Lady MJ Santos, Publisher‘s Note: Trillions of dollars of stock certificates are feared ruined after Hurricane Sandy flooded a vault at the Depository Trust & Clearing Corp (DTCC), the Wall Street-owned organization that manages important parts of the U.S. trading infrastructure. DTCC’s depository provides custody, asset services, paper certificates for shares, bonds and other financial instruments, including foreign securities more than 3.6 million securities issues from the United States and 121 other countries and territories, valued at US$36.5 trillion. In 2010, DTCC settled nearly US$1.66 quadrillion in securities transactions. It costs $300 million to replace $16 billion of certificates, the price for replacing the entire $36.5 trillion the DTCC holds would be $684 billion. $53,33 per unit replaced. But the damage in the vault in question involves not the entire $36.5 trillion, but “only” $13.2 trillion in certificates. Thank God. The cost – for the financial industry – of replacing the flooded certificates amounts to about $248 billion, when they finally get this checked. Many are on the edge of their seats.
November 8, 2012 (TSR) – The Depository Trust & Clearing Corporation announced this week that it has resumed daily physical processing of securities from its Brooklyn operations center, re-establishing critical processing and mechanisms for clients to receive position credit for deposits, reorg entitlements, and Direct Registration System (DRS) statement withdrawals.
More than 600 employees have been working from DTCC’s emergency recovery center in Brooklyn since October 31 with the balance able to work remotely in partnership with DTCC teams in Tampa, Dallas, London and globally.
DTCC also began supporting Deposit Services for clients able to make delivery of physical securities to DTCC’s Brooklyn location. The company is working with its courier services to have all receipted packages routed to this recovery facility. All other services related to physical securities processing are expected to follow in the next several days.
“DTCC has in place a comprehensive business continuity plan and we have been working closely with the industry since the storm to restore this last piece of functionality,” said Michael Bodson, CEO and President, DTCC. “DTCC has maintained operations since the on-set of Superstorm Sandy seamlessly shifting clearing, settlement and other processes to multiple out-of region operations facilities.”
The company’s subsidiaries, DTC, FICC and NSCC, including Mutual Funds Services, Alternative Investment Products services, and Insurance & Retirement Services, continue to follow their normal processing schedules for all transactions and applications. All deadlines for NSCC and FICC clearing fund, DTC participants’ fund, settlement and other processes continue to be met.
DTCC’s headquarters location in lower Manhattan has sustained significant water damage as a result of storm flooding.
While a lot of progress has been made to restore the building to normal conditions, the location remains inaccessible at this time. As the DTCC vault was sealed prior to evacuating the building and remains submerged, determining the extent of the damage would be speculative at this point. Thus, it would be premature to estimate a timeframe for re-occupancy, or provide an accurate assessment as to the full impact of the water damage to our vault.
“Although sea water levels have returned to normal, the lower floors in the building remain flooded. Our computer records are fully intact, including detailed inventory files of the contents of the vault.” said Bodson. “At this point, it is pre-mature to make an accurate assessment as to the full impact of the water damage nor would it be helpful to project on what specific actions need to be taken with respect to our vault. We are aggressively working on this situation to minimize disruption to our clients and will provide additional updates as more information becomes available.”