Obligation Warehouse (OW) is a real-time automated service of National Securities Clearing Corporation (“NSCC”) that facilitates the matching of broker-to-broker ex-clearing trades and provides Members with the ability to track, manage and resolve their failed obligations in real-time.

Overview

Obligation Warehouse (OW) is a real-time automated service of National Securities Clearing Corporation (“NSCC”) that facilitates the matching of broker-to-broker ex-clearing trades and provides Members with the ability to track, manage and resolve their failed obligations in real-time.

 OW stores eligible unsettled obligations (including securities exited from NSCC’s Continuous Net Settlement (CNS) system, Non-CNS Automated Customer Account Transfer Service (ACATS) items, NSCC Balance Order transactions and Special Trades) in a central location and provides on-going maintenance and servicing of such obligations, including daily checks for CNS-eligibility and periodic updates for certain mandatory corporate actions, until such obligations are settled, cancelled or otherwise closed in the system.  OW will also provide enhanced and more frequent RECAPS processing.

Who Can Use the Service

OW is available to all full service (Rule 2) Members of NSCC to manage their non-CNS broker-to-broker obligations.  For obligations not otherwise submitted to NSCC, OW can be used by participants to submit transactions that need to fulfill the regulatory requirement for the comparison of broker-to-broker trades (a.k.a. 101 confirmation) process.

Benefits

• Eliminates the highly manual and error-prone processes, including phone calls and faxes, traditionally used by financial firms to manage ex-clearing trades and failed obligations.
• Promotes transparency by providing, for the first time ever, a complete view of virtually all open obligations traded in the U.S. marketplace for equities, corporates, municipals and unit investment trust securities.
• Mitigates counterparty risk and reduces net capital charges by reconfirming and repricing open obligations to current market value on a more frequent basis (initially on a monthly basis) – as opposed to the current quarterly schedule under NSCC’s legacy RECAPS.

How the Service Works

Members submit their ex-clearing obligations to OW for real-time matching.  Once a party enters the required transaction information, the contra party receives an advisory that it must respond by submitting identical transaction details to facilitate a compared obligation, or by affirming the obligation via the OW Web browser.

Open obligations are tracked and maintained within OW and made available for RECAPS processing, which includes re-pricing, re-netting and allotting, on a more frequent basis than the current quarterly schedule, initially to take place monthly.   A new daily maintenance function will forward to CNS those obligations stored in OW that become CNS-eligible and will apply certain mandatory corporate action events until those obligations are settled, cancelled or otherwise closed in the system.  However, OW will not be a guaranteed service, and an obligation forwarded to CNS will only be guaranteed to the extent that the Member meets its settlement obligation on the date the item is originally scheduled to settle in CNS.

Additionally, firms will receive real-time updates, as well as an end-of-day report, that reflect their positions in OW.

For More Information

Please contact DTCC Relationship Services at 800-422-0582.