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MMI, All Valued Non-ID Deliver Orders and all Payment Orders are subjected to RAD. In the first quarter of 2015, DTC will implement the final phase of the initiative when all affirmed institutional deliveries (ID) will be subjected to receiver approval prior to settlement.

DTCC reduced the value and volume of reclaims without significant shifts in settlement throughput.

In 2013, The Depository Trust Company (DTC) – a subsidiary of The Depository Trust & Clearing Corporation (DTCC) – began introducing Settlement Matching to clients in an effort to reduce risk and boost intraday settlement finality.

Settlement Matching leverages DTC’s existing infrastructure to provide DTC’s Participants with the ability to “authorize or match” transactions before it attempts to process these transactions for settlement; with any subsequent return, or reclamation (“reclaim”), of the related securities to the original delivering Participant being treated as a new transaction which is subject to DTC risk controls. Therefore, Settlement Matching allows receiving Participants to maintain control over which transactions to accept, while removing the potential credit and liquidity risk previously associated with same-day reclaims.

This initiative, which is being implemented in a phased-approach, has removed approximately $525 billion of risk from the DTC settlement system including DTC, its Participants or the larger industry as a whole. To date, three out of four-phases of the initiative have been implemented and the initiative is scheduled to be fully completed in the first quarter, 2015.

Industry Collaboration

Since the start of the initiative, DTC worked diligently to educate clients on the need to eliminate reclaim risk and the importance of promoting intraday finality. In return, the industry actively provided DTCC with feedback on the effects that Settlement Matching introduces to their settlement process. Clients soon realized that Settlement Matching provided them with a proactive approach to resolution of discrepancies between deliverer and receiver by allowing the receiver to approve the transaction attributes prior to settlement. With this process, clients can correct issues intraday rather than on a next-day basis. The Securities Industry Financial Markets Association (SIFMA) also established the Settlement Matching Working Group to help clients seamlessly adopt DTCC’s Settlement Matching initiative.

“In close collaboration with the industry, we developed an implementation plan for Settlement Matching that improves intraday finality, while providing clients with sufficient time to make the necessary changes,” said John Kiechle, DTCC Vice President, Settlement Services. “Settlement represents a key step in the post-trade lifecycle, and we’re pleased with the progress we’ve made as an industry in significantly lowering risk in the overall settlement process.”


Settlement Matching has been in place for some time at DTC, and until recently, was limited to higher-valued transactions processed at DTC. In 2011, DTC announced plans to begin requiring receiver approval for all valued transactions, prior to process¬ing intraday securities deliveries for end-of-day net (money) settlement. Requiring pre-settlement matching for all valued transactions represents a significant change to the DTC process that fundamentally improves the way securities transactions in equi¬ties, corporate debt and municipal debt securities are settled in the U.S.

Implementing Settlement Matching

In July 2013, DTC lowered its Receiver Authorized Delivery (RAD) default limits to $7.5 million for deliver orders (DOs) and $500,000 for payment orders (POs), requiring receiver approval of all transactions that exceed these thresholds. With the reduction of RAD limits, DTC reduced by approximate¬ly 30-40% the value of reclaims. The second phase was implemented in October 2013, and offered clients the ability to provide a passive RAD authorization for some or all of their stock lending activity, separate and apart from other DTC activity. Phase three was completed via a three-step process in July/August, 2014, by eventually lowering RAD default limits to $0 for DOs and POs, requiring receiver approval for all valued non-institutional transactions. In the first quarter of 2015, DTC will implement the final phase of the initiative when all affirmed institutional deliveries (ID) will be subjected to receiver approval prior to settlement.

For more information on DTCC’s Settlement Matching initiative, visit:
DTCC Settlement Matching
Update to DTCC's Settlement Matching Initiative