n 1968, the U.S. stock market collapsed. 1 It did not flatline, of course, but major markets closed every Wednesday in an event now known as the \u27Wall Street Paperwork Crisis.\u27 2 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. 3 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 \u27back-office plumbing\u27 of securities markets.
