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CHAPTER TWO | REGULATION, REGIONALIZATION AND REORGANIZATION
disruption. Now it was all happening reasonably smoothly. That let people say, ‘Let’s make a very dramatic shift by using regulatory authority to accelerate this change.’ You saw the balance tilt toward electronic clearance and settlement.” With an increasing number of securities on deposit with DTC as the decade drew to a close, the firm continued pushing to solve other industry problems. Meanwhile, to consolidate clearance and settlement activities for listed and over-the-counter securities transactions, National Securities Clearing Corporation (NSCC) was established and incorporated on March 19, 1976, marking it as the nation’s leading provider of centralized clearance and settlement services to over 1,900 brokers, dealers, and mutual funds. After extensive proceedings on NSCC’s application for registration as a clearing agency, the SEC granted NSCC’s
registration on January 13, 1977. NSCC assumed control and responsibility for the operations of the Stock Clearing Corporation, American Stock Exchange Clearing Corporation and National Clearing Corporation on January 20, 1977. From the earliest days, NSCC’s services complemented those of DTC as both firms worked closely together to deliver securities to and from NSCC to DTC’s broker-dealer accounts. In 1977, DTC developed an automated voluntary offerings service, which allowed participants to accept tender offers and other corporate actions for their customers without having to withdraw the certificates and present them to agents. The next year, book entry became available for initial public offerings and other services. In 1978, over-the-counter issues were added to DTC’s portfolio. This was designed to accommodate a merger of clearing corporations of NYSE, AMEX and NASD that formed NSCC, centralizing the clearance and settlement of broker-to-broker trades. Jack Nelson, NSCC’s first president and director, was a leading proponent in automating the clearance of securities and clearing fixed-income securities within the firm’s Continuous Net Settlement System. His vision would help set the stage for the integration of NSCC and DTC into DTCC two decades later. Together, NSCC and DTC had laid an important foundation for their success, which both firms would enjoy for a short period of time before greater challenges would arise. ■
Jeffrey H. Smith of Salomon Brothers and James P. Mahoney of Morgan Stanley, pictured, with DTC’s Senior Underwriting Clerk Natalie Fiore and Anna Lane, a depository vault clerk. The executives were there to see how DTC handled point-of- issue immobilization.
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