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DTCC: SEC Approves Plan for GSCC, MBSCC and EMCC

Exchange Stock Offer for Shareholders of Three Clearing Corporations To Begin in November

New York, October 31, 2001 - The Depository Trust & Clearing Corporation (DTCC) today announced that the Securities and Exchange Commission (SEC) had approved a proposed integration plan for Government Securities Clearing Corporation (GSCC), MBS Clearing Corporation (MBSCC), and the Emerging Markets Clearing Corporation (EMCC) to become wholly owned subsidiaries of DTCC.

Under the plan, GSCC, MBSCC and EMCC will each continue to function as a separate legal entity with its own participants, rules and procedures, while operating under a single governance structure - a common Board of Directors and a unified management team.

"We are very pleased that the SEC has granted approval of our integration plan," said Jill M. Considine, Chairman and CEO of DTCC. "This represents a significant step in responding to industry needs for greater synergies and efficiencies in post-trade processing, particularly in the processing of fixed income instruments. With this consolidation, we'll be in a much better position to respond to changes in the markets and technology, including the move to straight-through processing, as well as the demand for the delivery of new products and services."

In early November, DTCC will begin offering shareholders of the three clearing corporations shares of DTCC Common Stock in exchange for their stock in the clearing corporations.

"This share exchange offer will be open for approximately four weeks so that the new structure can be in place by year end," said Richard Nesson, General Counsel of DTCC. "During December, we also will be conducting a proxy solicitation of current DTCC shareholders. Our shareholders will be asked to make changes in DTCC's corporate documents necessary to accommodate the integration, and to elect the post-integration Board of Directors of DTCC. This board will take office beginning February 1, 2002."

The terms of the proposed integration plan were approved in July by the user-representative Boards of Directors of DTCC, GSCC, MBSCC, and EMCC. These approvals followed a three-month study commissioned by the respective boards, and six months of further consideration by the Synergy Steering Committee made up of the chairpersons of each board and a second representative chosen from each board. The committee concluded that the industry could achieve greater efficiencies in each of the following areas by combining the organizations:

• streamlining core processes and information flows
• improving communication and quicken the pace of technology innovation
• further aligning clearing corporation strategies and services with customer needs
• strengthening risk management and expand opportunities for cross-margining
• enhancing management strength, governance, employee recruitment and retention
• positioning the industry for increased growth in global trading activity.

Since the study, the boards and the management teams of DTCC, GSCC, MBSCC and EMCC have been making considerable progress toward greater coordination to avoid redundant technology development.

For example, GSCC has been sharing its real-time trade matching (RTTM) technology for government securities in collaboration with MBSCC to develop RTTM capabilities for mortgage-backed securities. This will be available for participant testing by year-end 2001. In addition, GSCC and DTCC recently released a game plan for developing an RTTM system for corporate and municipal bonds, unit investment trusts (UITs), and other fixed income securities. Its target date for implementation is mid-2003. A centralized real-time fixed income matching system is a core requirement for building a straight-through processing infrastructure to accommodate settlement on a next-day basis.

"Our approach and success with the integration of NSCC and DTC in 1999 should reassure customers of GSCC, MBSCC and EMCC," said Considine, "that we can maintain the high quality service levels they've come to expect, while developing a seamless integration of clearing activities in a real-time environment."

Background on DTCC, GSCC, MBSCC and EMCC

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.

Government Securities Clearing Corporation (GSCC) is the leading provider of trade comparison, netting and risk management services in the U.S. Government Securities marketplace, processing over $252 trillion in securities transactions in 2000. GSCC is market owned and governed. For more information, check GSCC's web site at www.gscc.com.

MBS Clearing Corporation (MBSCC) is the sole provider of automated trade comparison, confirmation, risk management, netting and electronic pool notification to participants in themortgage-backed securities market. MBSCC compared almost $15 trillion in par value transactions in 2000, and its electronic pool notification system provided information on 8.3 million mortgage-backed securities pools representing almost $5 trillion in par value in 2000. For more information, check MBSCC's web site at www.mbscc.com.

Emerging Markets Clearing Corporation (EMCC) was developed by NSCC in coordination with the Emerging Markets Traders Association (EMTA). Founded and financed by firms worldwide that trade emerging market debt instruments, EMCC is a central resource for the clearance, multilateral netting, and risk management of emerging market debt products. For more information, check EMCC's web site at www.emcc.com.