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5 Ways DTCC Transformed the Industry in 2019

By DTCC Connection Staff | January 15, 2020

From settlement optimization to exception management, here are a few ways DTCC moved the industry forward in 2019.

1. Broadened Range of Participants in DTCC’s Sponsored Membership Service

FICC’s Sponsored Service expanded substantially in 2019, tripling in volume over a period of twelve months. FICC has offered the Sponsored Service since 2005, allowing bank members to sponsor their Registered Investment Company (RIC) clients into FICC. The service expanded in 2017, when it began permitting additional Qualified Institutional Buyer clients to lend cash and U.S. treasuries via their sponsoring member banks throughout the day. This expansion broadened the category of market participants who can participate as sponsors, and also enabled sponsor member clients to transact in clearing with market participants other than their sponsors (i.e. “Done-away” activity).

2. Finalized Settlement Night Cycle

DTCC spent 2019 testing the enhancements to the settlement night cycle to be ready for January 2020 implementation. As part of DTCC’s initiative to optimize the settlement process, Night Cycle Reengineering was designed to maximize transaction throughput to control the order in which transactions are attempted for settlement within existing night cycle timeframes. Benefits include improved processing efficiency, reduced operational risk and improved intraday settlement finality. In addition to improved settlement rates, Night Cycle Reengineering also results in less transaction processing at DTC which should translate into a savings of approximately $3.5 million per year for members. Night Cycle Reengineering also allows DTC to incorporate additional transactions into the night cycle – transactions that we previously couldn’t include because of timing limitations of the night cycle.

3. Enhanced GTR to Support SFTR

DTCC’s Global Trade Repository (GTR) formed new partnerships with Catena Technologies, Compliance Solutions Strategies (CSS) and Finastra, to further support our mutual clients who will leverage DTCC’s Global Trade Repository (GTR) service in support of forthcoming Securities Financing Transactions Regulation (SFTR) obligations. In 2018, DTCC’s Repository and Derivatives Services (RDS) division established GTR SFTR partnerships with EquiLend, Trax, IHS Markit and Pirum as well as Broadridge, FIS Global, Murex, RegTek.Solutions and SimCorp.

4. Expanded Margin Transit Utility Community

DTCC’s Margin Transit Utility (MTU) collateral settlement infrastructure community expanded further in 2019, as the firm moved beyond its pilot production phase. Driven by their clients’ needs to reduce risks related to operational, liquidity and counterparty risks, leading dealers Goldman Sachs, J.P. Morgan, Morgan Stanley, Societe Generale, UBS and Wells Fargo were among firms to adopt MTU. These dealers joined over 30 investment management, administrator and custodian firms, including Brandywine Global Investment Management, Fidelity International, Franklin Templeton, Vanguard and Brown Brothers Harriman (BBH) who have adopted the service.

MTU straight-through-processing is designed to offer improved efficiency for the transfer of collateral among market participants, by centralizing communications and settlement instructions within MTU. The service includes connectivity from AcadiaSoft’s MarginSphere and ALERT for enriched standing settlement instructions (SSIs), connectivity to custodians and triparty providers, confirmation of settlement, and standardized reporting.

5. Brought Greater Efficiency and Stability to the Industry Through DTCC Exception Manager Expansion

DTCC Exception Manager platform passed an important milestone in October of 2019, managing more than 2 million records related to 849,556 transactions/trades/exceptions and representing over $100 billion in market activity—an important step in moving the financial services industry forward.

DTCC Exception Manager was launched in 2018 to provide a central industry platform to publish, manage, and communicate exceptions throughout the trade settlement lifecycle process. It was created for all parties involved in the trade lifecycle, including buy-side firms, outsourcers, broker/dealers, custodians, prime brokers, clearing brokers and other settlement agents. The platform supports all securities transactions globally, capturing exception details from participating custodians, broker dealers and CSDs, and standardizing exception processing to enable faster issue resolution. It centralizes and standardizes exception processing to enable faster resolution, delivers a significant reduction in the number of exceptions and supports exceptions in trade validation and settlement processing. Effective collaboration and communication enable the reduction of risk and cost in the user’s settlement process while lowering the potential for failed trades.