Albert Howell, first vice president at Merrill Lynch and chairman of SIFMA's Securities Operations Division of the Regulatory and Clearance Committee

RECAPS requires firms to submit failed trades in certain asset categories to NSCC for comparison and netting. The enhancements will speed up settlement and streamline the entire process.

"We've been working with SIFMA's Securities Operations Division sub-committee on regulatory and clearance issues for some time to update RECAPS and eliminate unnecessary steps and costs for our members, and to make RECAPS a more effective service generally," said Ed Fanning, DTCC director, Clearance and Settlement. (SIFMA is the Securities Industry and Financial Markets Association.) "These changes represent the first in a series of improvements we plan to make to the service."

What the enhancements deliver
Under the previous RECAPS timetable, the service ran each quarter for a specific designated week in March, June, September and December. The cycle began on the designated Tuesday, when firms would submit a list of CUSIPs to NSCC for their likely fail submissions. On Friday, the actual fails data were submitted. The following Monday, any changes or adjustments were made, and Tuesday all compared fails settled.

The single most significant change in RECAPS is that settlement will now take place on Monday rather than Tuesday, according to Bill Corrigan, DTCC manager, Clearance and Settlement Group. "We can accelerate settlement because the new system is faster and more comprehensive, and because most of our customers have moved to faster processing systems, which facilitates the speedier delivery of securities."

NSCC is also condensing the front end of the cycle. Now, the submission of CUSIPs on Tuesday will be eliminated altogether. "For customers, the CUSIP submission was burdensome and there was also a nominal charge for it," said Fanning. "When we created RECAPS, those submissions allowed NSCC to obtain prices externally for the securities involved, but with the redesign, we can now obtain this information within DTCC, which translates into savings of time and money for customers."

Fails will still be submitted on Friday, but the cutoff for new submissions will be 10 p.m. ET Friday instead of the current 2 a.m. Saturday.

"We will now be able to make the RECAPS CNS, the non-CNS Compared Trade Summaries and RECAPS Contract sheets available early Saturday morning, around 2 a.m. ET, so firms can focus on corrections and additions that much faster," Fanning said. Previously these reports were not available until much later, on Saturday afternoon.

In addition, NSCC is eliminating a number of reports that are no longer needed or contain data that are readily available on other reports. These include the RECAPS CNS Projection Report File, the RECAPS Open Advisory Report, and RECAPS Stock and Bond Receive and Deliver Tickets.

Fanning noted that the changes to the RECAPS system would give NSCC the flexibility to run it more than quarterly.

Industry perspective
"We believe that eliminating the requirement to submit CUSIPs and accelerating the fails confirmation settlement process will significantly benefit the industry," said Albert Howell, first vice president at Merrill Lynch and chairman of SIFMA's Securities Operations Division of the Regulatory and Clearance Committee, whose sub-committee addressed RECAPS issues. "We appreciate the work DTCC has done to enhance RECAPS."

The enhancements and new schedule are expected to take effect with the March quarterly cycle. "Any firms that wish to test output with NSCC can do so," said Fanning, adding that testing is optional. @

[To learn more about RECAPS enhancements, contact Ed Fanning at 212.855.7623 or Bill Corrigan at 212.855.7658. To schedule testing, firms can contact DTCC's Enterprise Service Center at 888.382.2721, option 1, then option 4.]