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CHAPTER ONE | CRISIS CREATES OPPORTUNITY
four-hour-a-day trading cycle. Fully activated, CCS served all 1,200 eligible NYSE-listed securities in February. Average hourly trading volumes remained high, but the actions put in place by the industry—and the development of CCS—provided confidence that the paperwork problem would be solved. The industry was able to shift its focus from the immediate crisis to a long-term solution. Robert W. Haack, the NYSE’s president, called for a nationwide securities depository in an annual message to NYSE members: While many questions still must be resolved, we have set our sights firmly on the establishment of a truly nationwide depository system that will make the benefits of CCS available to everyone involved in the transfer and delivery of securities. The industry was starting to circle around the same idea, creating the Banking and Securities Industry Committee (BASIC) to tackle the problem. Commercial and investment bankers were wary partners, having been kept apart by the 1933 Glass-Steagall Act. BASIC was formed in 1970 and, for two years, it worked to put the basic
process in place. It recommended that stock certificates be held in a comprehensive national securities depository system based in New York. CCS would be the obvious starting place. In 1970, it delivered more than 1.6 billion shares by computerized bookkeeping entry, with 553 million total shares on deposit. Eight clearinghouse banks, which handled the exchange of most payment transactions and served as major securities custodians, began participating in CCS as deliverers and receivers of stock via bookkeeping entry. And in November, CCS began accepting a limited number of AMEX-listed stocks on a trial basis. BASIC had another goal as well: that CCS would be spun out of the NYSE and become its own independent, self-sustaining company with a bank charter. It would not take long for that to begin to take shape, ultimately paving the way for the creation of DTC a few years later. ■
Robert Haack, who served as NYSE president from 1967 to 1972, is pictured here on the Exchange’s trading floor in 1969. By then, Wall Street was getting a handle on the paperwork crisis. On the first day of trading of 1969, the markets had resumed a five-day-a-week, four-hour- a-day trading cycle. (Photo courtesy of Library of Congress Prints and Photographs Division Washington, D.C. 20540 USA. Collection: U.S. News & World Report magazine photograph collection. Reproduction Number: LC-DIG-ppmsca-56737.)
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