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DTCC: Game Plan for Real-Time Trade Matching
INDUSTRY'S INFRASTRUCTURE ISSUES GAME PLAN FOR REAL-TIME TRADE MATCHING OF FIXED INCOME SECURITIES
New York, August 2, 2001 - In support of the industry's move to astraight-through processing environment, Government Securities ClearingCorporation (GSCC) and The Depository Trust & Clearing Corporation (DTCC)today released a game plan for a real-time trade matching (RTTM) system forcorporate and municipal bonds, unit investment trusts (UITs), and other fixedincome securities.
The business plan, being distributed throughout the industry, providesdetails and will seek support from customers on plans to build a centralizedRTTM system that can process a range of eligible fixed income securities fromNational Securities Clearing Corporation. (NSCC is the clearing subsidiary ofDTCC.)
NSCC will use an RTTM model developed by GSCC, currently in production forU.S. Government securities. GSCC designed its RTTM system to accommodate otherfixed income products and has been working for more than a year with DTCC andMBS Clearing Corporation (MBSCC) to develop centralized RTTM capabilities fortheir respective fixed income products. A system for mortgage-backed securitieswill be available for participant testing by year-end 2001, and the target datefor implementing RTTM to process NSCC-eligible securities is mid-2003.
For NSCC customers, the system will provide a number of benefits includingfacilitating rapid error detection and resolution to provide for 100% matchingof trades on trade date to promote safe and efficient settlement.
Other key RTTM benefits will include:
- Reduced telecommunication and linkage costs for processing fixed incomesecurities;
- A single pipeline for expanded access to services offered by variousclearing corporations using a single communications link;
- Standardized interactive messaging formats for trade input;
- A real-time matching platform, and
- Real-time monitoring and exception processing tools.
"A centralized real-time fixed income matching system is a corerequirement for building a straight-through processing infrastructure toaccommodate settlement on a next-day basis," said Dennis J. Dirks, chiefoperating officer for DTCC. "In addition, our ongoing development of acentralized RTTM system for all fixed income transactions supports an industrygoal to achieve processing synergies across clearing corporations."
The RTTM initiatives have been endorsed by the Securities IndustryAssociation (SIA) and The Bond Market Association (TBMA) and by the Boards ofGSCC, DTCC and MBSCC as an incremental step toward greater coordination toachieve more efficiencies in operations of all three clearing corporations.
"The RTTM collaboration among DTCC, GSCC and MBSCC to integrate andconsolidate post-trade processing activities for fixed income products,"said Ronald Stewart, president of MBSCC and GSCC, "is a prime example ofthe progress that can be made by working together and the economies we canachieve by avoiding redundant technology development."
The business plan about the RTTM system for NSCC-eligible fixed incomesecurities will be available on the DTCC, GSCC and MBSCC Web sites at www.dtcc.com, www.gscc.com andwww.mbscc.com, respectively. In addition, printedcopies are being mailed to DTCC, GSCC and MBSCC customers.
NSCC customers will be receiving additional documents about the RTTM systemfor NSCC-eligible securities, including "Business Requirements" to beissued in first quarter 2002, and "Interactive Message Specifications"to be published in second quarter 2002. Participant testing of theproduction-ready system is scheduled to begin in the first quarter of 2003.
Background on DTCC, GSCC and MBSCC
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.
GSCC is the leading provider of trade comparison, netting and risk managementservices in the U.S. Government Securities marketplace, processing over $252trillion in securities transactions in 2000. GSCC is market-owned and governed.For more information, check GSCC's web site at www.gscc.com.
MBSCC is the sole provider of automated trade comparison, confirmation, risk management, netting and electronic pool notification to participants in the mortgage-backed securities market. MBSCC compared almost $15 trillion in parvalue transactions in 2000, and its electronic pool notification system providedinformation on 8.3 million mortgage-backed securities pools representing almost$5 trillion in par value in 2000. For more information, check MBSCC's Web siteat www.mbscc.com.