DTCC announced on August 7 an unprecedented expansion of its daily processing capacity for its equities clearing corporation subsidiary to 280 million transactions, several multiples of the highest volume ever experienced.

This 77% increase in capacity (from 160 million transactions) underscores DTCC’s commitment to handle unpredictable spikes in trading volume due to market expansion or volatility – and to safeguard the safety and soundness of financial markets.

New peak record

On July 26, one of the largest trading days in history, DTCC’s National Securities Clearing Corporation (NSCC) subsidiary readily handled a new record of nearly 93 million equity transactions from all major U.S. exchanges, regional stock exchanges and electronic communications networks (ECNs). This record volume surpassed the roughly 77 million transactions on February 27 by 21%, and topped by 85% the 2006 peak day of 50 million transactions.

“Global confidence in the strength and safety of U.S capital markets rests in part on the reliability and adaptability of DTCC’s processing systems,” said William Aimetti, DTCC’s president and chief operating officer. “Our seamless management of record volume increases and our forward-looking capabilities to expand capacity demonstrate time and again our continuing commitment to prepare for unprecedented growth and other risk factors affecting the global marketplace.”

During the first half of 2007, NSCC volume averaged 51 million transactions each day, compared to the peak day in 2006 of 50 million transactions.

NSCC’s activity is reported as transactions processed, while the market volume is calculated in terms of shares traded. A single NSCC transaction can be for any amount of shares and represents the buyside or sellside of a trade. Trans-actions in the first half of 2007 have averaged 758 shares. Given that the July 26 total share volume traded on the U.S exchanges totaled 10.59 billion shares, the latest capacity increase strengthens the NSCC systems far beyond the demands of whatever stresses trading volume may place on the U.S. infrastructure.

Comprehensive infrastructure

Redundancy and resilience characterize the expanding DTCC infrastructure. Multiple DTCC data centers and operating sites throughout the United States and overseas, and a highly resilient telecom network, ensure market safety and business continuity in the face of emerging threats and potential disaster scenarios.

In addition to providing and expanding the trade reporting and processing infrastructure that serves major broker/dealers, banks and the exchanges, DTCC meets the challenge of increased volumes and volatility by expanding its risk management group’s capacity, as well to keep pace with volume growth. Every incoming trade passes through NSCC’s rigorous risk management system that monitors the markets, identifies a number of risk factors and ensures that members have sufficient funds on deposit to cover intraday price moves.

NSCC’s Continuous Net Settlement (CNS) lowers the risk for market participants by reducing the financial obligations requiring settlement through netting. For example, the $2.09 trillion value of the 92.8 million transactions processed on the July 26 record day netted down 99%, requiring the settlement of only $26.9 billion, and only a single position movement for each firm in each security it traded on that day. @

[As @dtcc was going to press, NSCC had another peak day on August 16, processing approximately 98.5 million transactions.]