Settlement Services by The Depository Trust Company (DTC) reduce cost and risk, and increase efficiency and certainty of securities settlement in U.S. capital markets. Through cross endorsement between DTC and National Securities Clearing Corporation (NSCC), the DTC and NSCC settlement balances of a member of both clearing agencies may be further netted, reducing the volume of payments. DTC uses the Federal Reserve System's National Settlement Service (NSS) to process end-of-day net funds settlement, by processing through the Fed a single file transmission to debit and credit Fed accounts of settling banks acting on behalf of clients of the clearing agency.
DTC Asset Servicing also provides a broad range of services for underwriting, custody, corporate actions, dividend, proxy and reorganization activity, as well as the electronic registration and transfer of securities.
DTC fully recovered from the devastating effects of Hurricane Sandy in October 2012 by completing the remediation of 99.9% of all securities certificates damaged by the flooding of its vault in lower Manhattan. In a multistep process that took nine months to complete, more than 1.7 million certificates valued at $1 trillion were boxed, freeze-dried and shipped away for irradiation and subsequently returned for brushing, vacuuming and cleaning. The certificates were then reconciled and finally re-shelved in new vault facilities.
DTCC continued to make progress on an industry-wide goal of substantially eliminating physical securities certificates in the U.S. markets. In partnership with an industry working group, DTCC secured consensus to pursue the four main principles proposed in a 2012 white paper and develop a multiyear plan to move the industry closer to full dematerialization. The plan will support the expanded use of issuance and maintenance of securities in an electronic rather than paper format and work toward the dematerialization of other asset classes that rely solely on paper. Dematerialization of paper certificates is expected to reduce risks and save the industry and investors roughly $250 million annually. While the number of physical certificates held in DTCC's vault has dropped 86% since 2000, implementing the white paper's recommendations, subject to applicable regulatory approval, is expected to eliminate most of the remaining physical securities certificates in the U.S. within the next several years.