The Depository Trust & Clearing Corporation, DTCC, recently published a white paper on dematerializing physical securities. This paper launched the final stage in the industry’s long-standing campaign to achieve full dematerialization in the U.S. financial markets. It also opened a formal discussion among industry stakeholders to gain consensus on critical next steps.
In an effort to work together, DTCC asked for industry input on the outlined proposals so that they could take the remaining steps to achieve their goal. Some industry leaders believe that the paper doesn’t go far enough.
The major response came from Paul A. Conn, President of Global Capital Markets at Computershare Limited. Computershare (ASX: CPU), is a global market leader in transfer agency and share registration, employee equity plans, proxy solicitation and stakeholder communications.
In his 12 page response, Conn stated, “We do not believe that these initiatives alone can fully deliver the promise of full dematerialization implicit in the title to the White Paper, and indeed that achieving this is not fully within the authority of DTCC. Nonetheless, we share [their] objective of working in partnership with the industry to modernize securities holdings structures to ensure the US market can evolve in a highly efficient manner.”
“We strongly believe that a stakeholder group should be formed specifically to review the issue of full dematerialization in conjunction with the appropriate settlement period for the US market. The stakeholder dialogue must extend beyond the more limited framework of the White Paper and address the interactions with other related market issues and the potential impact on all stakeholders. Such a group should be convened jointly by DTCC, the New York Stock Exchange and NASDAQ. Participants should include representatives from SIFMA, the Society of Governance Professionals and Corporate Secretaries, the Shareholder Services Association, the Securities Transfer Association, the SEC, and representatives of retail investors”
It would appear that there is a lot more work to be done.
As a next step, DTCC will schedule follow-up meetings in appropriate industry forums and other venues. Depending on the outcome of industry input, DTCC stated that it could begin implementing recommendations in 2013.
References
White Paper: http://www.stai.org/pdfs/dtcc-white-paper-july-2012.pdf
White Paper Briefing: http://www.dtcc.com/downloads/leadership/whitepapers/4763DematerializationBriefing.pdf
Computershare Response https://docs.google.com/viewer?a=v&q=cache:FypdptDZRj8J:corporate.computershare.com/uk/services_sol