2020 was a year like no other in recent memory. For DTCC, it meant confronting an unusually wide range of issues over an extended period of time while continuing to deliver high levels of client service, prioritizing the well-being of employees and maintaining focus on executing the firm’s long-term strategy.
DTCC’s just-released 2020 Annual Report, Architects of Innovation, documents this extraordinary time. The online, interactive report recounts DTCC’s performance in a variety of formats – text, infographics, video – and from a diversity of perspectives.
In his Letter to Stakeholders, President and CEO Mike Bodson attributes DTCC’s success in meeting the year’s challenges to “the trust our leadership team places in one another, our ability as an organization to collaborate across areas and our commitment to empowering teams to respond decisively in a rapidly changing environment.”
Market volatility was a defining feature for the industry in 2020, with DTCC processing record-breaking volumes seamlessly. The firm also collaborated with clients to manage the risk arising from volatility and stayed in close contact with regulators and with firms experiencing stress.
During this remarkable year, DTCC balanced its short-term response with its long-term commitment to shape the future of the global markets. The pandemic intensified some client priorities, which will help guide DTCC’s ongoing innovations, such as its API marketplace to give clients open access to data and services. “We embrace our role as architects of innovation,” wrote Bodson, “knowing that every action we take must ensure a better experience for our clients and a better future for our industry.”
High Volumes, Increased Revenues
DTCC set several new volume records in 2020. The company processed $2.3 quadrillion in securities transactions, up nearly 8% over 2019, and on March 12, it hit a new, single-day peak of 363 million U.S. equity transactions — more than two-and-a-half times that of an average processing day.
This unprecedented level of activity translated into record revenues of $1.9 billion, a 6.8% increase over 2019, after payment of a rebate to Depository Trust Company (DTC) clients, the second such rebate in two years. Revenue from DTCC’s SIFMU businesses was $1.291 billion, pre-rebate, up 9.6% year over year, while Solutions business revenue was $607 million.
Business Achievements Power the Industry
DTCC continued to drive product innovation in 2020. Fixed Income Clearing Corporation’s (FICC’s) Sponsored Membership service, which enables clients to use a centrally cleared platform for repo trading activity to reduce counterparty risk and provide balance sheet and capital relief, grew as the number of Sponsoring Members more than doubled.
NSCC completed the re-engineering of night cycle processing to increase night cycle settlement rates by 15%, another step in building the foundation for an industry move to T+1 settlement by 2023. DTCC also further diversified its default liquidity resources for NSCC through the inaugural issuance of $3.8 billion of senior unsecured term debt in 3- and 5-year maturities.
The company’s transaction reporting solutions grew significantly to meet expanding regulatory mandates. Its SFTR solution enlarged the client subscriber base to more than 500 dealers, agent lenders and buy-side firms, and DTCC built a single-vendor platform for clients’ pre- and post-trade reporting of derivatives, MiFID II and SFTR by acquiring and integrating Publicis Sapient’s Compliance Management Reporting System (CMRS) into DTCC Report Hub.
DTCC launched several new products and services, including the Risk Management as A Service API. The Insurance Information Exchange creates consumable business intelligence from the millions of insurance policy records that are processed daily. DTCC Consulting Services offers strategic guidance to RDS and ITP clients to help them optimize their business operations, mitigate risk and reduce costs as they address regulatory compliance challenges around trade reporting and post-trade processing.
Reimagining the Future
DTCC’s work to build innovative industry solutions for a digitizing future included the launch of two key initiatives in 2020. Project Ion explores accelerating settlement to T+1 and T+0 on a digital platform using distributed ledger technology (DLT) and other emerging technologies, while Project Whitney considers the potential for asset tokenization and digital infrastructure to support private market securities.
To access the DTCC 2020 Annual Report click here.