White Papers

Mar 08, 2013 • White Papers

Increasing Certainty and Promoting Intraday Settlement Finality: A Service Description for Settlement Matching

Executive Summary

The Depository Trust & Clearing Corporation (DTCC), through its subsidiary, The Depository Trust Company (DTC), will institute Settlement Matching for DTCC Participants beginning in 2013, bringing significant enhancements to the settlement process and further reducing risk for DTCC and its Participants.

Settlement Matching will be introduced in a manner that promotes institutional trade affirmation and encourages straight-through processing (STP) by implementing a transaction matching component into DTCC’s existing settlement processes. DTCC will leverage existing infrastructure to provide Participants with the ability to authorize or match transactions prior to settlement. This will eliminate the need for reclamation transactions and the accompanying credit and liquidity risk, a significant step in risk mitigation for the industry.

In addition to the inherent credit and liquidity risks, a number of other drawbacks come with the current settlement process, including the inability to credit underlying customer accounts without risk of reversal, limited transparency of erroneous or disputed transactions, and costly manual intervention. Also, most reclaims are processed primarily late in the day making it difficult for the original deliverer to take corrective action or use the securities for other funding opportunities.

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