In an unusual move, the Securities Exchange Commission has approved a rule change that had the unwelcome result of giving that old relic, the stock certificate, a new lease on life. The ruling permitted the Depository Trust Company (DTC) to place a freeze on the addition of new securities to the Direct Registration System (DRS).

DRS was created several years ago to provide an electronic, book-entry alternative to traditional stock certificates. The freeze, which began Sept. 13 and continues today, was imposed to spur the industry to reach agreement on a proposed new feature of DRS known as the “Direct Registration System” Under the Profile system, a broker would have the ability to move an investor’s shares out of a book-entry record position maintained by a transfer agent and into a street-name account maintained by the broker. The dispute is centered on what protections brokers will provide to issuers and transfer agents if a broker improperly moves shares using the Profile system.

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