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CHAPTER TWO | REGULATION, REGIONALIZATION AND REORGANIZATION
DTC invested in early computer technology to ensure that every transaction was recorded digitally and that backups were available.
backup system you could imagine,” Jaenike said. “As time went on and the stakes became greater, and the oversight from the SEC and the Fed became greater, we introduced additional backup. We installed a backup site as far away as computer-to-computer technology would permit. We wanted to make sure that if there was ever a tsunami in the New York area, it would not reach this backup site.”
Standing on Its Own
In 1974, DTC opted to change its fee structure to one based on service costs, launching a series of annual studies, estimating direct and allocated cost for each service. Each participant, large or small, would pay a fee for each service. Users only paid for the services they used. At year’s end, any excess fees were refunded on a pro rata basis. DTC chose not to pay dividends to its participants. “BASIC had viewed user purchase of depository stocks as a means to participate in DTC’s governance and not as an investment vehicle, but had suggested paying a limited dividend,” Dentzer wrote in his history of DTC. “Even that, however, would require DTC to retain income to pay dividends and pay taxes on that income. It would benefit users, though not the NYSE, to give users refunds of all excess revenues.” DTC repaid NYSE for all start-up costs that had occurred prior to 1972 and, in 1974, announced its new policies to limit profits and return revenues for excess funds. It kept $500,000 in its reserves and returned about 10 percent of its total expenses—$2.4 million—to users that first year.
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