The Depository Trust & Clearing Corporation (DTCC) today outlined a proposal to fully dematerialize the US financial services industry, helping reduce the costs and risks associated with existing physical securities.
The multi-year programme is designed to further drive the elimination of all remaining physical certificates in the US market.
The white paper, ‘Strengthening the US Financial Markets: A Proposal to Fully Dematerialize Physical Securities, Eliminating the Costs and Risks They Incur’ states that "complete dematerialization will contribute to a more cost-effective, efficient, secure and competitive US marketplace," calling for the input and cooperation of all industry sectors.
While the campaign to immobilize and dematerialize the US financial markets has been very successful to date, the paper says, the industry still faces a remaining fixed-cost base that will disappear only once it achieves complete dematerialization.
"Thanks to the success of ongoing dematerialization efforts, the economies of scale for physical processing have been reversed: the fixed costs incurred to support physical processing are being recovered through dwindling transactions," according to the paper.
"This paper is a call to action," said Susan Cosgrove, DTCC managing director and general manager, Settlement and Asset Services.
"We're asking all sectors of the industry - stakeholders, banks, brokers, transfer agents, regulators and industry associations - to partner with us and to provide in-depth feedback on the proposals in this paper and help identify key, value-added services DTC can give market participants to accelerate the drive toward full dematerialization."
Depending on the industry's response, DTC could begin implementing recommendations for its dematerialization campaign in 2013, with the goal of reducing and ultimately eliminating physical processing over the following three-to-five years.
