributions.
All deposits are imaged when they arrive at the depository and can be retrieved if lost or stolen in transit. Participants can easily retrieve images of deposited or newly transferred securities via e-mail or fax.
Rush (24-hour) service is available at an additional charge from the transfer agent, but no additional charge from DTC.
Participant firms can constantly view transfer status and comments using the DTC Participant Terminal System (PTS).

For expeditious handling, all transfers are delivered in specially marked envelopes (to New York area transfer agents) or are shipped priority overnight (to non-New York based transfer agents, with a pre-paid return priority overnight shipping label.)

How the service works

Once a firm begins participating in the Restricted Deposit Service, it sends the restricted shares to DTC's Restricted Deposit Service personnel, along with the accompanying documentation and detail required to remove the restriction. DTC reviews the documentation and negotiability of the securities, images the certificates, and delivers them overnight to the transfer agent. Restricted certificates held in DTC Custody can be moved quickly from DTC's vault to the Restricted Deposits Service. DTC then follows up with the transfer agent to ensure the certificates have been received. Once the restrictions are removed by the transfer agent, either a new unrestricted certificate is issued, or if the agent is a FAST agent, the amount is automatically credited to the firm's DTC free account. If pickup and delivery of an unrestricted certificate is required, DTC does that and completes the "out-transfer" process. At the firm's option, any residual restricted securities are credited to the firm's Custody Service account or delivered to a specified destination by overnight courier. DTC can accommodate the restricted transfers of all DTC-eligible securities, as well as all transferable Custody-only issues. For more information: Please contact Relationship Management at (212) 855-4155.