Depository Trust Company - DTC

AAA

DEFINITION of 'Depository Trust Company - DTC'

One of the world's largest securities depositories. The Depository Trust Company, founded in 1973 and based in New York City, is organized as a limited purpose trust company and provides safekeeping through electronic recordkeeping of securities balances. It also acts like a clearinghouse to process and settle trades in corporate and municipal securities.

INVESTOPEDIA EXPLAINS 'Depository Trust Company - DTC'

The DTC emerged in the late 1960s when the New York Stock Exchange became unable to handle its trade volume, which was then in excess of 8 million shares per day. Thanks in part to the DTC, the NYSE now can handle billions of trades per day. As an automated system, the DTC lowers costs and improves accuracy. The Depository Trust Company is owned by the Depository Trust and Clearing Company, which manages risk in the financial system. Formerly an independent entity, the DTC was consolidated with several other securities clearing companies in 1999 and became a subsidiary of the DTCC.

The DTC holds trillions of dollars’ worth of securities in custody, including corporate stocks and bonds, municipal bonds and money market instruments. It settles funds at the end of each trading day using the Fedwire Funds Service. The DTC is registered with the SEC, is a member of the Federal Reserve System, and is owned by many companies in the financial industry, with the NYSE being one of its largest shareholders. Securities brokers, dealers, institutional investors, depository institutions, issuing and paying agents and settling banks use the DTC, but individual investors do not interact with it.

In addition to safekeeping, recordkeeping and clearing services, the DTC provides direct registration, underwriting, reorganization, and proxy and dividend services. For example, under its dividend services, it announces when a company declares a dividend, then collects the dividend payment from the issuing company, allocates dividend payments to shareholders and reports those payments.

RELATED TERMS
  1. Concentration Account

    A deposit account used to aggregate funds from several locations ...
  2. Clearing House

    An agency or separate corporation of a futures exchange responsible ...
  3. Euroclear

    One of two principal clearing houses for securities traded in ...
  4. International Commodities Clearing ...

    An international clearing house for futures markets around the ...
  5. Deposit/Withdrawal At Custodian ...

    A method of electronically transferring new shares or paper share ...
  6. Automated Confirmation Transaction ...

    An automated system designed to document and report the clearing ...
Related Articles
  1. Investing Basics

    How and when are stock dividends paid out?

    Learn about why, when and how companies declare and issue dividend payments to common stock shareholders. Also learn the timeline for when they are processed.
  2. Investing Basics

    The Auction Method: How NYSE Stock Prices are Set

    The New York Stock Exchange (NYSE), sometimes referred to as “the big board,” is the oldest and largest stock exchange in the United States. NYSE is the place investors think of when ...
  3. Investing Basics

    Principal Trading and Agency Trading

    Ever wonder what happens behind the scenes when you buy or sell a stock? Read on and find out!
  4. Options & Futures

    Getting To Know The Stock Exchanges

    Here are the answers to all the questions you have about stock exchanges but are too afraid to ask!
  5. Options & Futures

    The NYSE And Nasdaq: How They Work

    Learn some of the important differences in the way these exchanges operate and the securities that trade on them.
  6. Investing Basics

    How does a company switch from one stock exchange to another?

    A publicly traded company can, in fact, switch to a stock exchange that it believes will be favorable to its financing efforts. However, the company must first meet the new exchange's financial ...
  7. Investing

    What does membership in the New York Stock Exchange entail, and why is it known as "owning a seat"?

    Owning a seat on the New York Stock Exchange (NYSE) enables a person to trade on the floor of the exchange, either as an agent for someone else (floor broker) or for one's own personal account ...
  8. Investing

    On what days are the American stock exchanges closed?

    Similar to most businesses, the major stock markets in North America are open for trading on normal business days only (Monday to Friday, not on holidays). In terms of holidays, both the NYSE ...
  9. Bonds & Fixed Income

    History Of The Toronto Stock Exchange

    Find out how the third-largest stock exchange in North America came to be.
  10. Investing

    Who employs the specialists at New York Stock Exchange (NYSE)? Do they work for themselves, for the ...

    Before we address this question, let's review what specialists do. Specialists are people on the trading floor of an exchange, such as the NYSE, who hold inventories of particular stocks. A specialist's ...

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center