July 2, 1999

Jonathan G. Katz, Secretary

Securities and Exchange Commission

450 Fifth Street, N.W.

Mail Stop 0609

Washington, D.C. 20549-0609

and

Desk Officer for the Securities and Exchange Commission

Office of Information and Regulatory Affairs

Office of Management and Budget

Room 3208

New Executive Office Building

Washington D.C. 20503

Re: No. S7-17-99 -- Recording Requirements for Transfer Agents,

Proposed Rule 17Ad-7(f)

Release No. 34-41442

Ladies and gentlemen:

The Chase Manhattan Bank ("Chase"), a registered transfer agent pursuant to section 17(A) of the Securities Exchange Act of 1934, offers the following comments concerning the proposed amendment of Rule 17Ad-7(f) reported for comment on June 2, 1999, that would allow registered transfer agents to use electronic storage media to produce and preserve records they are required to retain.

Chase generally supports this proposal, subject to our comments below. Chase believes imaging of transfer agent records, over the course of time, will reduce storage expense, make record research by transfer agents more efficient and provide overall a more reliable means of record retention. Our comments on specific sections follow.

A. Comments on Collection of Information Requirements.

Within the proposed Rule certain of the amendments relate to "collection of information requirements" intended to ensure the integrity of the transfer agentís records maintained on the electronic storage media and to provide the Commission or other appropriate regulatory agency, full and complete access to the transfer agentís records stored on the electronic media.

    1. Location of Index
    2. Proposed Rule 17Ad-7(f)(iii) provides that the transfer agent using the electronic storage media must create an accurate index of the imaged records, store the index with the indexed records and have the index available at all times for examination by staff of the appropriate regulatory agency. Proposed Rule 17Ad-7(f)(iv) provides that the transfer agent must maintain a duplicate of the index of the records along with the indexed records separate from the originals and make the indexes available for examination by the appropriate regulatory agency.

      Chase agrees with the proposed requirement that any imaging system used by a transfer agent to maintain records should have an index system, and that a duplicate of the index should be retained by the transfer agent in a location separate from the original. We request that the Commission confirm that the Rule requires that the index be stored on the imaging system, but not that the index be stored on the optical disk that contains the imaged records.

      The purpose of an index is uniquely to identify an image so that it can be retrieved when necessary. From a design standpoint, indexes are typically maintained in a data base that is part of the imaging system. Usually the system also maintains a locator data base that identifies the exact position (such as optical disk volume, track number and file number) where the image is stored and from which it can be accessed. Being able to identify a needed image, locate the image and retrieve it whenever necessary should be a sufficient requirement for the index component of the Rule. Requiring that the index itself be located on the optical disk with the corresponding stored images would not enhance the usefulness of the index and would require major design changes to imaging applications, including the system used by Chase. Such a design change would likely result in inefficiencies to the system and impose major costs on the transfer agent that wishes to store records by imaging without any corresponding benefit.

      Therefore, the release accompanying the Rule should clarify that the index need only be stored as part of the imaging system without specifying location of the index (e.g. on the optical disk). Efficient and complete access to records during examination can be achieved by granting the examiners suitable access authority to view desired images from the imaging system. Access to these records is not dependent on where the indexes reside.

    3. Downloading Electronic Storage Media
    4. Proposed Rule 17Ad-7(f)(2)(iv) provides that the electronic storage media system used to store the transfer agentís records must have the capability to readily "download" indexes and records preserved on the electronic storage media to an alternate medium such as paper, microfilm or microfiche.

      It appears that the intent of the Rule on downloading information from the electronic storage media system is to assure that copies of the imaged records can be made available on another acceptable medium. Chase believes the Rule should require that the electronic storage media system used by the transfer agent have the capability to print images or provide copies of images stored on the electronic storage media in a format suitable for transfer to another acceptable medium, thus permitting the transfer agent the flexibility to determine the most suitable way for it to provide the imaged data to the appropriate regulatory agency.

      Chase also notes that the transfer of imaged records onto microfilm or microfiche would require a conversion capability which is not typical of most imaging systems, and would require the services of a conversion vendor. As long as this capability is elective on the part of the transfer agent, and paper is an acceptable alternate medium for the reproduction of the imaged records, Chase is comfortable with this requirement.

    5. Third Party Access to the Transfer Agentís Electronic Storage Media System.

Proposed Rule 17Ad-7(f)(5) provides that in order for the transfer agent to use an electronic storage media system, it must give a third party designated by the transfer agent, access to the transfer agentís system and the ability to download information from the system. We understand this to mean that the third party must have unrestricted access to the transfer agentís imaging system. The release states that this requirement is designed to assure that examining authorities would be able to have access to a transfer agentís records if the transfer agent could not or would not download the records.

Chase considers this requirement unwarranted, especially for financial institutions like Chase that are regulated and examined by state and federal banking regulators. We cannot conceive of a situation where a financial institution, subject to regulation and examination by its appropriate regulatory agency or the receiver of an insolvent financial institution, would refuse to make the records on the imaging system available for examination by the examining authority or not be available to provide such access. Requiring a financial institution to provide a designated third party access to its entire imaging system, as if the third party were the system administrator, would compromise the confidentiality of the transfer agentís records and system, and put the transfer agent and its system at risk. Such a condition is unacceptable to Chase and is more likely to create than solve problems.

    1. Response to General Request for Comments.

    1. Image Quality.
    2. Rule 17Ad-7(f)(2)(ii) provides that the electronic storage media system used must automatically verify the quality and accuracy of its recording process. It is true that any electronic storage media system used by a transfer agent must be capable of recording and reproducing a full and complete legible facsimile of each recorded image. However, Chase is unaware of any system that can ensure image quality automatically. Manual review is required to ensure image quality is acceptable. A review should be performed at the time the record is scanned and the image created. Additionally, quality assurance checks, such as at the time of indexing, should also be part of the procedure to verify image quality. Therefore, the Rule should only require that the transfer agent have in place quality assurance procedures that will provide reasonable assurance that the recorded image will produce a legible facsimile of the recorded document or instrument.

    3. Destruction of Canceled Securities Certificates.

We believe that transfer agents should be permitted to destroy canceled securities certificates after they have been imaged, provided the transfer agent has written quality assurance procedures and practices in place as described above, and a periodic audit should be required of those procedures and practices.

We appreciate the opportunity to comment on the proposal in release No. 34-4144. If the Commission or staff has any questions concerning these comments, please call the undersigned at (212) 552-5528.

Very truly yours,

Robert P. DeGregorie

Assistant General Counsel

Senders address:

The Chase Manhattan Bank

Legal Department

One Chase Manhattan Plaza

New York, New York 10081

Tel: (212) 552-5528

Fax: (212) 383-0249

e-mail address: robert.p.degregorie@chase.com