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Revision as of 18:15, 8 January 2008 editJzG (talk | contribs)Edit filter managers, Autopatrolled, Extended confirmed users, Page movers, New page reviewers, Pending changes reviewers, Rollbackers155,078 editsm Protected Depository Trust & Clearing Corporation: per talk (expires 18:15, February 8, 2008 (UTC))← Previous edit Revision as of 23:00, 9 January 2008 edit undoJzG (talk | contribs)Edit filter managers, Autopatrolled, Extended confirmed users, Page movers, New page reviewers, Pending changes reviewers, Rollbackers155,078 editsm Reverted to revision 180126369 by Samiharris; Per talk, removing poorly cited, biased and misrepresented material. (TW)Next edit →
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{{pp-dispute|expiry=January 8, 2008}}
{{Mergefrom|The Depository Trust Company|date=December 2007}}

{{Advert|introductory section|date=December 2007}}
'''The Depository Trust & Clearing Corporation''' (DTCC), based primarily at 55 Water Street in ], is the world’s largest post-] financial services company. It was set up to provide an efficient and safe way for buyers and sellers of ] to make their exchange, and thus "] and ]" transactions. It also provides custody of securities. '''The Depository Trust & Clearing Corporation''' (DTCC), based primarily at 55 Water Street in ], is the world’s largest post-] financial services company. It was set up to provide an efficient and safe way for buyers and sellers of ] to make their exchange, and thus "] and ]" transactions. It also provides custody of securities.


User-owned and directed, it automates, centralizes, standardizes, and streamlines processes that are critical to the safety and soundness of the world’s ]s. Through its subsidiaries, DTCC provides clearance, settlement, and information services for equities, corporate and municipal ], unit investment trusts, government and mortgage-backed securities, money market instruments, and over-the-counter ]s. DTCC is also a leading processor of ]s and insurance transactions, linking funds and carriers with their distribution networks. DTCC's DTC depository provides ] and asset servicing for 2.8 million securities issues, comprised mostly of ] and ], from the United States and 100 other countries and territories, valued at $36 ], more than any other depository in the world. DTCC processes most of the securities transactions in the ], over $1.5 ] worth every year. User-owned and directed, it automates, centralizes, standardizes, and streamlines processes that are critical to the safety and soundness of the world’s ]s. Through its subsidiaries, DTCC provides clearance, settlement, and information services for equities, corporate and municipal ], unit investment trusts, government and mortgage-backed securities, money market instruments, and over-the-counter ]s. DTCC is also a leading processor of ]s and insurance transactions, linking funds and carriers with their distribution networks. DTCC's DTC depository provides ] and asset servicing for 2.8 million securities issues, comprised mostly of ] and ], from the United States and 100 other countries and territories, valued at $36 ], more than any other depository in the world. DTCC processes most of the securities transactions in the ], over $1.5 ] worth every year.


In 2006, DTCC settled the vast majority of securities transaction in the ], more than $1.5 quadrillion in value. DTCC has operating facilities in New York City and at multiple locations in and outside the U.S. In 2006, DTCC settled the vast majority of securities transaction in the ], more than $1.5 quadrillion in value. DTCC has operating facilities in New York City and at multiple locations in and outside the U.S.


==History== ==History==


Established in ], ''']''' (DTC) was created to alleviate the rising volumes of paperwork and the lack of security that developed after rapid growth in the volume of transactions of the U.S. securities industry in the late ]. The increase in volume made the exchange of physical ]s more difficult, less efficient, and increasingly expensive. The goal of DTC was to automate this process by holding paper certificates in one place, and keeping electronic records of the certificates and transactions in them. Established in ], ''']''' (DTC) was created to alleviate the rising volumes of paperwork and the lack of security that developed after rapid growth in the volume of transactions of the U.S. securities industry in the late ]. The increase in volume made the exchange of physical ]s more difficult, less efficient, and increasingly expensive. The goal of DTC was to automate this process by holding paper certificates in one place, and keeping electronic records of the certificates and transactions in them.


Two methods were devised to solve the crisis: Two methods were devised to solve the crisis:


The first was to hold all stock certificates in a centralized location and record all changes of ownership electronically - this method led to the creation of DTC in ] (stocks held by DTC are kept in the name of its ] nominee, Cede & Co.). The primary function of the DTC system is to provide centralized clearing and settlement of security transactions electronically. Not all securities are eligible to be settled through DTC ("DTC-eligible"). The first was to hold all stock certificates in a centralized location and record all changes of ownership electronically - this method led to the creation of DTC in ] (stocks held by DTC are kept in the name of its ] nominee, Cede & Co.). The primary function of the DTC system is to provide centralized clearing and settlement of security transactions electronically. Not all securities are eligible to be settled through DTC ("DTC-eligible").


The second method involves '']''; and led to the formation of the '''National Securities Clearing Corporation''' (NSCC) in ]. The second method involves '']''; and led to the formation of the '''National Securities Clearing Corporation''' (NSCC) in ].


Before DTC and NSCC were formed, ] physically exchanged certificates, employing hundreds of messengers to carry certificates and checks. With volumes approaching 10 to 12 million shares a day, the paperwork burden became enormous. To deal with this large volume, the exchanges were forced to close every week (they chose every Wednesday), and trading hours were shortened other days of the week. Before DTC and NSCC were formed, ] physically exchanged certificates, employing hundreds of messengers to carry certificates and checks. With volumes approaching 10 to 12 million shares a day, the paperwork burden became enormous. To deal with this large volume, the exchanges were forced to close every week (they chose every Wednesday), and trading hours were shortened other days of the week.


This continuing growth in securities trading led the ] to establish the Central Certificate Service (CCS) in ]. The CCS kept track of the total number of shares held by NYSE members. This led to the development of the Banking and Securities Industry Committee (BASIC), and finally the development of DTC. This continuing growth in securities trading led the ] to establish the Central Certificate Service (CCS) in ]. The CCS kept track of the total number of shares held by NYSE members. This led to the development of the Banking and Securities Industry Committee (BASIC), and finally the development of DTC.


DTCC has become involved in the controversy involving ].<ref>], July 5, 2007]</ref><ref></ref> Ten suits alleging naked short-selling filed against the DTCC were withdrawn or dismissed by May 2005.<ref> Depository Trust Clearing Corporation, May 2005. Accessed February 5, 2007</ref>
==Litigation==


DTCC has been sued with regard to its alleged participation in ]. The plaintiff is seeking $400 million in damages. The '''North American Securities Administrators Association''', which represents state stock regulators, filed a brief arguing that if the claims were correct, its shareholders "have been the victims of fraud and manipulation at the hands of the very entities that should be serving their interest." In the case of ''Pet Quarters, Inc. v. The Depository Trust & Clearing Corporation, et al.'', filed October 29, 2004, the DTCC Defendants’ motion to dismiss and plaintiffs’ motion to remand to state court are pending.

While there is no dispute that illegal naked shorting happens, there is a fight as to the extent to which DTCC is responsible. Some companies blame DTCC as the keepers of the system where it happens, and say DTCC has turned a blind eye to the problem. DTCC says naked shorting isn't widespread enough to be a major concern. "We're not saying there is no problem, but to suggest the sky is falling might be a bit overdone," DTCC's chief spokesman Stuart Goldstein said.<ref name=Bloomberg>{{cite news
|accessdate=2007-12-25
|url=http://www.rgm.com/articles/bloomberg2.html
|title=Naked Short Sellers Hurt Companies With Stock They Don't Have
|author=Drummond, Bob
|date=], ]
|publisher=Bloomberg.com}}</ref><ref name=FinancialWire>{{cite news|accessdate=2007-12-25
|url=http://www.rgm.com/articles/financialwire.html
|title=DTCC Chief Spokesperson Denies Existence of Lawsuit
|date=], ]
|publisher=financialwire.net}}</ref> DTCC General Counsel Larry Thompson calls the claims "pure invention." The SEC has viewed naked shorting as a serious enough matter to have made two separate efforts to restrict the practice.<ref name=WSJ_July2007>{{cite news|accessdate=
|url=http://online.wsj.com/public/article/SB118359867562957720-5Yb1Y_mpcl9a2nKbc0IaV0tDHyk_20070712.html |title=Blame the 'Stock Vault'?
|author=Emshwiller, John R. and Kara Scannell
|work=The Wall Street Journal
|date=], ]}}</ref>

Critics contend that DTCC has been too secretive with trade delivery-failure data, depriving the public of important information about where naked shorting might be taking place.<ref name=WSJ_July2007>{{cite news|accessdate=
|url=http://online.wsj.com/public/article/SB118359867562957720-5Yb1Y_mpcl9a2nKbc0IaV0tDHyk_20070712.html |title=Blame the 'Stock Vault'?
|author=Emshwiller, John R. and Kara Scannell
|work=The Wall Street Journal
|date=], ]}}</ref> In June 2007, WayPoint Biomedical Holdings filed a lawsuit against DTCC claiming damages as a result of DTCC's refusal to comply with a ] request for documents that are needed by WayPoint in order to track trades in the company's shares.<ref name=Gen>{{cite web|accessdate=2007-12-25
|url=http://www.genengnews.com/news/bnitem.aspx?name=19497609
|title=WayPoint Biomedical Holdings, Inc. Files Lawsuit Against The Depository Trust and Clearing Corporation (DTCC)
|date=], ]
|work=GEN (Genetic Engineering and biotech News}}</ref>


==Subsidiaries== ==Subsidiaries==
Line 66: Line 35:
* ] – Partnership with ] that provides clearing automation solutions * ] – Partnership with ] that provides clearing automation solutions


==References== ==References ==
<references/> <references/>


==External links== ==External links==


*
* {{cite web|accessdate=
|url=http://www.dtcc.com *
|title=DTCC corporate website}} *
*

*
* {{cite web|accessdate=
|url=http://www.antandsons.com/takesalook/depositorytrustcompany/
|title=Take a Look at the Depository Trust Company
|publisher=Ant & Sons}}

*{{cite press release
|url=http://www.petquarters.com/press/pr041110.asp
|accessdate=
|publisher=Pet Quarters Inc.
|title=Pet Quarters, Inc. files complaint against the Depository Trust and Clearing Corporation
|date=], ]
|quote=Company seeks over $400,000,000 in damages}}


] ]

Revision as of 23:00, 9 January 2008

The Depository Trust & Clearing Corporation (DTCC), based primarily at 55 Water Street in New York City, is the world’s largest post-trade financial services company. It was set up to provide an efficient and safe way for buyers and sellers of securities to make their exchange, and thus "clear and settle" transactions. It also provides custody of securities.

User-owned and directed, it automates, centralizes, standardizes, and streamlines processes that are critical to the safety and soundness of the world’s capital markets. Through its subsidiaries, DTCC provides clearance, settlement, and information services for equities, corporate and municipal bonds, unit investment trusts, government and mortgage-backed securities, money market instruments, and over-the-counter derivatives. DTCC is also a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC's DTC depository provides custody and asset servicing for 2.8 million securities issues, comprised mostly of stocks and bonds, from the United States and 100 other countries and territories, valued at $36 trillion, more than any other depository in the world. DTCC processes most of the securities transactions in the United States, over $1.5 quadrillion worth every year.

In 2006, DTCC settled the vast majority of securities transaction in the United States, more than $1.5 quadrillion in value. DTCC has operating facilities in New York City and at multiple locations in and outside the U.S.

History

Established in 1972, The Depository Trust Company (DTC) was created to alleviate the rising volumes of paperwork and the lack of security that developed after rapid growth in the volume of transactions of the U.S. securities industry in the late 1960s. The increase in volume made the exchange of physical stock certificates more difficult, less efficient, and increasingly expensive. The goal of DTC was to automate this process by holding paper certificates in one place, and keeping electronic records of the certificates and transactions in them.

Two methods were devised to solve the crisis:

The first was to hold all stock certificates in a centralized location and record all changes of ownership electronically - this method led to the creation of DTC in 1973 (stocks held by DTC are kept in the name of its partnership nominee, Cede & Co.). The primary function of the DTC system is to provide centralized clearing and settlement of security transactions electronically. Not all securities are eligible to be settled through DTC ("DTC-eligible").

The second method involves multilateral netting; and led to the formation of the National Securities Clearing Corporation (NSCC) in 1975.

Before DTC and NSCC were formed, brokers physically exchanged certificates, employing hundreds of messengers to carry certificates and checks. With volumes approaching 10 to 12 million shares a day, the paperwork burden became enormous. To deal with this large volume, the exchanges were forced to close every week (they chose every Wednesday), and trading hours were shortened other days of the week.

This continuing growth in securities trading led the New York Stock Exchange to establish the Central Certificate Service (CCS) in 1968. The CCS kept track of the total number of shares held by NYSE members. This led to the development of the Banking and Securities Industry Committee (BASIC), and finally the development of DTC.

DTCC has become involved in the controversy involving naked short selling. Ten suits alleging naked short-selling filed against the DTCC were withdrawn or dismissed by May 2005.


Subsidiaries

The DTCC has several subsidiaries:

References

  1. "Blame the 'Stock Vault'?" The Wall Street Journal, July 5, 2007
  2. DTCC response to Wall Street Journal Article, July 6, 2007
  3. "Nevada Court Dismisses Nanopierce Lawsuit Against DTCC On Naked Short Selling," Depository Trust Clearing Corporation, May 2005. Accessed February 5, 2007

External links

Categories: