DTCC

The DTCC is the institution that clears and settles the overwhelming majority of securities trades in the United States, covering stocks, corporate and municipal bonds, and other securities. When an investor buys or sells a stock, the trade does not settle instantly, the DTCC and its subsidiaries process the transfer of securities and cash between the parties involved, typically finishing the process within a day or two of the trade.

The DTCC also acts as a central depository, holding securities in electronic book entry form on behalf of banks and brokers rather than requiring physical stock certificates to change hands. This is why an investor's brokerage statement shows shares held electronically rather than a paper certificate, the actual security sits within the DTCC's system, and the brokerage keeps its own records of who owns what.

Because so much of the US securities market runs through it, the DTCC is considered part of the market's critical infrastructure. Its subsidiaries, the National Securities Clearing Corporation and the Depository Trust Company, handle clearing and depository functions respectively, and its smooth operation is part of what allows trades to settle reliably even during periods of extremely heavy trading volume.