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THE STORY OF THE DEPOSITORY TRUST & CLEARING CORPORATION
William Hodash, former managing director, Enterprise Data Management, who opened the UK office, explained why the firms chose London:
We were pretty much a domestic company until 1995. The firm decided that its main participants—the word we used at the time for our customers—were becoming global. Merrill Lynch was in London. Goldman Sachs International was in London, Morgan Stanley, etc. A lot of the firms were expanding their footprint in Europe and Asia, and we said, “Well, the beachhead needs to be London.” Opening the office in London was simply a customer-driven move. When Hodash arrived there in the summer of 1995, he formed a user group of the UK affiliates of DTC’s US firms and paid them a visit to see how DTC could service them. One of the first ways was by expanding institutional trade processing. As DTCC had done throughout its history, it grew by slowly developing related areas. “We grew to serve the counterparties or the customers of our customers,” Hodash said. “So while we had about 300 main customers in the US who owned us, they had thousands of customers throughout the world that they were trading with. Our first international foray was to expand that institutional trade processing set of services to their customers.” The International Depository & Clearing, LLC (IDC)—the venture formed by DTC and NSCC in 1997—was intended to expand the relationship with other depositories around the world. DTC’s London office was rolled into IDC. That same year, DTC and NSCC hosted the first CSD conference on US Settlement and Clearance, which drew representatives from 17 countries. IDC led the way in promoting straight-through processing (STP), which aimed to process from trade initiation to settlement with minimal manual intervention. As the 1997 Annual Report outlined, “STP would provide for an open gateway to a common and standard transaction structure that eliminates repetitive data entry for all markets, all instruments and all participants. Once it becomes a reality, STP can help to reduce transaction risks, accommodate shortened settlement cycles, minimize costs while optimizing client service and eliminate volume sensitivity.” Despite the forward-thinking global initiatives, the London office also did what DTC, NSCC and today’s DTCC does best: process securities transactions. In 1997, the London office processed 3,071 deposits of over-the-counter eligible securities on behalf of participants. Nine participant-affiliated offices in Europe were linked to DTC’s and NSCC’s network, allowing for timely information on transactions, reducing the need to wait for the information to come from US-based offices.
William Hodash, former managing director,
Enterprise Data Management, was responsible for opening the DTC and NSCC offices in London prior to the integration of both firms into The Depository Trust & Clearing Corporation. (Photo courtesy of Christopher Elston Photography.)
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