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THE STORY OF THE DEPOSITORY TRUST & CLEARING CORPORATION
Computer vulnerabilities were hardly the only risk that DTC faced. The 1987 stock market crash had pointed out the need to be able to process an unprecedented number of transactions. One key area of concern was the length between sale and settlement, a time period fraught with risk. It was far from the only threat on the horizon. Virtually anything could pose a threat and DTC had to be prepared on any front for whatever came its way.
A Need for Speed
The 1987 market crash provided plenty of lessons for Wall Street, including one suggestion that would have a profound impact on DTC. A group of banking executives and economists, known as the Group of Thirty, recommended shortening the settlement cycle and discontinuing use of next-day funds for settling transactions, said Donald Donahue, who would later become The Depository Trust & Clearing Corporation’s (DTCC) president and CEO. In those days, settlement was scheduled to happen five days after the trade occurred, known as “T+5.” “We realized it would be desirable to narrow the window of unsettled trades,” CEO William Dentzer said. “The question was, ‘Could the broker-dealer workforce do that? Was the industry able to do that?’” Dentzer believed the move was a good idea, but he was concerned about whether it could work. “You have to make a prudential judgment. Is this desirable thing possible? Can you get enough people on board so that when it happens, it does not blow up? If you work at it long enough, you can finally get to a three-day settlement, which we did. Three day and in same-day funds.”
1990 As the decade begins, The Depository Trust Company (DTC) is custodian for $4.1 trillion in securities. The firm would collect more than $238 billion in cash dividends and interest, resulting in 14.3 million disbursements.
1993 DTC launches its continuous improvement program to take a more customer- focused approach. A cross-departmental steering committee emphasizes service, quality and efficiency.
1993 FEBRUARY A truck bomb at the World Trade Center causes DTC to explore options for a backup site for operations. Brooklyn is ultimately selected.
1994 Founding Chairman and CEO William Dentzer retires. Bill Jaenike, DTC’s president, is named his successor.
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