Clearing the Securities Industry's Paper-Work Backlog
by EDWARD J. Lill Partner, New York Office
Presented at the Annual Convention of the Investment
Bankers Association, New York—November 1967
As POINTED OUT by the previous panelists, there are certainly avenues
for individual member firms and for the securities industry as a whole to follow in correcting the errors and paper-work backlog presently
existing in the business; and what is just as important, there are things that can be done to provide a means for avoiding similar errors and paper-work backlogs in the future.
You have observed, I am sure, from the previous panelists' comments,
that almost all the suggested corrective action will take time—a year, two years, possibly three to five years.
The ultimate answer, we all recognize, is to reduce the large amount of paper handling required on a daily basis under present industry procedures.
Such reduction, we know, must originate with the securities industry as a whole; it cannot start with any individual member firm or securities exchange. A co-operative effort such as the previous panelist has just described is certainly a step in the right direction. Perhaps, in the not too distant future, a "certificateless industry," or perhaps a single securities clearing house with a comprehensive "Central Certificate Service,"
will be realized and much of the paper work will be eliminated. For at least the next several years, however, member firms must continue to handle the large volume of paper required under present industry procedures.
As a CPA servicing many firms in the industry, I have had the interesting opportunity to observe how many firms successfully cope with high volumes, while others experience significant difficulties. On the basis of these observations I should like to explore with you for the next few minutes a possible change in emphasis by top management, which I believe will assist in alleviating back-office difficulties.
THE EMERGING PROBLEM
Let us first take a look at what happens in a firm when the volume of securities transactions increases, bringing with it substantial increases in paper work.