According to the Depository Trust and Clearing Corporation (DTCC), the DTC (its subsidiary) “is a member of the U.S. Federal Reserve System, a limited-purpose trust company under New York State banking law and a registered clearing agency with the Securities and Exchange Commission. The depository brings efficiency to the securities industry by retaining custody of some 2 million securities issues, effectively ‘dematerializing most of them so that they exist only as electronic files rather than as countless pieces of paper. The depository also provides the services necessary for the maintenance of the securities it has in custody.” –www.dtoc.com But according to many investigative accountants and legal researchers, the DTC is “the best kept secret in America. … [T]he average American has no clue that this financial institution is the most powerful banking corporation in the world. … How can a private banking trust company hold assets of over $19 trillion and be unknown? In a recent press release dated April 19, 1999, the Depository Trust Company stated: The Depository Trust Company (DTC) 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 year is now 2005, and there is no evidence to suggest that business has slowed down any. The DTC is said to have been created, along with the National Securities Clearing Corporation (NSCC), as a solution to the paperwork crisis” of the 1960s. It is intimated that the New York Stock Exchange (NYSE) was doing up to 12 million shares transactions daily, with runners going to and fro delivering stock certificates, other paper assets, and payment checks in order to clear and settle” the transactions, Brokerage firms were overwhelmed with paperwork, so they decided to close every Wednesday and shorten trading hours on other days just to help compensate for the backlog they were suffering. A solution was desperately needed. The crisis required a two-part solution: First, eliminate the cumbersome nature of physical paper assets (stock certificates, etc.), and second, ease the transfer of ownership from one party to the next. This called for the creation of a centralized service for the maintaining of certificates, so the broker-dealers established the Central Certificates Service (CCS) in 1968. It also called for the extensive participation of the banking industry, without which the solution wouldn’t work, so the Banking and Securities Industry Committee (BASIC) was formed, initially to make recommendations in the area of banking regarding the clearance and settlement process. It was the function of BASIC that eventually led to the formation of the DTC, specifically to “immobilize securities for broker-dealers and banks, complete book-entry delivery of those securities, and handle the myriad of operational tasks required to provide safekeeping through electronic record-keeping of securities balances. The second part of the solution was to establish the “multilateral netting” process that would allow brokers to “net” or conjoin two or more equal-number-of-shares transactions between themselves with no physical movement of shares between them, but leaving themselves to simply account for any price differences. The problem was that few opportunities for netting arose under the then-current state of trading because most brokers trade in single securities to multiple brokers during the course of a day. To make the process work, brokers were required to clear and settle through the central organization, making all trades of a single security “net-able” into one single clearance and settlement obligation at the end of the day. This allowed for such obligations to be reduced (netted) even more into one clearance and settlement obligation of a single firm, daily, making it possible for a firm to write a single check or make a single funds transfer to the central organization itself for the net amount in lieu of an individual check being written to each individual seller for each securities transaction at the end of the day. So, the NYSE, American Stock Exchange and National Association of Securities Dealers (NASD) each formed their own independent clearing organizations to handle their respective markets. This proved to be effective, but improvements could still be made to the system. So, in 1976 all were merged into the NSCC which would eventually assume all the functions of each markets’ clearing and settling organizations. Here is how it is now done. The DTCC explains it as follows: “When two firms trade, they are considered ‘contra-parties to each other. In a multilateral netting environment, NSCC steps into the middle of a trade, becomes the contra-party to both firms and guarantees completion of the transaction. This guarantee assures all members that NSCC will complete trades on the original terms, even if the original contra-party fails between midnight of trade date plus 1 [day] and settlement (day). To protect itself and its members, NSCC requires members to post collateral (usually cash and securities) to cover the risks associated with the trade. “NSCC offers further protection from risk through a risk management system that monitors customers’ financial health and trading patterns, as well as financial and operations requirements that applicants must meet in order to become NSCC members. In addition, NSCC ensures that it always has the capacity to process not only the average daily trading volume, but unexpected peak volumes, as well. This commitment has become increasingly important in light of the substantial volume growth in the 1990s.” Even in comparison to the DTC, the NSCC is by far the largest of the clearing organizations in terms of securities transaction volumes it processes. “NSCC provides clearing and settlement, risk management, central counterparty services and a guarantee allowing brokers to offset buy and sell positions into a single payment obligation. But if you understand how the U.S. Federal Reserve system works, then you don’t have to be told that there is much more to the functions of the DTCC and its subsidiaries and joint-ventures than just clearance and settlement And it becomes easy to see that there is more raw power located at 55 Water Street, New York, New York 10041-0099, than meets the average eye. In fact, in addition to the DTCC, DTC, and NSCC, the Federal Reserve Bank of New York, JP Morgan Chase Bank, Standard and Poor’s, CUSIP Service Bureau, Chubb Group of Insurance, Companies. Browne and Co., and the New York Times (to name a few) Share this building And when you consider that there is no “lawful money” of account or of exchange in circulation in America today (all there is is Federal Reserve bank notes, electronic book entries, and other actual securities for which the DTC and NSCC were created), you see that literally any person can replace these instruments with instruments of their own so long as they meet certain standards. The power is legally within reach of every legal person who can grasp the nature of this system, and abide by the rules and regulations put in place by the “Fed” through the U.S. Federal government.