For the second consecutive year, The Depository Trust & Clearing Corporation (DTCC) was honored by WatersTechonolgy’s readers as the Best Sell-Side Clearing Provider in the publication’s 13th annual Waters Technology 2015 awards – a widely-recognized benchmark for the financial services industry, distinguishing its top solution providers.
Waters cited DTCC’s efforts to address global data harmonization for OTC derivatives, its introduction of Clarient and its role in advancing the move to a shortened settlement cycle in the award announcement.
“These three areas all illustrate the crucial role DTCC now plays in nudging the industry forward, with a long view toward stability,” stated Timothy Murray of Waters. “While still a utility at heart, it is fair to say that as clearing and settlement have evolved well beyond their past, DTCC has evolved as well—into something far more essential.”
Collaboration in a Regulatory Initiative
Marisol Collazo, CEO of DTCC’s Data Repository U.S. and Head of Regulatory Affairs for DerivSERV, said the company is focused on driving a unified, global approach to regulatory reform and transparency in the derivatives marketplace as the current approach has created operational inefficiencies and undue burdens. Further, fragmentation across jurisdictions has hampered regulators’ ability to transform the data reported into meaningful information -- like understanding systemic risk in the marketplace – a key goal outlined by the G20 leaders, the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO).
DTCC’s efforts include making specific data harmonization proposals to the Committee on Payments and Market Infrastructures (CPMI)-IOSCO to establish a ‘global data dictionary’ to provide systemic risk transparency and oversight, and recommending formalized guidance that all jurisdictions and trade repositories can implement and follow.
“We are trying to act readily and urgently to resolve this issue so our clients can comply with regulations in an efficient, cost-effective manner,” Collazo said. “Being recognized by our clients and Waters’ readers validates our efforts to help improve the financial market infrastructure.”
Innovation in a New Data Initiative
DTCC charted new territory with the formation of Clarient Global LLC, a DTCC company founded with six of the world’s leading banks and asset managers including Barclays, BNY Mellon, Credit Suisse, Goldman Sachs, JPMorgan Chase and State Street, representing over USD 8 trillion in combined assets under management.
"The industry is very focused on the increased pressures they are facing to address operational costs and risks in their business,” said Matthew Stauffer, CEO of Clarient. “The company is an example of how DTCC is being proactive in responding to industry challenges and providing capabilities beyond its core clearance and settlement services.”
Stauffer said the recognition in the Waters Rankings is a testament to Clarient’s growing success, adding that the solution offers a centralized service that brings an unparalleled degree of security and transparency into the management of legal entity information and related documents.
“We are committed to helping firms better manage client relationships during the onboarding process and throughout ongoing client lifecycle events.”
Leadership in a Renewed Market Initiative
The Waters award also highlighted a long standing industry initiative to shorten the U.S. settlement cycle to a T+2 standard for equities, corporate bonds, municipal bonds, unit investment trusts, and financial instruments comprised of these products.
The industry first brought attention to shortening the settlement cycle after the market disruption in 2008 and ensuing financial instability.
“After the financial crisis the industry saw real, renewed interest in taking risk out of the marketplace,” said John Abel, Vice President of Product Management for DTCC’s Settlement & Asset Services. “Momentum for T+2 has come out of this, with DTCC sponsoring the charge for reform and providing support for this important industry initiative.”
Abel commented that the Waters award is a tribute to the industry’s ability to organize and find solutions to address complex financial problems.