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No-More-Paper Campaign Kicks Off, Talks About Savings Millions of Dollars
In a style reminiscent of a political campaign, right down to campaign buttons, DTCC kicked off an anti-paper securities campaign during the Securities Industry Association’s 32nd annual Operations Conference and Exhibit in May.
“Processing physical securities eats up millions of dollars every year,” said Janet Wynn, managing director of DTCC’s Asset Services unit. “We want to help people in the industry understand where these costs come in and how to avoid them if possible.”
Conference attendees received distinct campaign flyers each day of the conference as well as buttons showing a cancelled certificate and listing DTCC’s special email address – nomorepaper@dtcc.com – for questions about how to save on physical certificate processing costs.
The flyers, all part of DTCC’s new “no-more-paper” series, focused on the average monthly savings brokerage firms and custodians can gain by avoiding paper-based transactions, including corporate actions, withdrawals-by-transfer, “legals” and restricted securities.
Many securities traded in U.S. markets today are paperless, including corporate and municipal bonds, U.S. government securities, money market instruments, asset-backed securities, financial futures and options, commodity futures and options and, most recently, U.S. savings bonds.
“Equities are one of the last vestiges of paper,” Wynn said. “But if people can get by without passbook savings, they should be able to do the same with their securities.”
According to the “Idea No. 2” flyer in the series, many brokerage firms, custodians and transfer agents can generate estimated savings each year approaching $1 million simply by using DTCC’s programs and services to process securities or to keep electronic assets from being converted into paper certificates.
DTCC is working closely with the Securities Industry Association, which has been leading dematerialization efforts for the industry and estimates that the annual cost for processing paper certificates is $250 million.
Wynn said DTCC is focusing its campaign on three targets:
- Getting the industry to look at its real costs for handling paper certificates and understand what it can do to reduce them immediately;
- Educating investors about alternatives to paper certificates, which are costly to handle and keep safe; and
- Working with the various states that still require companies to issue paper certificates.
“The main reason we still face the costs of handling paper certificates,” Wynn said, “is that some investors continue to ask for them and several states continue to require companies to issue them. Our goal is to educate both investors and lawmakers about how much paper certificates cost us all.” @
[Editor’s note: Questions about how to cut paper processing costs can be addressed to nomorepaper@dtcc.com. The first four flyers in the “no-more-paper” series will soon be posted on the DTCC Web site, www.dtcc.com.]