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THE STORY OF THE DEPOSITORY TRUST & CLEARING CORPORATION
Under Jaenike, DTC would not only move to T+3, but also settlement in same-day funds, which rolled out in 1996. “It was a tremendous conversion effort,” Jaenike said. Previously, DTC participants had settled their end-of-day balances with New York Clearing House bank checks, which became good funds when presented at the Clearing House the following day. The participant would present a check to DTC or pick up a draft. “Because of five-day settlement, you had extra time to make sure you had the money all lined up. The industry was moving away from checks and drafts and toward electronic funds settlement, using the Federal Reserve wire.” Same-day settlement was “much more efficient” and allowed DTC to reduce its staff size. “The industry had many hundreds of people taking in these checks and making sure they were endorsed right and then getting them to the bank. Once we went to same-day funds, it was done automatically by the Fed, untouched by human hands,” Jaenike said. Automation was coming at a time when DTC was growing, adding adjacencies to its existing products to better serve its customer base. Regional depositories continued to be absorbed into DTC, with the Midwest Securities Trust Company closing in 1996 and Philadelphia Depository Trust Company in 1997. The move made sense, Jaenike said. “Depositories cost a lot of money to develop and operate. If you don’t have a substantial number of transactions going through to pay for all of that, you’ve got a loser on your hands. It took a long time for them to realize that.” Once realized, however, regional depositories sought a buyout from DTC, as Jaenike described:
In 1994, DTC Chairman and CEO William Dentzer (pictured) reached the company’s mandatory retirement age of 65. Bill Jaenike would be named as his successor. Below: To ensure that the securities industry was prepared for its conversion to T+3, DTC’s ID Task Force was made up of individuals who had in-depth knowledge of institutional trade clearance and settlement. Pictured from left to right are task force members James Coulter, Brian Mullarkey, John Galletta, Tanya Paul, Daniel Argueta and Steve Minicone.
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