May 13, 2014
• DTCC Connection
DTCC White Paper Details New Initiatives to Reduce Systemic Risk
by Joseph King
The Depository Trust & Clearing Corporation (DTCC) released a new white paper “The Future of Clearing: Mitigating Risk and Enhancing Efficiencies in the U.S. Equity and Fixed Income Markets,” which outlines steps the company and the industry are taking to further mitigate systemic and operational risks in the marketplace.
“Today, firms operate in a market where risks continue to grow more complex and the regulatory landscape continues to change,” said Murray Pozmanter, DTCC Managing Director and General Manager, Clearing Agency Services. “To help them navigate this new environment, DTCC is proactively developing and working to deliver new, effective solutions that will promote a safer, more efficient market environment for our clients and the financial system overall.”
One of the “new and effective solutions” is FICC’s expansion of its membership to include buy-side firms, specifically registered investment companies (RICs). The addition of buy-side firms will help reduce counterparty and systemic risks by capturing a larger portion of activity from both current and new members. Further, it will increase operational efficiency as RICs benefit from netting services which greatly reduce security and corresponding cash movements.
Other risk mitigation initiatives detailed in the white paper include:
- The proposed Institutional Delivery (ID) Clearing process
- DTCC Limit Monitoring
- Automated Customer Account Transfer Service (ACATS)
- FICC’s proposal to cross-margin between the Government Securities Division (GSD) and the Mortgage-Backed Securities Division (MBSD)
The Future of Clearing: Mitigating Risk and Enhancing Efficiencies in the U.S. Equity and Fixed Income Markets
Fixed Income Clearing Corporation
Automated Customer Account Transfer Service
DTCC Limit Monitoring