DTCC Outlines Steps to Achieve Complete Dematerialization of Physical Securities in the U.S.
DTCC is building consensus among stakeholders on critical next steps to fully transition securities processing from physical certificates to electronic records.
The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today issued its latest whitepaper, “From Physical to Digital: Advancing the Dematerialization of U.S. Securities,” outlining the necessary steps to reduce, and ultimately eliminate, certificated U.S. securities. Dematerialization, the transition from physical certificates to electronic records, would reduce the risks and costs associated with manual processing and human touchpoints, as well as increase efficiency and resiliency across the industry at a time when automation is more important than ever. Today, less than 1% of assets serviced by DTCC, through the firm’s subsidiary The Depository Trust Company (“DTC”), are still in physical form, but they represent $780 billion dollars in value.
To date, many millions of physical certificates in the U.S. capital markets have been dematerialized, including exchange-traded equities and certain corporate and U.S. government debt. However, in many cases, it is still possible for stockholders to obtain physical certificates, which results in multiple manual touchpoints between beneficial owners, financial intermediaries, and transfer agents, among others.
With concerted effort and collaboration across the industry, including but not limited to banks, brokers/dealers, transfer agents, issuers, regulators, industry associations, and exchanges, DTCC believes that the industry can achieve full dematerialization of 98%+ of all U.S. physical certificates in the next three years.