Commercial paper is among the most liquid and ubiquitous types of securities and plays a vital role in the U.S. economy.  Commercial paper (CP) is an essential source of short-term financing for institutional issuers.  Every day major U.S. corporations raise tens of billions of dollars in short-term CP. 

The Depository Trust Company (DTC) has been settling U.S. commercial paper transactions since 1990. CP trades are processed through the DTC settlement system employing comprehensive risk management controls and procedures specially designed for money-market instruments.

The 2008 financial crisis has reshaped the CP market and intensified market participants' focus on risk management. DTC, as the sole entity clearing and settling CP transactions in the U.S., has been a source of operational stability and market knowledge through this period of change.

Given the company's central role in the CP market, it's not surprising that DTCC was a founding member in 1996 of the Commercial Paper Issuers Working Group (CPIWG), an industry group that meets regularly to discuss economic trends, market practices, trading rules and other concerns.

The CPIWG provides a forum for open communication and information-sharing among major CP issuers and other key players in this market.  The CPIWG now comprises 45 members, including 30 issuers, five Issuing and Paying Agent banks (IPAs) and eight vendors—among them Bloomberg LLP, which provides trading platforms for the commercial paper market, and Crane Data, a provider of market analytics.

DTCC is one of two CPIWG members at large; the Federal Reserve Bank is the other.
Because the commercial paper market is largely self-regulated, the working group fills a need for the larger corporate issuers in particular, by giving them a voice in the development of systems and processes that help this market mitigate risk and operate smoothly.

The purpose of the group is to get people together to discuss industry situations and evaluate market conditions. Members get to hear diverse viewpoints on developments in the industry, which helps them better understand what's happening in the market.

As at an at-large member, DTC works closely with fellow CPIWG members to help mitigate risks associated with commercial paper transactions and in partnership with regulators to maintain the safety and soundness of the CP market.