Fixed Income Clearing Corporation (FICC)

FICC offers a range of post-trade products and services that provide its customers highly efficient processing, collateral control, lower costs and reduced risk.

Through its two divisions, FICC offers safety, stability, efficiency and innovation to post-trade processing for U.S. Government and mortgage-backed securities transactions. In addition, FICC provides critical matching services for trades in corporate and municipal bonds as well as unified investment trusts.

Expanding Service

Through New York Portfolio Clearing, a DTCC joint venture with NYSE Euronext, FICC also offers unified clearing and margining for government securities trades conducted each day in both the futures and cash markets, delivering a high degree of capital efficiency.

Who Uses FICC Services?

Broker/dealers and banks, both in the United States and overseas, as well as mutual funds, hedge funds, sovereign wealth funds, investment advisors and inter-dealer brokers…plus hundreds of correspondent firms and other financial institutions that clear through FICC members.

Keeping it Simple–and Uniform

FICC leverages its expertise and technology to offer uniform systems and approaches to meet post-trade challenges all across the fixed-income marketplace. For example, FICC continues to make its membership, collateral and operating requirements as uniform as possible across the business segments it serves. As a result, trading firms that join FICC to take advantage of its trade guarantee for government securities discover that it's a simple step to bring their mortgage-backed securities trading under FICC's post-trade management, highly efficient netting and trade guarantee as well.

Customer Value

FICC is a member-owned and governed organization. Its focus is on generating value for its member-customers by operating at cost and rebating to its members fees not needed for sustaining the business.

The Trade Guarantee

FICC's primary task as a central counterparty is to provide its customers with risk mitigation tools to help manage market disruptions and other risks, including the default of a trading firm and the subsequent need to close out that customer's net settlement position in the open market. In a market that averages around $4 trillion a day in trading, this trade guarantee is a critical factor.

Real Time Trade Matching

Once a trade is matched in FICC’s real time trade matching (RTTM) system, the result is an immediate confirmation for trade execution that is legal and binding. The confirmation also initiates the guarantee of trade completion. It’s fast, easy and extremely safe.

Netting

Critical to FICC’s role as a central counterparty is its ability to net down a large share of submitted trade obligations. In 2009, for example, FCCC was able to net out 79% of government securities trades, freeing up billions of dollars in capital for its customers by netting down or eliminating almost four out of every five dollars that would have otherwise gone to settlement. For mortgage-backed securities, FICC’s netting success rate was even higher. It eliminated nearly 93% of the financial transactions required to settle the trades.

Repos

Repos, processing repurchase agreements, which allow trading firms to use securities as collateral in secured financing transactions, is a major element of FICC’s business. In fact, the repo market now accounts for a majority of FICC’s government securities processing business.