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DTCC: and NSCC Again Awarded "AAA" Credit Rating
New York, September 23, 2003 - The Depository Trust and Clearing Corporation (DTCC) announced today that, after a thorough review of its operations and finances, two of its subsidiary businesses were once again awarded credit ratings of "AAA/A-1+" by Standard & Poor's (S&P).
The ratings cover both short- and long-term credit, and are the highest given out by S&P. The two DTCC subsidiaries-National Securities Clearing Corporation (NSCC) and The Depository Trust Company (DTC) -originally sought and earned S&P's top credit ratings in the spring of 2001 in the course of raising their credit ceiling and combining existing credit facilities.
"This is a considerable achievement for us," said Richard Macek, chief financial officer of DTCC. "Our processing volumes have continued to climb despite the long bear market, and these ratings help to confirm both our strong financial management and the scope and effectiveness of our risk management practices."
S&P said its ratings for NSCC reflect "the critical nature of its behind-the-scenes support to the U.S. securities markets, as well as the strong credit controls and financial safeguards that protect it from counterparty default." NSCC, which processed 4.1 billion transactions valued at $81 trillion last year, clears, settles and guarantees completion of virtually all broker-to-broker equity, corporate and municipal bond trades on the New York Stock Exchange, Nasdaq, The American Stock Exchange, regional stock exchanges and electronic communications networks.
According to S&P, its rating for DTC "reflects the company's strong controls which protect it from operational and credit losses, as well the low-risk nature of its core operations." DTC is the world's largest securities depository, handling custody and asset servicing for more than 2 million securities issues, valued at $20.2 trillion, from the United States and 100 other countries.
DTCC currently maintains a combined credit facility of $3.15 billion in order to ensure end-of-day settlement in the event of a member is unable to settle its trades. In its 30 years of operations, DTCC said, its subsidiaries have never failed to settle outstanding trades and have never had to call on their credit lines. Each company maintains a clearing or participant fund that is recalculated daily and consists of a combination of cash, securities and irrevocable letters of credit.
"Obtaining S&P's highest credit ratings this year, which is the 30th anniversary of the founding our subsidiary companies, is a reaffirmation of our strong record of bringing certainty, reliability and soundness to our marketplaces - and to the financial community," said Jill M. Considine, DTCC Chairman and CEO.
DTCC subsidiaries last year settled in excess of $917 trillion in securities transactions. On a daily basis, from multiple operating sites, the company regularly processes four billion shares across all markets and settles more than $3 trillion daily. This is the equivalent of turning over the annual U.S. gross domestic product of $10 trillion every three days.
DTCC handles trades from virtually every U.S. marketplace, including the New York Stock Exchange, Nasdaq, The American Stock Exchange, the regional U.S. exchanges and many of the world's fast-growing electronic trading networks. The company provides the safe, electronic transfer of ownership records and delivery of settlement payments to cover the trading of equities, corporate and municipal bonds, money market instruments, asset-backed instruments, and U.S. government as well as mortgage-backed securities.
Through automation and new technology, the company's depository has reduced the number of paper certificates held in its vaults from more than 25 million in 1990 to 5 million in 2002.
About DTCC
The Depository Trust & Clearing Corporation (DTCC), through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, over-the-counter credit derivatives and emerging market debt. DTCC's depository also provides custody and asset servicing for more than two million securities issues from the United States and 100 other countries and territories. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC has operating facilities in multiple locations in the United States and overseas. For more information on DTCC, visit www.dtcc.com.