In 1968, the U.S. stock market collapsed. It did not flatline, of course, but major markets closed every Wednesday in an event now known as the "Wall Street Paperwork Crisis." This seizure was not caused by problems at the front end of a trade; brokers and dealers could easily keep up with the various client orders to buy or sell stock. Rather, the difficulties arose from back-end bottlenecks that occurred during the clearing and settlement process-the method by which a share of stock is transferred from seller to buyer. This two-step process is necessary because the initial moment of contracting-the trade-is not executed on an instantaneous basis. The shares are exchanged later, thereby fulfilling the contractual commitment, via a settlement and clearing process that is often described as the "back-office plumbing" of securities markets. The Wall Street Paperwork Crisis of 1968 led to a fascinating Congressional investigation and the establishment of a novel second-generation system for clearing trades. This solution finessed the paperwork problems arising from first-generation clearing, reopened markets for the full workweek, and made good sense at the time. It remains largely in place today, more than fifty years later, even as our financial markets encompass vastly different trading structures and exponential trading volume.

George S. Geis, The Historical Context of Stock Settlement and Blockchain, 26 Chapman Law Review, 557 (2023).
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