Flash Fact: DTCC

Did you know that the NYSE used to be shutdown on Wednesdays? In what was known as the “paperwork crisis”, a short period during the the late 1960’s, the NYSE couldn’t process all the trades fast enough. Before electronic clearing, actual people would deliver actual physical certificates of stock. Sounds crazy right, but this is how the markets worked back then.

As the backlog grew larger and larger, firms began failing to deliver on share certificates. “A lot of firms could not separate records of fails to receive and fails to deliver,” Robert M. Gardiner, now 92, who served as managing partner of Reynolds & Co. during the crisis, recalled during a recent interview. “It became a financial problem.”

As with any volatile environment, the vultures swoop in, and it is estimated that $400 million in stock certificates were stolen by organized crime syndicates.

It was events like this that culminated in the creation of the Depository Trust Corporation (DTC), the central clearing house for all trades executed on the National Markets System



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