The Banking and Securities Industry Committee (BASIC) was established in 1970 with the goal of standardizing, automating and streamlining the processing of stock certificates. It was tasked with ensuring uniformity in the rules and regulations for the processing of both stocks and options. BASIC attempted to reduce the physical exchanges of stock certificates when transferring ownership to new owners by bringing on board an automated procedure to accelerate the process.
The main push behind the plan to standardize and automate the stock certificate and options process was the paperwork crisis that occurred during the bull market of the late 1960s. Many small-time investors entered the stock market, which led to increased trading volumes that touched new highs. Since the trading involved physical exchange of certificates, there were significant amounts of paperwork involved in completing the transfer of ownership to the buyers. At one point during the crisis, more than eight million shares traded every day, and the traders needed an alternative that would make the process quick and efficient.
The National Association of Securities Dealers, the New York Clearing House banks and major stock exchanges collaborated to form BASIC to resolve the paperwork crisis in the securities industry resulting from the bull market of the late 1960s.
Essentially, BASIC attempted to reduce the physical exchange of stock certificates when transferring ownership. Its efforts culminated in the creation of the Depository Trust Company.
A committee established in 1970 to standardize, automate and streamline stock certificate and options processing. The Banking and Securities Industry Committee (BASIC) sought to uphold uniform rules and regulations regarding the trading and settlement of securities.