DTCC Connection

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)

Related reading

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

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