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Question

Difficulty: EasyDepositories, Clearing Corporations, and Settlement Entities

Which entity functions as the primary central securities depository in the United States, maintaining custody of physical certificates and providing automated book-entry ownership transfers for broker-dealers?

  1. Depository Trust Company (DTC)Answer
  2. B
    National Securities Clearing Corporation (NSCC)
  3. C
    Options Clearing Corporation (OCC)
  4. D
    Financial Industry Regulatory Authority (FINRA)

Answer

Depository Trust Company (DTC)
The Depository Trust Company (DTC) serves as the primary central securities depository in the United States, providing custody, book-entry delivery, and asset servicing for equities, corporate debt, and municipal bonds.

Step-by-Step Solution

1
Identify the primary operational function described in the question stem
The core function requested is safekeeping/custody of securities and book-entry transfer of ownership.
Financial market utility entities specialize in distinct functions such as custody, clearing, derivative guarantee, or industry regulation.
2
Match the required operational function to the appropriate entity
The Depository Trust Company (DTC), a subsidiary of the DTCC, acts as the central securities depository.
DTC immobilizes securities certificates and facilitates electronic book-entry settlement between participant firms.

Key Concept

Central Securities Depository (DTC) Role
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Topics

Depositories, Clearing Corporations, and Settlement Entities

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