This week on Taking Stock, Chives and Bibic continue looking back in time, but this week it’s to The Great Paperwork Crisis of 1968, which led to the rationalization and birth of The Depository Trust (AKA The DTC). We look at why it made sense for the time, but how it is severely outdated today, and the impact that has on markets.
We also had a surprise special guest join us! John Wooten, founder of BlockTransfer, the first blockchain based transfer agent. We spoke to John about the ins and outs of how a blockchain based transfer agent works as well as a current SEC proposal that will enable API access to Edgar filings. This kind of access will allow developers to create apps to not only help with searching through the Edgar system, but to help make the filings as well.
We’ll be having John back on in a future week on December 13th - mark your calendars! If you have any questions you’d like him to be asked, please leave them below.
#Taking Stock #14
Twitter Link:
https://x.com/i/spaces/1YqxoDqLprbKv
mp3 Link:
https://static.wixstatic.com/mp3/06e09f_64b8a51b6fb44d9b93fc72845718b4f1.mp3
#Important Reminders
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Listen to Taking Stock on demand (https://linktr.ee/takingstockpodcast)
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Join DRSGME Discord (https://discord.gg/EGvmpdGDm)
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Join Lemmy (https://lemmy.whynotdrs.org/)
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Visit https://www.drsgme.org and https://www.whydrs.org
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Terminate DirectStock (https://www.drsgme.org/terminating-from-directstock)
#Links and Resources:
- The Birth and Rationalization of Cede https://www.whydrs.org/post/cede-ing-ownership-why-almost-all-publicly-traded-stock-belongs-to-one-company
- Articles on the Paperwork Crisis of 1968 https://therepubliccapital.com/blog/the-great-paperwork-crises-of-1968 https://www.bbh.com/us/en/bbh-who-we-are/our-story/200-years-of-partnership/the-paperwork-crisis.html
- BlockTransfer - Web3 Transfer Agent https://www.blocktransfer.com/
- SEC Proposal - Edgar Next https://www.sec.gov/rules/2023/09/edgar-next
- DTC/Cede holds 83% of all securities - 1998 https://www.sechistorical.org/collection/papers/1990/1998_0101_DTCAR_1.pdf
This was a really great episode. It was basically 2 episodes, the part about the DTC which was really good and the part with John Wooten.
Re: DTC:
so there was a paperwork crisis, to solve this issue they embraced computers, which at the time necessarily meant putting all of the legal ownership of the shares under a single centralized entity, which is owned collectively by the major wall st participants. To this day the problem of centralized ownership persists. wikipedia says Cede & Co owns 83% of all shares, sourced from a document from 1998. As I learned from this episode, ever since 1998 the data has not been made public, only that the number increased almost every year, so it is reasonable to assume that the number 83% is likely lower than the actual number.
In other words: Cede & Co is the legal owner of the large majority of all shares. And this is kind of a pretty big problem isn’t it?
Re: John Wooten of BlockTransfer
Never heard of John or BlockTransfer before but it sounds really cool and I am definitely intrigued to learn more. John’s story is interesting, and it is very cool how his interests sort of harmonizes with the interests of DRS advocates.