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DTCC Calls for Global Clearing Solution

Conference Planned in Europe

New York and London, October 30, 2000 - The Depository Trust & Clearing Corporation (DTCC), the world's largest securities clearance and settlement organization, called today on the financial services industry to develop a global clearing solution to lower cost, reduce risk and facilitate the growth of financial instruments trading worldwide.

In a newly released White Paper, Central Counterparties: Development, Cooperation and Consolidation, DTCC announced plans to sponsor a global conference to begin to address these issues with major industry players from the Americas, Asia and Europe. DTCC has already started reaching out to other clearing organizations and is encouraged by their interest in cosponsorship. The conference, to be held next year in Europe, will explore practical global issues that will impact the development of central counterparties (CCPs) worldwide.

A central counterparty is a specialized clearing institution that facilitates securities trading by standing between buyers and sellers to ensure that money and securities change hands smoothly and efficiently. This can include guaranteeing trade completion and netting down the value of obligations requiring financial settlement. In the U.S. equities market, this reduction can be as much as 97 percent.

"All of us in the industry feel a sense of urgency about this issue," said Jill M. Considine, Chairman & CEO of DTCC. "In the consolidation discussions going on among exchanges today, the focus keeps coming back to central counterparty capabilities as the key to reducing costs and facilitating trading. This is a worldwide issue. We must avoid creating multiple solutions driven by local concerns that result in a patchwork of processes and systems that are more costly and less efficient, and may even, in the end, impede the ability to trade seamlessly cross-border."

The white paper cites a number of benefits capital market participants can expect from coordination, cooperation and consolidation of CCP capabilities:

• Standardizing processing which will translate into lower operating costs;
• Reducing risk during settlement (through better risk management practices, multilateral netting and settlement guarantees);
• Anonymity among trading parties; and
• Reducing the number of trades requiring settlement, improving liquidity and effectively increasing market capacity.

"Today's national and regional central counterparty initiatives will benefit from a global perspective," said Considine. "We are proposing this conference as a first step in a global practitioner dialogue on the future of CCPs. Building the next generation of clearing capabilities will be challenging and expensive, with every region of the world planning major infrastructure investments in the next five to ten years. We must share experience and best practices, looking for innovative ways to lower costs and expand capabilities going forward."

The DTCC white paper does not prescribe a single CCP solution, but rather identifies issues that require discussion, a shared understanding and mutual agreement across the industry. These include:

• Ongoing cooperation and dialogue among various segments of the industry
• Standards for communications and technology
• Agreements on cross-collateralization and cross-margining among CCPs
• Shared technology investments.
• Coordinated business policies and plans.
• Possible integration methods and structures for central counterparty linkages.

In the U.S., DTCC's clearing corporation subsidiary serves as the central counterparty for virtually all broker-to-broker equity, corporate bond and municipal bond trades from the U.S. marketplaces, including the New York Stock Exchange, Nasdaq, American Stock Exchange, regional exchanges and ECNs. Volumes processed are unrivalled by any other CCP worldwide: In just one day this year, NSCC handled 18.1 million transactions representing well over 4 billion shares traded valued at $722 billion. After netting transactions, it reduced the number of trade obligations requiring actual financial settlement by 97% to $21.7 billion.

About DTCC

The Depository Trust & Clearing Corporation (DTCC), with operating facilities in multiple locations in the U.S. and overseas, is a holding company for six subsidiary businesses - a depository and five clearing corporations - as well as the co-owner with Thomson Financial of a global joint venture called Omgeo. Through its subsidiaries, DTCC provides clearance, settlement and information services for equities, corporate debt, municipal debt, government securities and mortgage-backed securities in the U.S., and emerging markets debt trades globally. It is also a leading clearinghouse for mutual funds and insurance products, linking funds and carriers with distribution networks. In addition, DTCC provides custody and asset servicing for more than two million securities from the U.S. and 84 other countries. For more information on DTCC, see www.dtcc.com.