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THE STORY OF THE DEPOSITORY TRUST & CLEARING CORPORATION
Automation was needed more than ever as DTC faced two unique challenges during this time: a strike in 1985 and a massive Wall Street meltdown in 1987. Each provided DTC an opportunity to showcase its grace under pressure, a theme that would recur many times.
Innovating Through Automation
In the early 1980s, when Jacob Feuchtwanger joined DTC as a manager, processing remained a largely manual task. In the withdrawal by transfer area where Feuchtwanger worked, brokerage houses and banks would request a physical certificate for a customer. “They would enter it online, and the system would transfer that into a request to pull it out of the vault and then send it to a transfer agent and monitor it coming back,” said Feuchtwanger, who retired from what became The Depository Trust and Clearing Corporation (DTCC) as managing director and chief information officer in February 2012. When DTC began holding bearer bonds in 1981, the physical handling of documents increased dramatically. Municipal bonds were typically bearer bonds, meaning “whoever has possession of the bond owns it,” said Dennis Dirks, who retired as DTCC president and chief operating officer in 2003. “They’re not registered in anybody’s name.” This meant heightened security was necessary to protect the bonds. They were housed at DTC’s vault in Garden City. Bonds brought additional work, too. They were large pieces of paper and included small coupons that were cut out and sent to an agent to be paid. In 1983, the market began a decades-long process of phasing out the use of
1981 The New England Depository Trust Company is folded into The Depository Trust Company (DTC). In 1987, the Pacific Securities Depository Trust Company closed and its members would move over to DTC.
1981 AUGUST DTC begins accepting
1983 JANUARY
1985 Automated Customer Account Transfer Service launches at National Securities Clearing Corporation (NSCC). By the end of its first
A New York Stock Exchange (NYSE) change requires most institutional trades to be confirmed through DTC’s Institutional Delivery (ID). ID would expand from 667 users in 1980 to nearly 7,400 by the end of the decade.
municipal bonds, most of which are bearer bonds. It begins building a dedicated processing facility in Garden City, New York, which would be occupied in mid-1984.
year, 100 firms are participating in the efficient transfer of accounts between brokers.
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