Every trading day, millions of broker-to-broker transactions generate an immense volume of settlement obligations. Without centralization, these would need to be settled individually, increasing cost, complexity and exposure to counterparty and operational risk.

CNS®, operated by NSCC, serves as the central netting engine for U.S. securities markets and plays a critical role in maintaining the efficiency and stability of the financial system. It acts as the central counterparty for the clearance and settlement of virtually all broker-to-broker trades in equities, corporate bonds, municipal bonds and unit investment trusts (UITs).

By netting eligible transactions into a single daily position per security and Member, CNS® reduces settlement volume, simplifies post-trade processing and significantly reduces the number of deliveries required. CNS further supports market resilience through daily mark-to-market and fail-control processes, while its automated book-entry accounting system maintains records of securities and cash balances and provides daily reporting to Members.

Through a process called novation, NSCC becomes the legal counterparty to every trade, guaranteeing settlement and mitigating counterparty risk. Once a transaction has passed all required checks and is accepted into the system, it reaches the point of validation where NSCC's trade guarantee applies, helping ensure settlement even if one party defaults.