DTCC: The little-known, $20 trillion company
Billions of stock trades and purchases are made every year. Each one of them is "cleared" through the Depository Trust & Clearing Corporation (DTCC). The function this entity serves in the Wall Street world is, perhaps, the most underreported aspect of the financial machinery that is currently falling apart. Without understanding the DTCC’s role in securities trading, you cannot fully comprehend the pure fiction upon which our economy depends. Following is merely an introduction to the DTCC.
Compiled by The Idaho Observer
The Depository Trust & Clearing Corporation (DTCC) has a website at www.dtcc.com. The DTCC, with a home office at 55 Water St. in New York City is arguably the world’s most powerful banking institution. DTCC claims assets of over $20 trillion and processes the vast majority of all stock transactions in the United States as well as for many other countries.
According to the DTCC website, "The DTCC is a holding company established in 1999 to combine The Depository Trust Company (DTC) and National Securities Clearing Corporation (NSCC)."
The DTCC was created to solve the problem of paperwork created by the dramatic increase in stock shares traded daily on Wall Street and throughout the world.
The DTCC website explains that, "The depository, DTC, and the oldest of our clearing subsidiaries, NSCC, were both created in response to the paperwork crisis that developed in the securities industry in the late 1960s and early 1970s.
"At that time, brokers still exchanged paper certificates and checks for each trade, sending hundreds of messengers scurrying throughout Wall Street clutching bags of checks and securities. Wall Street’s ‘Paperwork Crisis’ with the New York Stock Exchange (NYSE) handling 10 to 12 million shares daily, brokers were literally buried in paperwork, and concern about risk was growing in Congress, the Securities and Exchange Commission, and elsewhere.
"The crisis became so severe that, in order to help reduce the backlog, the exchanges closed every Wednesday, shortened trading hours on the other days, and extended settlement to T+5 from T+4 [the equation represents the time of the trade plus the number of days necessary to complete the transaction].
"Eventually the industry developed two separate and distinct approaches to solve the paperwork problem.
"DTCC, through its subsidiaries, provides clearing, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks.
"DTCC’s depository provides custody and asset servicing for 3.5 million securities issues from the United States and 110 other countries and territories, valued at $40 trillion. In 2007, DTCC settled more than $1.86 quadrillion in securities transactions."
DTCC claims to operate through six subsidiaries, "...each of which serves a specific segment and risk profile within the securities industry."
The subsidiaries are listed as the National Securities Clearing Corporation (NSCC), The Depository Trust Company (DTC), Fixed Income Clearing Corporation (FICC), DTCC Deriv/SERV LLC, DTCC Solutions LLC and EuroCCP Ltd.
DTCC also claims to be involved in a "joint venture" with "Omgeo," which has over 6,000 customers in 45 countries and "...plays a critical role in institutional post-trade processing, acting as a central information management and processing hub for brokers, investment managers and custodian banks."
DTCC in action
While the stocks are in the process of "clearing," or transferring from seller to buyer—a period of two to four days (T+2-T+4)—the DTCC is able to use those stocks as assets to leverage in its own trading activities.
The DTCC is a private company reportedly owned by the same international banking interests that own the Federal Reserve. Through some complex regulatory schemes and clever bookkeeping tactics, publicly-offered stocks, 99 percent of which are cleared through the DTCC, appear to be the property of the DTCC and people merely purchase the right to be beneficiaries of the stocks’ performance in the market (or subject to losses if the stock diminishes in value).
In a press release dated April 19, 1999, the DTCC stated that it, "...is the world’s largest securities depository, holding nearly $19 trillion in assets for its Participants and their customers.... Last year, DTC processed over 164 million book-entry deliveries valued at more than $77 trillion."
The Christian Common Law Institute (CCLI) began researching the role of the DTCC in November, 1995. Several attempts to get answers from what was then "DTC" officials proved fruitless. "After encountering numerous ‘no comments’ and a myriad of ‘that’s not my department’ excuses via telephone, I eventually spoke with Mr. Jim McNeff who told me his position was Director of Training for the DTC. He said he’d been employed there for 19 years and was ‘very proud’ of his employer," wrote CCLI member Wayne Anthony in 1999.
"During my initial telephone interview, either Jim’s employer or some other unknown person or persons were illegally listening or taping our telephone conversation, according to the electronic eavesdropping equipment we have installed on our end. Why did anyone feel it was necessary to illegally record our conversation without advising us? Was some federal alphabet agency monitoring DTC calls to safeguard National Security? That in itself is suspicious enough to warrant a big red warning flag," Anthony recalled.
According to Anthony, McNeff informed him that the "DTC" is the largest limited trust company in the world with assets of $ 9.1 trillion".
In July, 1998, Anthony spoke with Rose Barnabic of the DTC Finance Department who said that "DTC assets are currently estimated at around $11 trillion."
As of April 19, 1999, the DTC itself stated that its assets total "nearly $19 trillion."
McNeff had also stated "the DTC is a brokerage clearing firm and transfer center. We’re a private bank for securities. We handle the book entry transactions for all banks and brokers. Every bank and brokerage firm must secure their membership with us in case they become insolvent, so your assets are secure with DTC."
The admissions here are veiled but significant. The DTCC is a private bank that processes every stock and bond (paper securities) for all U.S. banks and brokerage houses. But, by what authority is this private company exclusively commissioned to provide this critical service and wield such tremendous financial clout?
The answer not only explains why the public has never heard of the DTCC, it also explains how it was commissioned to perform this exclusive function and why this "service provider" has amassed $20 trillion in assets since forming in the late 60s.
The public doesn’t know about DTCC because it’s a privately-owned depository bank for institutional and brokerage firms only; it processes all of their book entry settlement transactions. McNeff said "There’s no need for the public to know about us... it’s required by the Federal Reserve that DTC handle all transactions."
CCLI’s research demonstrated that the Federal Reserve Corporation, a/k/a The Federal Reserve System, is also a private company and is not an agency or department of the federal government. The Federal Reserve Board of Governors is listed, but they are not the owners. The Federal Reserve Board, now chaired by Ben Bernanke, serves merely as a liaison advisory panel between the Federal Reserve’s owners (see page 18) and the federal government.
The FED, as they are more commonly called, mandates that the DTCC process every securities transaction in the U.S.
So, the DTCC, through which every publicly traded security flows, is owned by the same stockholders as the Federal Reserve System. In other words, the DTCC, which enjoys a monopoly on "clearing" securities transactions, is really just a division of the Federal Reserve System—which enjoys a monopoly on the creation of "money" in the U.S.