Vault Status at DTCC Unclear, Post-Sandy
November 8, 2012
The DTCC has been working on a plan to eliminate physical securities in U.S. markets to make processing more efficient and reduce risks. In a July report the company said there were 86 percent fewer certificates in its vault than there were in 2000.
Many companies have stopped issuing paper certificates, according to Bob Kerstein, CEO of Scripophily.com, a company in Fairfax, Virginia, that runs a website selling old stock and bond certificates. It also provides research on them. The damage or loss of certificates in DTCC’s vault won’t affect the value of those bought and sold by collectors since what DTCC holds doesn’t become public when the physical securities are eliminated, he said.
Certificates no longer needed are usually returned to transfer agents or shredded, Bodson said.
A certificate from Pixar, the animation studio that created “Toy Story” and “A Bug’s Life” and was bought by Walt Disney Co. in 2006, sells for $595 on Scripophily.com. DreamWorks Animation SKG, shows Shrek, a green creature in a movie by the same name, on its certificate. It sells for $79.95.
Company certificates portray pieces of American financial history and show how firms’ self-portrayal changes over the years, Angel said. Still, the financial system should press ahead with eliminating physical securities, he said.
“This may be a golden opportunity for DTCC to move to a paperless setup for as many securities as possible,” he said. “Hurricane Sandy may have handed them a fait accompli.”