Our Year of Execution

DEAR STAKEHOLDER,
For DTCC, 2024 was a year where challenge was triumphed by leadership as our industry confronted some of the most historic changes to market structure in recent decades.

Faced with the daunting mandate to implement T+1 in North America, we galvanized and steered the industry in testing and preparing their systems to ensure a seamless conversion to the shorter settlement cycle. We accomplished this herculean effort while continuing to elevate our firm and advance important initiatives, including U.S. Treasury clearing, derivative rule refits globally, digital asset adoption and modernization.

T+1 is just one example of how DTCC strengthened our position as a global leader and strategic partner in 2024, which we named our Year of Execution given the criticality of the imperatives on our agenda. Through our new DTCC Digital Assets business, our company has emerged as the center of gravity in building the digital asset ecosystem. Our compelling new solutions have increased our competitive edge in the market, with the industry looking to us for guidance and leadership in creating a sustainable infrastructure for digital securities exchange.

These achievements, and others, are reflected in our strong financial and operational results for 2024.  Despite the persisting uncertainty in the global operating environment, we moved several strides closer to achieving our Vision – to lead the advancement of the global financial markets as the most influential, strategic and tech-focused partner. The actions we’ve taken to elevate our organization, enhance our client centricity and advance our strategic priorities have poised us for the next chapter in our evolution – to deliver the whole firm to our stakeholders.

Becoming a More Strategic Partner

The financial services industry has come to depend on us even more as a strategic partner and value creator, given our proven track record in leading large-scale implementations. The move to T+1 was no different in how we collaborated and coordinated with market stakeholders to deliver on this massive initiative and achieve all the benefits that we promised the industry, including returning $3 billion in liquidity to the marketplace through a reduction in the clearing fund, driving same-day affirmations of transactions to a historic 95%, and maintaining a steady 2–3% rate for CNS and non-CNS fails, which have not increased following the T+1 conversion. As several countries in Europe mobilize to implement T+1, we’re sharing our knowledge and best practices on accelerated settlement to support their efforts.

However, the journey to accelerated settlement globally does not stop with T+1. We see plenty of opportunity in the U.S. for additional automation and straight-through processing to further reduce friction in the markets, mitigate risk and strengthen resilience. DTCC looks forward to providing market participants with solutions, expanded capabilities and our expertise, which includes our Consulting Services, to make these benefits a reality.

Alongside the T+1 transition, under the leadership of our Repository & Derivatives Services team, we successfully implemented the derivatives rule refits in multiple jurisdictions around the world and supported our clients in their compliance with the new regulations. This work extends into 2025 as additional jurisdictions release their reporting rule rewrites. On the heels of these initiatives, we’re now focused on ways to transform and invest in the business over the long term.

In addition, U.S. Treasury clearing remains a top priority despite the SEC’s recent decision to delay implementation of its mandatory clearing requirement based on industry feedback. However, this change did not impact the SEC’s requirements for us to enhance our access models, separate house and customer activity and introduce segregated customer margin accounts by March 31, 2025. I’m proud to say that we successfully met the provisions of the rule, and in true DTCC spirit, we did it one week ahead of schedule. As we’ve demonstrated time and again over more than 50 years, when faced with a daunting challenge, our team rises to the occasion and goes above and beyond to exceed the industry’s expectations.

At the same time, we continue to work hand in hand with the industry to address challenges that prompted the request for an extension, including support for done-away transactions and clarifying accounting rules to allow clearing banks to record trades off balance sheet. We understand the crucial importance of delivering on this initiative with the same precision and focus as T+1.

While the U.S. economy remains relatively strong and resilient, the circumstances in international markets are more challenging. Many nations are contending with high debt, stagnation, demanding regulatory requirements and underdeveloped or declining infrastructure. As a result, these markets are seeking and competing for capital to stimulate their growth at the same time that liquidity is still constrained in many parts of the world. Treasury clearing represents a tremendous opportunity for DTCC to support our clients in creating the capital efficiencies necessary for them to free up liquidity to redeploy in other parts of the world where it is needed.

In addition, our 2024 enhanced cross-margining arrangement with CME is optimizing collateral usage and creating on average over 50% in margin savings for users. Just a few weeks ago, we announced that we are further expanding this arrangement to provide increased margin savings and capital efficiencies to end-user clients by December 2025, subject to regulatory approval. We look forward to sharing more details on this work throughout the year.

The Surge toward Digital Assets

In a relatively short amount of time, our Digital Assets business has raised our standing as a global leader in the development of the digital asset ecosystem. We completed the integration of over 100 Securrency employees into our IT organization in 2024, creating an exceptional team of technologists who share a passion for pushing the limits of innovation in blockchain, a transformative technology that has the potential to make a safe and sound financial services ecosystem even better.

As the year unfolded, we pursued several paths in our multi-pronged digital strategy by bringing to market cutting-edge products and services and driving thought leadership. The rollout of DTCC Digital Launchpad, our industry sandbox for digital asset experimentation and testing, has generated excitement and interest from market participants and is increasingly viewed as the “it” place for effective collaboration.

At its heart, DTCC Digital Launchpad speaks to the fundamental principle that you can’t build the digital ecosystem of the future in isolation. The corollary is that you also need expertise. That’s why DTCC – with experience in creating systems that are secure and work at scale – is serving as the industry’s partner as we create the digital “railroad tracks,” helping to ensure that the end result is thoughtful and strategic and creates long-term value for those who have contributed. Launchpad – as well as our most recent solution, ComposerX, which streamlines token creation and settlement – enables participants to co-create solutions and, over time, link them to establish the infrastructure to support a digital financial system.

With that in mind, we published a white paper last May in partnership with Euroclear and Clearstream, which unveiled the Digital Asset Securities Control Principles. This framework offers standards for digital asset utilization by identifying 30 specific risks and 50 controls to mitigate them, ensuring that the environment for digital assets is as safe, stable and trusted as that for traditional securities.

With interest in digital assets surging, we’ll continue to galvanize and lead firms on this exciting frontier as we accelerate our efforts to support the industry’s digital asset journey.

Modernizing Our Tech Stack

Our ability to execute at the highest levels demands that we have state-of-the-art, resilient and reusable applications that will endure a host of scenarios, including those that could disrupt our operations and the financial markets. We’ve embedded digitization and innovation into our upgraded applications and enterprise platforms to create consistency and standardization. Modernization will not only improve our clients’ experience with DTCC systems, it will also strengthen the flexibility and functionality of our platforms and applications for decades to come.

For the past several years, we’ve made significant investments in our foundational capabilities across our data and infrastructure to create a common approach to our systems and businesses. We’ve also taken steps to streamline our client interfaces and provide best-fit solutions that include APIs, messaging and on-demand reporting. By leveraging our partnerships with third-party firms, we’ll improve our data and information management and reduce our technology debt. With the underlying work now complete, we’re excited to move into the adoption and continuous improvement phases of our program in partnership with our clients.

Accelerating Innovation

As we modernize our infrastructure, we’re instilling a “disrupt ourselves first” mentality within our organization when it comes to applying innovation to our business. With client needs mounting and competition among FMIs, incumbents, fintechs and new entrants intensifying, we must shift our approach to how we serve our clients. Innovation will be the differentiator that will set DTCC apart from our peers and distinguish us as a strategic partner and growth enabler.

For DTCC, innovation is more than an ideation process or adoption of new technology. It’s a mindset that challenges our people to think beyond the traditional perimeters of our organization, experiment with new ideas and have the confidence to fail fast before achieving success. We want our teams to act as inventors, pioneers and disruptors of the status quo. Whether it involves optimizing an existing solution or introducing new capabilities and techniques, our innovation efforts will always be purposeful, have a defined business rationale and focus on creating new and incremental value for our clients.

For example, with cloud technology becoming more prevalent, we’re committed to breaking new ground by hosting core clearing and settlement applications in the public cloud, pending regulatory approval. We’re working closely with our cloud partners to ensure maximum security and resiliency given the critical nature of our responsibilities and the industry’s reliance on us to protect global market stability. With the magnitude of this potential change, we’ve already taken steps to improve our IT processes and upgrade our architecture and capabilities in the cloud environment. This exciting work is leading edge and meets the criteria we set as purposeful, defined and value driven.

Our AI Opportunity

While cloud and blockchain will be powerful solutions propelling our business, AI increasingly looks like the technology that will be most transformative because it has the potential to reinvent all stages of the trade life cycle, enhance risk management and improve productivity, among other benefits.

We’re currently advancing a number of initiatives to use AI where it’s strategically beneficial to our firm and our clients. In addition, we’re leveraging our position as a global leader to drive open-source solutions to solve capital markets’ issues and foster innovation through industry-wide showcases and hackathons.

Among our AI efforts, we’ve adopted new enterprise tools that will help employees work more efficiently and productively. We’re also investing significantly in AI upskilling, having launched an AI Accelerator program to help leaders drive AI adoption across the firm. More broadly, we’ve made available over 300 online AI courses to help every colleague at our firm become familiar with AI and know how to use it in a safe and compliant manner.

Guiding us through these efforts is our cross-functional internal AI Council, which shapes our AI strategy and execution, and our AI Enablement Team, which advances our onboarding and adoption of AI technologies in adherence with our AI policies. Both groups work to ensure that our use cases are aligned to the four key pillars of our AI strategy – to optimize productivity, elevate the client experience, enhance risk mitigation and advance research and development. While full-fledged adoption of AI is part of a larger and more visionary transformation for our industry, we’re taking disciplined steps to adopt AI responsibly as we consider opportunities to reimagine our business and all aspects of trading in the global financial markets.

Our Culture of Excellence

None of our achievements in 2024 could have been possible without the outstanding efforts of our people, to whom we owe a significant debt of gratitude. As our organization continues to grow and evolve, the future of DTCC rests in the hands of our next generation of enterprise leaders.

Last year, we kicked off a longer-term transformation of performance management by, among other efforts, defining what embodies “great leadership,” which resulted in new tools to enable leaders at all levels of the organization. Our refreshed DTCC Leadership Expectations identify the behaviors that create a culture of accountability, performance and client-centricity. And our Senior Leader Success Profile defines the capabilities, mindsets and traits that we look for in our executives, in addition to exceptional domain expertise.

Our employees also need tangible resources that set them up for success. We continue to offer on-demand and scheduled learning resources, professional development programs and career mobility opportunities that nurture strong leaders with institutional and industry knowledge. It’s essential for our people to have a work environment where they can thrive, which is why we’ve also invested in our workspaces and productivity tools to strengthen connectivity and engagement. Our modern, tech-enabled offices foster collaboration while also supporting workplace sustainability and talent recruitment. We’re committed to empowering our global team with the training, development and resources they need to be successful.

A Future Filled with Promise

Our corporate goals are bigger, bolder and more transformational than at any other time in our company’s history. Today, we stand at the forefront of some of the most impactful work occurring in the industry. The initiatives we’re leading are ambitious in nature, and they will deliver incredible value to our clients and the markets over time.

DTCC’s longevity and trusted reputation have been earned through the commitment of every individual who has worked for and supported our organization. I’m deeply grateful to the DTCC Board of Directors, the Executive Committee and our employees for their partnership and contributions this year. I would like to thank Kevin Kessinger, our Non-Executive Chairman, for his leadership and guidance to the Board. I’d also like to recognize Lori Hricik, who retired from the Board at the end of 2024 after more than 14 years of dedicated service. In addition, I thank Debbie Cunningham, Craig Messinger and Andrea Pfenning, who stepped down from the Board at the end of March. They have provided invaluable counsel and insight to the Board’s discussions. I’d also like to welcome our new Directors, Cenk Kamis and Laide Majiyagbe, who joined the Board a few weeks ago. We look forward to their participation and expert perspective.

To our clients and stakeholders – thank you for your collaboration and trust in our firm to protect your assets and the stability of the financial markets. We’re committed to elevating our support for you and outperforming your expectations of us as a strategic partner.

As I look ahead, I am reminded of sage advice offered many years ago by U.S. President Dwight D. Eisenhower: “Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him.” 2025 will be a pivotal year for DTCC, and I can assure you that we are proactively charting our course and have a clear vision of our path forward. On behalf of all of us at DTCC, I look forward to pursuing the exciting opportunities in front of us together.

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