The name derives from the impartial intermediary role a transfer agent plays in validating and registering the purchase of new ownership shares and, in the case of a transfer of ownership, cancelling the name and certificate of shareholders who sell shares and substituting the new owner's name on the official master shareholder register.
Transfer agents in the United States must be registered with the Securities and Exchange Commission (SEC) or a bank regulatory agency.
Public companies typically use transfer agents to keep track of the individuals and entities that own their stocks and bonds.
Investment funds may also use transfer agents to manage their shareholder registry although only some legal structures are required to do so.
[4] Stock transfer agents operating in the U.S. are required to register with the U.S. Securities and Exchange Commission or a banking regulator.