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Why do we need a depository and clearing center today?

Personal Finance & Money Asked on May 13, 2021

I imagine that Back In The Day, the depository kept real securities in some safe and gave physical receipts about the presence of such a quantity of funds in such an account. Today, though, all securities are just information on servers, so all this (in theory) can be processed by the exchange itself or the bank in which the user has an account.

Thus, why do we need separate organizations for this, if now everything is in electronic form?

One Answer

Because there was an established system that worked, which was well tested, and which everyone involved knew how to use. If you are a sensible software developer, in going from paper to electronic data you change as little of that as possible. In other words, IF IT AIN'T BROKE, DON'T FIX IT.

Correct answer by jamesqf on May 13, 2021

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