Banking and Securities Industry Committee - Explained
What is a Banking and Securities Industry Committee?
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Table of ContentsWhat is a Banking And Securities Industry Committee?How Does the Banking And Securities Industry Committee Work?
What is a Banking And Securities Industry Committee?
The Banking and Securities Industry Committee (BASIC) was established in 1970 to act as an oversight committee in the settlement of securities and formulate rules aimed at standardizing options processing. The committee has the responsibility of ensuring that there is uniformity in the rules and regulations applicable to the settlement of securities such as the processing of stock and options. Essentially, BASIC was established to standardize, automate and streamline the processing of stock certificates and options.
How Does the Banking And Securities Industry Committee Work?
The bull market experienced in the securities market in the 1960s led to the creation of the Banking and Securities Industry Committee (BASIC). Before BASIC was established, traders make physical exchanges of stock certificates and securities, thereby undergo a rigorous process and elaborate paperwork when processing the transfer of securities or stock. However, as daily trades became voluminous, it became too cumbersome to be handled by paperwork, which led to a paperwork crisis. BASIC was established to minimize the physical exchange of stock certificates as well as the paperwork associated with it. BASIC came into force as a collaboration between the major stock exchanges at that time such as the National Association of Securities Dealers, the New York Clearing House banks and others.