DTCC Connection

Dec 01, 2012 • DTCC Connection

Steady Hands at the Helm During a Perfect Storm

As Hurricane Sandy roared up the Atlantic Coast of the U.S. in late October, DTCC began activating its business continuity plans – and preparedness paid off. The company remained operational from Monday October 29, the first business day of the “superstorm,” through its aftermath – despite massive flooding that has made its headquarters in lower Manhattan inaccessible since then.


Due to the closure of New York City’s subway system and expectations that the storm could significantly impact the company’s headquarters in lower Manhattan, DTCC temporarily suspended physical securities processing and custody transaction services Monday. By Thursday, the company began to restore these services.


DTCC’s continuity strategy shifted systems and operations to the company’s multiple out-of-region and Brooklyn facilities – and a workforce that was geographically dispersed, equipped with remote capabilities and practiced in emergency-response procedures ensured DTCC operated seamlessly. Employees from Tampa, Dallas, the U.K, India and China moved into action, while staff from the New York region began working remotely at the onset of the storm. By Wednesday, October 31, the company’s emergency recovery center in Brooklyn was fully active.


The week of the storm, DTCC subsidiaries processed nearly $19 trillion in securities transactions and met all critical deadlines for clearing fund, settlement and other processes. In the weeks since then, the company has been functioning on a near business-as-usual basis.


“Through the extraordinary efforts of all our employees, many of whom have been working under difficult conditions, we executed our business continuity plans without incident,” said Michael Bodson, DTCC CEO and President.


Planning into practice
DTCC’s robust business continuity strategy includes having a number of facilities operating on a daily basis from different locations, maintaining multiple technology redundancies and a dispersed employee population, according to Bodson. “This enables us to stay operational even under the most challenging of circumstances, such as Superstorm Sandy and last year’s Hurricane Irene,” he said. “As a leading provider of critical infrastructure services for the global capital markets, our priority is to ensure that we remain operational through a wide range of scenarios.”


Throughout the storm and its aftermath, DTCC was in regular contact with key members of the financial industry, its settlement banks, clients, employees, regulators and local, state and federal emergency management officials to ensure all stayed current on developments impacting the company and its clients. The senior management team was also in constant contact with DTCC’s Board.


“We met all critical clearance and settlement deadlines, helping ensure the stability of the U.S. markets despite the significant impact of the storm to the U.S. eastern seaboard and New York City,” Bodson said.


Contact and connectivity
DTCC’s Settlement Operations Department maintained contact and connectivity with all of Depository Trust Company (DTC), National Securities Clearing Corporation (NSCC) and Fixed Income Clearing Corporation (FICC) settling banks, MMI (money market instruments) issuing paying agents and the majority of the company’s participants throughout the week.


The approximately $19 trillion in securities transactions processed for the week ending Friday, November 2, compares to a $23.1 trillion weekly average in 2012 year-to-date.


DTCC subsidiaries completed the following:


Clearance and Settlement


  • NSCC cleared approximately $2.35 trillion in securities transactions for mutual funds, equities, corporate and municipal bonds. This compares to a $3.5 trillion weekly average in 2012.
  • FICC cleared $13.45 trillion in government and mortgage backed securities transactions over the week without incident. This compares to a $17.35 trillion weekly average in 2012.
  • DTC processed a total of $1.85 trillion in money market activity and other participant-to-participant deliveries that week. This compares to a $1.95 trillion weekly average in 2012.

Asset Services


  • DTC’s P&I (principal and income) Cash Processing completed a total of $62 billion in collections and allocations in cash entitlements for dividends, periodic principal, interest, redemption and maturity payments. This included a peak payable date on November 1 where over $40 billion were received and processed. This compares to a $53 billion weekly average in 2012.
  • DTC’s Reorganization Services cash allocations for the week totaled $7.6 billion. This compares to a $6 billion weekly average in 2012.
  • DTC’s Underwriting Services processed a total of 823 closings with a total value of approximately $62 billion. This compares to a $57.6 billion weekly average in 2012.


DTCC’s continuity strategy shifted systems and operations to the company’s multiple out-of-region and Brooklyn facilities – and a workforce that was geographically dispersed, equipped with remote capabilities and practiced in emergency-response procedures ensured DTCC operated seamlessly.... The week of the storm, DTCC subsidiaries processed nearly $19 trillion in securities transactions and met all critical deadlines for clearing fund, settlement and other processes. In the weeks since then, the company has been functioning on a near business-as-usual basis.



Physical securities processing
DTCC announced the temporary suspension of all certificate-based services starting Monday, October 29, given the closure of New York City’s subway system and expectations that the storm could significantly impact lower Manhattan and access to the company’s headquarters.


By Thursday, November 1, Deposit Services resumed for clients able to make delivery of physical securities to DTCC’s Brooklyn location.


Daily physical processing of securities was further expanded Friday, November 2, by re-establishing critical processing and mechanisms for clients to receive position credit for deposits, reorganization entitlements, and Direct Registration System (DRS) statement withdrawals. The majority of other services related to physical securities processing resumed shortly thereafter.


“Since the first business day of the storm, we had been working closely with the industry to restore this last piece of functionality,” Bodson said.


While the status of securities held in the DTCC vault remained uncertain for several weeks, on November 14, DTCC announced it had begun the initial phase of recovering the contents of its securities vault. DTCC has retained highly recognized, well respected disaster recovery and expert restoration firms to work on this important effort.


“Investors who held certificates in the vault as part of the DTCC’s book-entry system are not at risk of losing the value of their holdings,” Bodson stated. “These physical certificates represent securities held in paper form. DTCC maintains electronic records of the full contents of the vault, which can be replicated if the physical certificates are damaged or destroyed. While it may take some time to replace these certificates, we are working as diligently as we can to address this situation in as timely a way as is practicable to minimize disruption to our clients.”


Other areas of normal processing
Through its subsidiaries, the company’s Mutual Funds Services, Alternative Investment Products Services, Insurance & Retirement Services, Deriv/SERV and Global Trade Repository Services, Data Services, Corporate Action Services and Loan/SERV followed their normal processing schedules for all transactions and applications. The CICI Utility also continued processing throughout the week without incidence. (This is the new portal for issuing interim legal entity identifiers. CICI is short for CFTC [Commodity Futures Trading Commission] Interim Compliant Identifier.)


Words for the weary
“Our efforts over the past week reflect the strength and vitality of the organization and the collaborative nature of our employees,” Bodson wrote to the company’s employees on Friday, November 2, at the close of a long week. “We should all be proud of being a part of such an amazing organization and to have such incredible colleagues.”@

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