DTC Eligibility Services

DTC Eligibility refers to the process of having a company’s securities, typically common stock or bonds, become approved and accepted for deposit into the Depository Trust Clearing Corp.’s (DTC) deposit system.  By becoming DTC Eligible, a company’s securities can be held electronically at a brokerage firm.  This is known as being held in streetname.

Coral Capital Advisors works with the brokerage firms and investment banks that are highly experienced in submitting applications and obtaining approval for a company’s securities to become DTC Eligible.  We assist both private and public U.S. issuers, foreign issuers, shell companies and Regulation A offerings.

Coral Capital Advisors works with its clients to select the brokerage firm to submit the DTC Eligibility application, and in the preparation of the information package and additional documents necessary to submit their applications for DTC Eligibility.  The key to timely and efficient DTC eligibility approval is to submit a “complete package” of required documents.

Why It Is Important To Be DTC Eligible

The Depository Trust Clearing Corporation (“DTCC”) facilitates electronic trading of securities in the U.S. through its central depository system known as the Depository Trust Corporation (DTC).  The DTC system allows participating brokerage firms to electronically settle trades with other member firms.  This is accomplished by holding securities in “street name,” which means that they are held electronically at the brokerage firm that has deposited the securities into its account with DTC.  This eliminates the need for buyers and sellers holding securities in street name to produce physical certificates to settle the trades. The Depository Trust Corporation’s automated clearing and settlement system automatically transfers the “net” trades between participating firms.  This allows for a dramatic reduction in the costs associated with trading securities.

How Non-DTC Eligible Securities Trade

Securities that are not in the DTC system a/k/a not DTC Eligible trade the very old fashioned way.  What this means is when a shareholder sells his shares, the that executed the trade for him must send his stock certificate to the company’s transfer agent who reissues the shares in the name of the buyer.  The transfer agent must then send the shares back to the seller’s brokerage firm, that then sends the shares to the buyers brokerage firm.

This creates a lot of extra fees.  The brokerage firms charge higher commissions to cover their costs, which are ultimately passed along to the shareholders. These fees include transfer agent fees, and lots of shipping fees.  Investors and traders do not like to pay these fees.  Additionally there is the added risk that the certificate being sent to the transfer agent is not a valid certificate, which increases the risk of a buy-in.

Very importantly, most brokerage firms do not want to execute trades in non-DTC Eligible securities.

Companies whose securities are not DTC Eligible see dramatically lower investor interest and lower valuations.

Please feel free to contact us to see how we may be of assistance to your company in making its securities DTC Eligible.