Investment giant Fidelity becomes a stock transfer agent
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Fidelity Investments today will announce its entry into the stock transfer agent market, with an all-digital solution that it's been quietly testing for the past year.
Why it matters: Stock transfer is vital to capital markets transactions, including both IPOs and M&A, but it's also dominated by an oligopoly that has a habit of driving CFOs to slam their fists into walls.
- When BuzzFeed went public via SPAC in late 2021 and ex-employees were unable to sell their shares because of stock transfer troubles, one venture capitalist told me he'd back "any entrepreneur on the planet who can solve this problem at scale."
- He certainly wasn't thinking of Fidelity, one of the world's largest asset managers, as the hero he needed. But this is where we're at.
The big picture: Fidelity's stock transfer effort is the brainchild of Schuyler Laird, a managing director in the firm's innovation incubator unit, Fidelity Labs.
- "I'd previously been at a tech startup acquired by a publicly traded company, and I saw a lot of what you covered with BuzzFeed," he explains. "A lot of Fidelity clients had seen the problems too and asked if Fidelity could do that work for them, so it was a bit of serendipity of me joining at the right time and having the right focus."
- Laird adds that while existing stock transfer agents aren't exactly analog, they rely a lot of email communication and often treat intraday requests as overnight requests. By authenticating digitally, he argues that Fidelity's effort will "do things at the speed of the internet, not at the speed of postage."
Zoom in: Fidelity only will work with publicly traded companies, or companies going public, leaving white space for existing players like SRS Acquiom (which focuses on private company mergers).
- It will operate independently of Fidelity Asset Management, to prevent conflicts of interest. Including among the firm's plethora of unicorn holdings.
The bottom line: Stock transfer will never be exciting. But it might be getting a little less boring.
