DTCC Connection

Jun 01, 2011 • DTCC Connection

DTCC Provides Greater Transparency On Its Operations

by Steve Letzler


To meet the increased demand from customers for detailed information on the key infrastructure organizations they do business with, DTCC has a series of initiatives under way.


“Today regulators are requiring financial services firms to better understand the risks involved in doing business with a wide array of organizations, including DTCC,” said Paula Arthus, DTCC managing director, Relationship Management. “We want to be proactive in assisting our members in doing so.”


“In the past, we handled inquiries from our participants on an ad hoc basis and, in general, most firms took the operating details of the infrastructure for granted,” said Janet Wynn, DTCC managing director, Relationship Management.


That approach has changed since the 2008 financial crisis. “Today, customer firms need to better understand this key element of the U.S. financial system,” Wynn said. “And for them to effectively manage their own risk, they need to fully comprehend the risks managed by DTCC: why we have those risks, how we mitigate them and the safeguards we provide for both the industry and our subsidiaries.”


Upsurge in requests

The customer and regulator requests for information include queries on how DTCC subsidiaries are governed and operated, and how they manage risk, according to Arthus. “While we have seen an upsurge in requests for all of DTCC, demand is highest for The Depository Trust Company [DTC],” she said. “As a result, we have been making a greater effort to get information out and available about DTC’s operations and functions.”


One example of this effort is a new report for members of DTC, which details its governance and risk framework to provide greater transparency for its operations. Called “DTC Business and Operations Review,” the document covers DTC’s corporate structure, governance model, regulatory structure, membership requirements, settlement procedures, asset services, risk controls and standards, asset protection, business continuity program and other operational risk measures. The report, which is available to DTC participant firms upon request, has already been distributed to a number of firms. (Contact your relationship manager to obtain a copy.)


DTC also completed, for the first time in 2011, the Association of Global Custodians (AGC) survey that other national depositories have completed for years. Completion of the survey, which is mandatory for non-U.S. depositories under Section 17(f) of the Securities Act, is not required for U.S. depositories. Nonetheless, DTC opted to complete the survey this year to support its transparency initiatives.


DTC also has expanded its existing cooperation with the Thomas Murray survey that assesses depositories globally, in which it has participated for a number of years.


“We have other initiatives in the pipeline that we’ll be rolling out in the coming months,” said Arthus. “We consider it a priority to be highly responsive to this industry requirement, and we firmly believe that the more customers and regulators know about DTCC, the more it benefits all participants in the U.S. financial system.” @


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