Vault Status at DTCC Unclear, Post-Sandy
November 8, 2012
While the certificates may be damaged if water flowed into the vault, they’re already recorded electronically in DTCC’s systems, the CEO said. Once the company can assess the status of the certificates, it will figure out what to do about replacing them, he said. DTCC also has images of all bearer stocks and bonds in the vault, he said.
“There’s no loss of economic ownership here,” Bodson said. “It’s a logistical and administrative challenge in assessing if certificates are damaged. We did not lose the computer records of ownerships or the computer records of images.”
About 600 people of the 2,000 at the company’s headquarters in Manhattan are currently working at DTCC’s Brooklyn recovery site, with the remaining operating remotely from home, Bodson said. Bodson, who lives in Connecticut, carpools to the Brooklyn site with three other employees each day. The commute, which starts at 5:30 a.m. New York time, is down to an hour now from 3 1/2 on Oct. 31, he said.
Transactions from the week before the storm continued to be processed on Oct. 29 and Oct. 30 when U.S. stock and bond markets closed or shut early, Bodson said. About 25 people stayed in the company’s Brooklyn location during the storm so they could continue to handle financial trades, with others working remotely, he said.
Officials from the SEC, New York Fed and the state’s Financial Services Department remain at its Brooklyn site, which Bodson likened to the prison -- “without the charm” -- portrayed in the 1999 movie “The Green Mile.”
Some DTCC clients had sporadic connectivity to its systems and telecommunications problems because of the damage Sandy caused, he said. The industry’s back offices that handle transactions and record keeping after trades occur and the technology infrastructure operated “very well,” he said.
Water in the underground level that includes the vault should be fully pumped out today, Bodson said. Assessments of whether there are contaminants in the building and whether it’s safe for personnel to return can then begin, along with a study of how to open the vault since no one knows if water lies behind the two-ton door, he said. The vault, built on bedrock, has 18- inch walls of reinforced concrete and has never before been submerged, he said.
The DTCC restarted some services for clients that could deposit physical certificates to its Brooklyn location on Nov. 1 and expanded the processing of those securities the next day.
The National Securities Clearing Corp., a DTCC subsidiary, cleared $2.35 trillion in securities trades for mutual funds, equities, corporate and municipal bonds the week of Oct. 29, compared to a weekly average of $3.5 trillion this year, DTCC said. The company’s Fixed Income Clearing Corp. cleared $13.45 trillion in government and mortgage-backed securities last week, versus a weekly average of $17.35 trillion, it said.
The DTCC said in 2009 it would relocate about 1,600 employees to offices in Jersey City, New Jersey, in the beginning of next year. The contents of the current vault are going to be moved to a vault in the new location, Bodson said. Temporary office space may be sought for employees for the next few months, he said.