Increasing volume and interest in the service prompted the latest expansion, diversifying sponsor ranks and adding new capabilities
New York/London/Hong Kong/Singapore/Sydney, April 1, 2019 – The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced its proposal to expand the Sponsored Service of its subsidiary Fixed Income Clearing Corporation (FICC) has been approved by the Securities and Exchange Commission (SEC). DTCC views this as the latest milestone in the transformation of the Treasury market.
This expansion broadens the category of market participants who can participate as sponsors. It also changes how the service can be used, with sponsors now able to let their clients trade with counterparties other than themselves, providing sponsored members with the same execution flexibility they have in the bi-lateral market today.
“The greatest benefit of allowing different types of firms to be sponsors is that FICC has now made it possible to bring a much larger percentage of the market into clearing while maintaining our robust risk management standards,” said Murray Pozmanter, DTCC Managing Director and Head of Clearing Agency Services. “This should create needed capacity for the market, while at the same time reducing systemic risk.”
Following the 2017 expansion, which allowed Buy Side firms beyond Money Funds and Mutual Funds to participate in the service as sponsored members, DTCC received increased interest from Dealers, Non-US Banks, and Prime Brokers that were not previously able to be sponsors. The rise of interest across market participants prompted FICC to propose its latest approved expansion.
“We anticipate this expansion will have a positive impact on the Treasury market,” said Jim Hraska, DTCC Managing Director and General Manager, FICC Services. “In order to create a robust cleared market, you need to be able to provide access to as many participants as possible on both the long and short sides of the equation. Buy Side participation, therefore, is crucial because they are the true cash lenders and cash borrowers the market needs, and many have struggled over the years to get capacity due to constraints on dealers’ balance sheets.”
With over 45 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry. From operating facilities, data centers and offices in 16 countries, DTCC, through its subsidiaries, automates, centralizes and standardizes the processing of financial transactions, mitigating risk, increasing transparency and driving efficiency for thousands of broker/dealers, custodian banks and asset managers. Industry owned and governed, the firm simplifies the complexities of clearing, settlement, asset servicing, data management and information services across asset classes, bringing increased security and soundness to financial markets. In 2017, DTCC’s subsidiaries processed securities transactions valued at more than U.S. $1.61 quadrillion. Its depository provides custody and asset servicing for securities issues from 131 countries and territories valued at U.S. $57.4 trillion. DTCC’s Global Trade Repository service maintains approximately 40 million open OTC positions per week and processes over one billion messages per month through its group of licensed trade repositories.