Financial markets remain highly dynamic as sweeping new regulations, an extended period of low interest rates, a greater focus on balance sheet and new fintech innovations reshape the industry. In such a challenging environment, DTCC remains focused on protecting the integrity of the financial system while also training its eye on the future to better serve the complex and evolving needs of clients. Here are six ways that DTCC is shaping the future of the global marketplace.
Driving T+2 Preparations in the U.S.
DTCC is driving the U.S. financial industry’s preparations for the long-anticipated move to shorten the settlement cycle from three days to two (T+3 to T+2) for equities, corporate and municipal bonds, and unit investment trust trades.. In preparation for Sept. 5, 2017 implementation date, the firm has completed development work, client testing and readiness and also submitted rule changes to the U.S. Securities and Exchange Commission (SEC) to ensure a smooth transition for the industry. Reducing the time between trade execution and settling payment for U.S. cash securities transactions will further protect the financial markets by substantially reducing credit and liquidity risks for market participants.
Building Momentum for Margin Transit Utility
DTCC-Euroclear GlobalCollateral Ltd. continues to build a global community in preparation for launching the Margin Transit UtilityTM (MTU) pilot program this year. The new service comes in response to new financial rules that will require financial firms to create thousands of new segregated collateral accounts, support hundreds of thousands of new margin calls and manage over $1 trillion in additional collateral. With several of the world’s largest fund administrators, brokers and asset managers expressing support for the MTU, DTCC will remain focused on further growing client adoption and on-boarding brokers and buy-side firms this year.
Bringing the Buy-Side into DTCC
DTCC’s Fixed Income Clearing Corporation’s (FICC) Government Securities Division (GSD) continues to advance an innovative suite of new and enhanced services to expand the availability of central clearing to the bilateral repo market. GSD’s Centrally Cleared Institutional TriParty Repo ServiceTM (CCITTM) will allow eligible institutional cash lenders to join GSD as limited members to clear eligible tri-party transactions with existing GSD members, pending regulatory approval. GSD is also expanding its existing Sponsored Membership Program, which allows well-capitalized bank members to sponsor eligible clients into GSD membership. Client eligibility is currently limited to Registered Investment Companies (RICs). FICC will permit all Qualified Institutional Buyer clients of sponsoring banks to have their eligible activity novated to FICC, pending regulatory approval.
Transforming Corporate Actions
DTCC’s multi-year Corporate Actions Transformation enters its final phase this year after deploying Redemptions life cycle functionality in 2016. This initiative will improve how corporate actions are communicated to clients thanks to the transition to ISO 20022 messaging and a new web-based user interface, called “CA Web,” which has replaced countless files and legacy platforms. Among the benefits of this single platform are increased automation and ease of use for clients, which help reduce risk, enhance efficiencies and drive down the costs of corporate actions processing.
Increasing Market Transparency with GMEI
With the pace of new registrations for legal entity identifiers (LEIs) expected to increase next year following the implementation of MiFID II in Europe, DTCC’s subsidiary operating the GMEITM utility, stands ready to meet the demand. The GMEI utility, which recently received official accreditation from the Global Entity Identifier Foundation (GLEIF), remains the largest Local Operating Unit (LOU), issuing more than 230,000 LEIs to entities from more than 184 jurisdictions since its launch in 2012. The GMEI utility is enabling the industry to solve a long-standing problem of how to standardize the identification of legal entities that engage in financial transactions and make the data readily accessible. The information afforded by GMEI is a critical tool for helping regulators and market participants understand exposures, enhance market transparency and manage systemic risk.
Embracing the Fintech Revolution
DTCC has embraced the fintech revolution, earning global recognition for its work to integrate distributed ledger technology into the post-trade infrastructure. The firm’s 2016 white paper, Embracing Disruption, is recognized as an authoritative source of information on blockchain, while the Symposiums it’s hosted the past two years have brought together industry leaders and policymakers to debate potential applications of new technologies, including robotics, artificial intelligence, cloud computing and machine learning. In addition, DTCC is replatforming its Trade Information Warehouse (TIW) for credit derivatives – one of the first and largest blockchain initiatives to date based on industry scale – to streamline, automate and reduce the cost of derivatives processing across the industry.
Click here to read DTCC’s 2016 Annual Report to learn more about how DTCC is driving innovation in the global markets.