Posted in Finance, Accounting and Economics Terms, Total Reads: 672
Definition: Banking and Securities Industry Committee(BASIC)
BASIC was a committee established in the year 1970 to overlook trading and settlement of securities, and ensure uniformity in the rules and regulations that are followed in stock certificate and options processing.
When the markets experienced a bull run in 1960s, many small-time investors entered the market and transaction volume touched new highs. During those times, trading involved physical exchange of stock certificates and the amount of paperwork involved in completing the transfer of ownership was huge. At one point of time, about 8 million shares were getting traded per day and this eventually led to a “paperwork crisis”.
In order to reduce paperwork, efforts were taken to standardize and automate the trading process with the help of computers. This is where BASIC came in. The committee’s role was to come up with a way of automating the process, which led to the establishment of the Depository Trust Company (DTC). DTC standardized and automated all the steps involved in stock and option trading, like registration, underwriting, etc., thereby reducing the paperwork in the system.