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by Helen Cunningham

Related Information

  • Access the Risk Handbooks

  • Goals of the Risk Program

  • Another Resource

  • DTCC has launched a program to give customers comprehensive information about the organization's risk management policies, processes and practices. The goal of this multi-faceted initiative, which will comprise handbooks, training and other outreach initiatives, is to bring greater transparency to DTCC's risk management infrastructure in order to help mitigate risk across the industry.

    "A pillar of our Systemic Risk Policy is ensuring customers have ample, readily accessible information on DTCC's risk infrastructure," said Nan Noonan, DTCC managing director and chief systemic risk officer. "We want firms to understand our risk regimes and the implications of our procedures on their business operations."

    As part of the initiative, DTCC is publishing a series of handbooks detailing the risk management regimes for:

    • Fixed Income Clearing Corporation/ Government Securities Division (FICC/ GSD)
    • The Depository Trust Company (DTC
    • National Securities Clearing Corporation (NSCC)

    The DTCC Operations Advisory Committee, comprising 14 senior leaders at participant firms, has acted as a sounding board for the content for the handbooks.

    The program is being spearheaded by a cross-functional team of DTCC professionals in Enterprise Risk Management, Systemic Risk Management, Core Product Management, Legal and Relationship Management.

    Impetus for the program

    Today, financial firms are taking steps to better understand and manage risks across all areas of their business, including the major market infrastructures they interface with. This means customers need more transparency into DTCC's risk infrastructure.

    "Our customers are holding themselves to a higher standard for risk management, and for them to manage their risks, they need to understand the risks managed by DTCC," said Paula Arthus, DTCC managing director, Relationship Management. "Firms want in-depth knowledge of what we do and how we do it, and we are proactively working to give them the information they need - and a solid comfort level with it."

    Likewise, DTCC's leadership team is eager to broaden understanding of DTCC and its risk mitigation role in the financial markets. "The more customers, regulators and legislators know about DTCC's risk infrastructure, the more it benefits the entire industry," said Noonan.

    Extending knowledge

    In the past, firms tended to have a basic understanding of DTCC's risk management procedures, with the bulk of the knowledge residing in the operations side of the business, according to Arthus. One goal of the educational outreach is to extend and deepen awareness of DTCC's risk protocols within customer firms.

    "In addition to the operations people, we want to reach executives in the risk and finance/treasury areas of firms," said Arthus, noting that when a large failure or other crisis occurs, the operations, risk and finance people work together to manage it. "Our new risk handbooks, along with other initiatives, will provide a unified body of knowledge to help executives in these disciplines better understand the whole picture," Noonan underscored.

    DTCC sent information for accessing the first handbook, covering FICC/GSD, to member firms in July. The handbook for DTC will be published in September, followed in short order by the NSCC handbook. The subsequent handbook in this suite will be for FICC's Mortgage- Backed Securities Division.

    Building blocks

    Over the past 18 months, DTCC has been fielding many requests for the type of information covered in the risk handbooks, according to Arthus.

    Rather than continuing to manage the requests on a case-by-case basis, DTCC decided it would be more effective to give customer firms the same information in a single source. "The handbooks provide customers with a comprehensive resource about risk management for specific DTCC subsidiaries, and they put everybody on the same page," said Arthus. "We invite customers to give us feedback on the handbooks: what works, what may be missing, what requires more detail," she added.

    As a follow-on to the books' DTCC will offer self-paced learning courses that walk personnel at customer firms through the books' contents. DTCC will provide these courses at no charge to customers in the coming months.

    Eye on the goal

    DTCC's new risk education program will evolve based on customer feedback and developments in the industry, both in the U.S. and globally.

    For now, the agenda is ambitious and straightforward. "It's all about the industry being better prepared for the next crisis," summed up Noonan. @

    [Customers who wish to obtain access to the risk handbooks or provide feedback on them may contact their relationship managers, call the DTCC Learning toll-free hotline at 888.258.6393, or send an email to training_]