July 2, 1999

Jonathan G. Katz, Secretary

Securities and Exchange Commission

450 Fifth Street, N.W., Mail Stop 0609

Washington, DC 20549-0609

Re: File No. S7-17-99

Proposed Rule 17Ad-7(f)

Dear Mr. Katz:

ChaseMellon Shareholder Services, L.L.C. ("ChaseMellon") is pleased to submit its comments on the proposed change to Rule 17Ad-7(f) with respect to Recordkeeping Requirements for Transfer Agents. ChaseMellon, a non-bank transfer agent serving more than 2000 publicly traded companies, is one of the largest providers of shareholder services in the United States.

ChaseMellon fully supports the Securities and Exchange Commission’s ("Commission") proposal to amend Rule 17Ad-7(f) under the Exchange Act to include optical storage media as an additional format by which transfer agents may satisfy their record retention requirements under Rules 17Ad-6 and 7. The volume of records maintained by ChaseMellon and other transfer agents is substantial, and electronic storage technology will greatly facilitate the ability to maintain, manage and retrieve such records and enhance shareholder service.

While ChaseMellon supports the proposed rule, it provides the following comments:

By it terms, the proposed rule will supplant current Rule 17Ad-7(f) which sets forth the requirements applicable to the maintenance of records on microfilm. However, the proposed rule, which specifically allows the retention of records using either micrographic or electronic storage media, does not set forth any requirements with respect to the use of the former media. The requirements of proposed 17Ad-7(f)(1) would appear to apply only to the maintenance of records on electronic storage media in

that subparts (i) through (iv) are limited by the phrase "the records that you store on electronic storage media", suggesting that those requirements do not apply to storage on the permitted micrographic media. Given that Rule 17a-4(f), relating to recordkeeping by broker/dealers, and current Rule 17Ad-7(f), have specific requirements for recordkeeping on micrographic media, ChaseMellon believes their absence in the proposed rule may have been a drafting oversight.

The language "on any medium permitted by this section" in 17Ad-7(f)(1)(iv), and "to any medium acceptable under this paragraph" in 17Ad-7(f)(2)(iv), could be interpreted to permit only the use of micrographic or electronic storage media for downloads and the maintenance of duplicate indexes and records. The language should be clarified to allow the use of hard copies, hard or zip drives and floppy discs for such purposes.

The phrase "and any changes to every record" at 17Ad-7(f)(3) should be explained. It appears to be inconsistent with the requirement that the electronic storage format be "not rewriteable and not erasable" in 17Ad-7(f)(2)(i).

Current Rule 17Ad-7(f) does not require that a third party have access to the transfer agent’s records as is now proposed in 17Ad-7(f)(5) with respect to electronically stored records. Although the media covered by the two rules is different, microfilm in the former and electronic media in the latter, the distinction would not appear to necessitate third party access. In addition, the records of a transfer agent covered by the proposed rule belong to the issuer and in many instances must be kept confidential. It is feared that third party access to those records might result in violation of that confidentiality. It is requested that the Commission consider eliminating the requirement of third party access.

If the foregoing requirement is not eliminated, the third party will have access to the transfer agent’s electronic storage media system and must also be able to download information from it. Guidance is requested with respect to the meaning of "access" and "download" in this context. If the terms require electronic connectivity between the transfer agent’s system and that of the third party, issues of system security and confidentiality arise, especially if the third party may effect the access and downloading without the knowledge of, or prior notice to, the transfer agent.

ChaseMellon appreciates the opportunity to comment on proposed Rule 17Ad-7(f) and supports the Commission’s efforts to expand available record retention media.

Please feel free to contact the undersigned if additional information is needed.

Very truly yours,

S/Gerald L. Popovsky

Gerald L. Popovsky

Associate Counsel