A shadow looms large over the world of asset ownership.
At the heart of this shadow stands the Depository Trust & Clearing Corporation (DTCC) and its nominee, Cede & Co., entities that, in the event of a financial super crisis, could emerge as de facto owners of an unparalleled swath of assets.
This scenario, underscored by the immense scale of the casino derivatives market, manipulated regulatory oversights, and the deliberate obfuscation of securities ownership structures, reveals the serious, potential for mass confiscation of assets during the approaching fiat system financial collapse.
During the financial super crisis, and mass bankruptcies/insolvencies, courts will rule in favor of the DTCC’s priority ownership all of its pooled assets. These assets include bonds, stocks, mortgages, and potentially personal and business bank deposits.
Derivatives: The $1 Quadrillion Powder Keg
The derivatives market, with its valuation exceeding a quadrillion dollars, is a hungry monster market whose risk appetite is way beyond the current global GDP’s capacity of $100 trillion. This disparity highlights a gross mismatch, fed by global shadow banking networks, that will likely trigger a systemic financial collapse.
There’s not enough currency in the world to save the system should the derivatives market fail.
Amidst this vast expanse of financial gambling, the DTCC/Cede & Co. stand as pivotal entities, custodians over a system where the very concept of asset ownership is being redefined under duress.
DTCC’s Role: One Entity to Own Them All
The DTCC is a central clearing counterparty (CCP) sitting at the top of a pyramid of banks, brokers and exchanges. All have agreed to hold their customers’ assets in “street name,” collect those assets in a fungible pool, and forward that pool to the DTCC, which then trades pooled blocks of stock and bonds between brokers and banks in the name of its nominee Cede & Co.
The DTCC, a private corporation, owns them all.
DTCC’s role as the central clearinghouse, processing transactions worth $2.5 quadrillion across 131 countries in 2022 alone, underscores its critical position in the global financial infrastructure.
However, this centralized control, governed by the Uniform Commercial Code (UCC), especially sections 8 and 9, introduces a systemic vulnerability. The UCC’s adoption across the U.S. and its harmonization with international rules have codified a system where asset owner’s rights are fundamentally altered and absorbed under ‘contractual claims’, rather than direct ownership.
Altered Asset Ownership Via Dematerialization
The transition to dematerialized securities in the 1970s, aimed at streamlining trading, birthed a complex system of ownership that centralizes power within DTCC/Cede & Co.
This shift, ostensibly for efficiency, has altered the direct link between owners and their assets, transferring them instead to a ‘nominee’ whose dominion and ownership priority is affirmed by the courts and now entrenched in the fabric of global financial operations.
In essence, during a financial super crisis, and the bankruptcies/insolvencies resulting therein, the courts will rule in favor of the DTCC’s ownership priority regarding all of its pooled assets. These assets include bonds, stocks, mortgages (mortgage backed securities) and potentially personal and business bank deposits.
The Shadow of Rehypothecation
Rehypothecation, a process where securities are reused for various financial activities without explicit owner consent, further muddies the waters of ownership.
This practice, while bolstering liquidity, also facilitates a precarious expansion of the derivatives market and enables practices like illegal naked short selling. Here, the transformation of proprietary rights into contractual ones dilutes an owners’ control over their assets, embedding a layer of high risk and opacity into the system.
The Derivatives Casino Will Get Legal Ownership Priority
The intertwining of rehypothecation and derivatives creates a fragile web of interdependent claims, where the same assets underpin multiple, leveraged financial system casino bets. In this environment, collateral chains extend, weaving a complex matrix of exposures that amplify systemic risk and the potential for collapse.
The prioritization of derivative claims in bankruptcy scenarios, places genuine asset owners at the end of the recovery line, their claims diminished in the face of speculative instruments (derivatives).
Bottom Line
The predatory role of UCC and DTCC/Cede & Co., in the event of a systemic financial crisis, cannot be understated.
The intersection of derivatives, rehypothecation, and dematerialized ownership points towards a future where the very essence of asset ownership has been fundamentally transformed, leaving super clearing houses and their controllers as the legal owners of nearly everything.
