What is The Depository Trust Company (DTC)?
To facilitate quick and easy purchases and sales of bonds, bond issuers often engage the services of The Depository Trust Company (DTC). DTC is a securities depository, which is just as it sounds – a place where issuers deposit securities, such as bonds. Rather than giving physical bond certificates to each purchaser, issuers deposit their bonds with DTC, and DTC, together with brokerage firms, keeps track of ownership interests by computer. This system eliminates the need to transfer a physical bond every time a sale occurs. Most, but not all, bonds use DTC. Those that do use DTC are called “book entry” bonds. When purchasing book entry bonds, be sure to review the section in the official statement that discusses book entry system procedures.
