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THE STORY OF THE DEPOSITORY TRUST & CLEARING CORPORATION
and it was good money tomorrow. Same-day funds were for shorter maturity instruments. It was the first foray DTC had made into the world of things that were settled in money that was good on the date of the settlement.” The faster turnaround was not the only thing speeding up. By that August, the Dow Jones Industrial Average had gained 44 percent in seven months. By October, however, the market began to correct, starting with a week of large daily losses. The weekend did nothing to stop the slide. On Monday, October 19, the Dow Jones Industrial Average dropped 22.6 percent—the largest one-day decline in Wall Street history. Larry Thompson, then an associate general counsel, remembered when he first got wind of the “Black Monday” crash. “We heard that the market was cratering and had to work diligently,” said Thompson, who retired in 2018 as DTCC’s vice chairman, managing director and general counsel. Donahue remembered walking down Wall Street on the Monday night of the crash and feeling as if he were walking through a dystopian landscape. “It was very calm, very quiet. There was no sign of the turmoil that had gone on. It was a very frightening day. Then at some time the following day, on that Tuesday when the market turned around and all of a sudden started to head up, you could feel the relief in the air.” On October 20, NSCC’s processing volume peaked at 1.7 million sides, nearly triple the daily average and almost double the highest previous single day. “Many of us thought we had learned much about risk over the years, and that we had done a good job of dealing with it,” said David Kelly, NSCC president and CEO, in the firm’s 1987 Annual Report. “While events such as those that occurred in October had been chronicled before, few in the industry fully anticipated the far-reaching effects of such events. Those events have
Despite the rattling on Wall Street from the 1987 crash, NSCC and DTC did not miss a beat. On October 20, NSCC’s processing volume peaked at 1.7 million sides, and by the end of that week, DTC had settled a daily average of 1.7 billion shares.
presented the industry and NSCC with an opportunity to forge change in systems and procedures which will increase efficiency and capacity and give us a better understanding of risk.” By week’s end, DTC had settled a daily average of 1.7 billion shares. The firm did not rest in that relief, however. It began to explore any contingency that might arise, as Thompson described: It was something that was embedded into the culture because we always had to be ready for a potential market shock. Employees had to understand what they needed to do instinctively,
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