The Depository Trust & Clearing Corporation (DTCC) is an American

financial market infrastructure Financial market infrastructure refers to systems and entities involved in Clearing (finance), clearing, Settlement (finance), settlement, and the recording of payments, Security (finance), securities, Derivative (finance), derivatives, and other ...

company that provides clearing, settlement and trade reporting services to

financial market A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial marke ...

participants. It performs the exchange of

securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...

on behalf of buyers and sellers and functions as a

central securities depository A central securities depository (CSD) is a specialized financial market infrastructure organization holding securities such as shares or bonds, either in certificated or uncertificated ( dematerialized) form, allowing ownership to be easily tra ...

by providing central custody of securities. DTCC was established in 1999 as a holding company to combine the Depository Trust Company (DTC) and National Securities Clearing Corporation (NSCC). User-owned and directed, it automates, centralizes, standardizes, and streamlines processes in the

capital market A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers ...

s. Through its subsidiaries, DTCC provides clearance, settlement, and information services for equities, corporate and municipal bonds,

unit investment trust In U.S. financial law, a unit investment trust (UIT) is an investment product offering a fixed (unmanaged) portfolio (finance), portfolio of security (finance), securities having a definite life. Unlike open-end and closed-end investment companie ...

s, government and mortgage-backed securities,

money market The money market is a component of the economy that provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less. As short-term securities became a commodity, the money market became a compo ...

instruments, and

over-the-counter Over-the-counter (OTC) drugs are medicines sold directly to a consumer without a requirement for a prescription from a healthcare professional, as opposed to prescription drugs, which may be supplied only to consumers possessing a valid pres ...

derivatives. It also manages transactions between

mutual fund A mutual fund is an investment fund that pools money from many investors to purchase Security (finance), securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV in ...

s and

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect ...

carriers and their respective investors. In 2022, DTCC settled the vast majority of securities transactions in the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

and $2.50

quadrillion Depending on context (e.g. language, culture, region), some large numbers have names that allow for describing large quantities in a textual form; not mathematical. For very large values, the text is generally shorter than a decimal numeric repres ...

in value worldwide, making it by far the highest financial value processor in the world. DTCC operates facilities in the

New York metropolitan area The New York metropolitan area, also called the Tri-State area and sometimes referred to as Greater New York, is the List of cities by GDP, largest metropolitan economy in the world, with a List of U.S. metropolitan areas by GDP, gross metropo ...

, and at multiple locations in and outside the United States.

History

DTCC was established in 1999 as a holding company to combin
The Depository Trust Company (DTC)
and National Securities Clearing Corporation (NSCC). In 2008, The

Clearing Corporation The Clearing Corporation (TCC, former CCorp) is "a Delaware corporation owned by 17 stockholders (which include banks Goldman Sachs, Deutsche Bank and Morgan Stanley, as well as inter-dealer brokers ICAP and GFI Group and German derivatives excha ...

(CCorp) and The Depository Trust & Clearing Corporation announced CCorp members will benefit from CCorp's netting and risk management processes, and will leverage the asset servicing capabilities of DTCC's

Trade Information Warehouse The Trade Information Warehouse is a service offering of the Depository Trust & Clearing Corporation's Deriv/SERV, and is described by DTCC as "a centralized and secure global infrastructure for processing over-the-counter (OTC) derivatives over th ...

for credit default swaps (CDS). On 1 July 2010, it was announced that DTCC had acquired all of the shares of Avox Limited, based in Wrexham, North Wales.

Deutsche Börse Deutsche Börse AG (), or the Deutsche Börse Group, is a German multinational corporation that offers a marketplace for organizing the trading of shares and other securities. It is also a transaction services provider, giving companies and inv ...

had previously held over 76% of the shares. On 20 March 2017, it was announced that

Thomson Reuters Thomson Reuters Corporation ( ) is a Canadian multinational corporation, multinational content-driven technology Conglomerate (company), conglomerate. The company was founded in Toronto, Ontario, Canada, and maintains its headquarters at 1 ...

acquired Avox. DTCC entered into a joint venture with the

New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...

(NYSE) known as New York Portfolio Clearing, that would allow "investors to combine cash and derivative positions in one clearinghouse to lower margin costs". DTCC supported the Customer Protection and End User Relief Act (H.R. 4413; 113th Congress), arguing that it would "help ensure that regulators and the public continue to have access to a consolidated and accurate view of the global marketplace, including concentrations of risk and market exposure". DTCC collateral requirements for brokerages created difficulty for users during the

GameStop short squeeze In January 2021, a short squeeze of the stock of the American video game retailer GameStop and other Security (finance), securities took place, causing major financial consequences for certain hedge funds and large losses for Short (finance), ...

. In reaction to the

2022 Russian invasion of Ukraine On 24 February 2022, , starting the largest and deadliest war in Europe since World War II, in a major escalation of the Russo-Ukrainian War, conflict between the two countries which began in 2014. The fighting has caused hundreds of thou ...

, on March 3, 2022, DTCC blocked Russian securities from the Bank of Russia and The Ministry of Finance of the Russian Federation.

Operations

DTC

The Depository Trust Company (DTC) was the original securities depository. Established in 1973, it was created to reduce costs and provide efficiencies by immobilizing securities and making "book-entry" changes to show ownership of the securities. DTC moves securities for NSCC's net settlements, and settlement for institutional trades (which typically involve money and securities transfers between

custodian bank A custodian bank, or simply custodian, is a specialized financial institution responsible for providing securities services. It provides post-trade services and solutions for asset owners (e.g. sovereign wealth funds, central banks, insurance comp ...

s and broker-dealers), as well as

instruments. In 2022, DTC processed $2.5 quadrillion in transactions. In addition to settlement services, DTC retains custody of 3.5 million securities issues valued at $87.1 trillion, including securities issued in the United States and more than 170 other countries. DTC is a member of the U.S.

Federal Reserve System The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of ...

, and a registered clearing agency with the

Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

. Most large U.S. broker-dealers and banks are full DTC participants, meaning that they deposit and hold securities at DTC. DTC appears in an issuer's stock records as the sole registered owner of securities deposited at DTC. DTC holds the deposited securities in "

fungible In economics and law, fungibility is the property of something whose individual units are considered fundamentally interchangeable with each other. For example, the fungibility of money means that a $100 bill (note) is considered entirely equ ...

bulk", meaning that there are no specifically identifiable shares directly owned by DTC participants. Rather, each participant owns a pro rata interest in the aggregate number of shares of a particular issuer held at DTC. Correspondingly, each customer of a DTC participant, such as an individual investor, owns a pro rata interest in the shares in which the DTC participant has an interest. Because the securities held by DTC are for the benefit of its participants and their customers (i.e., investors holding their securities at a broker-dealer), frequently the issuer and its transfer agent must interact with DTC in order to facilitate the distribution of dividend payments to investors, to facilitate corporate actions (i.e., mergers, splits, etc.), to effect the transfer of securities, and to accurately record the number of shares actually owned by DTC at all times.

NSCC

The National Securities Clearing Corporation (NSCC) is the original clearing corporation, and provides clearing and serves as the central counterparty for trades in the U.S. securities markets. It was an outgrowth of '' multilateral netting'', which led to the formation of the National Securities Clearing Corporation (NSCC) in 1976. Established in 1976, it provides clearing, settlement, risk management, central counterparty services, and a

guarantee A guarantee is a form of transaction in which one person, to obtain some trust, confidence or credit for another, agrees to be answerable for them. It may also designate a treaty through which claims, rights or possessions are secured. It is to ...

of completion for certain transactions for virtually all broker-to-broker trades involving equities, corporate and municipal debt, American depositary receipts,

exchange-traded fund An exchange-traded fund (ETF) is a type of investment fund that is also an exchange-traded product, i.e., it is traded on stock exchanges. ETFs own financial assets such as stocks, bonds, currencies, debts, futures contracts, and/or comm ...

s, and

s. NSCC also nets trades and payments among its participants, reducing the value of securities and payments that need to be exchanged by an average of 98% each day. NSCC generally clears and settles trades on a "T+1" basis. NSCC has roughly 4,000 participants, and is regulated by the U.S. Securities and Exchange Commission (SEC).

FICC

The Fixed Income Clearing Corporation (FICC) provides clearing for

fixed income securities Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule. For example, the borrower may have to pay interest at a fixed rate once a year and repay the prin ...

, including treasury securities and

mortgage backed securities A mortgage-backed security (MBS) is a type of asset-backed security (an " instrument") which is secured by a mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals (a government agency or investment ba ...

FICC was created in 2003 to handle fixed income transaction processing, integrating the Government Securities Clearing Corporation and the Mortgage-Backed Securities Clearing Corporation. The Government Securities Division (GSD) provides real-time trade matching (RTTM), clearing,

risk management Risk management is the identification, evaluation, and prioritization of risks, followed by the minimization, monitoring, and control of the impact or probability of those risks occurring. Risks can come from various sources (i.e, Threat (sec ...

, and

netting In law, set-off or netting is a legal technique applied between persons or businesses with mutual rights and Liability (financial accounting), liabilities, replacing gross positions with net positions. It permits the rights to be used to discharg ...

for trades in U.S.

government debt A country's gross government debt (also called public debt or sovereign debt) is the financial liabilities of the government sector. Changes in government debt over time reflect primarily borrowing due to past government deficits. A deficit occu ...

issues, including

repurchase agreement A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is a form of secured short-term borrowing, usually, though not always using government securities as collateral. A contracting party sells a security to a lend ...

s or repos. Securities transactions processed by FICC's Government Securities Division include

Treasury bill United States Treasury securities, also called Treasuries or Treasurys, are government debt instruments issued by the United States Department of the Treasury to finance government spending as a supplement to taxation. Since 2012, the U.S. ...

s, bonds, notes, zero-coupon securities, government agency securities, and inflation-indexed securities. The Mortgage-Backed Securities Division provides real-time automated and trade matching, trade confirmation, risk management,

, and electronic pool notification to the mortgage-backed securities market. Participants in this market include mortgage originators, government-sponsored enterprises, registered broker-dealers,

institutional investor An institutional investor is an entity that pools money to purchase securities, real property, and other investment assets or originate loans. Institutional investors include commercial banks, central banks, credit unions, government-linked ...

s, investment managers,

s, commercial banks, insurance companies, and other financial institutions.

Global Trade Repository

DTCC created Deriv/SERV LLC In 2003 to help resolve

over the counter Over-the-counter (OTC) drugs are medicines sold directly to a consumer without a requirement for a prescription from a healthcare professional, as opposed to prescription drugs, which may be supplied only to consumers possessing a valid pres ...

(OTC)

derivative In mathematics, the derivative is a fundamental tool that quantifies the sensitivity to change of a function's output with respect to its input. The derivative of a function of a single variable at a chosen input value, when it exists, is t ...

s challenges of the time. It provides automated matching and confirmation services for derivatives trades, including credit, equity, and

interest rate derivative In finance, an interest rate derivative (IRD) is a derivative whose payments are determined through calculation techniques where the underlying benchmark product is an interest rate, or set of different interest rates. There are a multitude of dif ...

s. It also provides related matching of payment flows and bilateral netting services. Deriv/SERV's customers include dealers and buy-side firms from 30 countries. In 2006, Deriv/SERV processed 2.6 million transactions. From 2006 this service was complemented by the

(TIW), an infrastructure that records all

credit derivative In finance, a credit derivative refers to any one of "various instruments and techniques designed to separate and then transfer the ''credit risk''"The Economist ''Passing on the risks'' 2 November 1996 or the risk of an event of default of a corp ...

s transactions, such as credit default swaps. This proved specifically useful in September 2008 by helping authorities and market participants understand exposures to failing or fragile counterparties such as

Lehman Brothers Lehman Brothers Inc. ( ) was an American global financial services firm founded in 1850. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, and Merril ...

AIG American International Group, Inc. (AIG) is an American multinational finance and insurance corporation with operations in more than 80 countries and jurisdictions. As of 2023, AIG employed 25,200 people. The company operates through three core ...

. Partly based on that experience, the

G20 The G20 or Group of 20 is an intergovernmental forum comprising 19 sovereign countries, the European Union (EU), and the African Union (AU). It works to address major issues related to the global economy, such as international financial stabil ...

in 2009 decided to mandate derivatives trade reporting across all derivatives asset classes (interest rates, currencies, equity, credit, and commodities), with the reports collected by regulated Trade Repositories. The reporting mandate was subsequently enshrined in legislation in the respective jurisdictions, e.g. the Dodd–Frank Act in the U.S. and

EMIR Emir (; ' (), also Romanization of Arabic, transliterated as amir, is a word of Arabic language, Arabic origin that can refer to a male monarch, aristocratic, aristocrat, holder of high-ranking military or political office, or other person po ...

in the European Union. In May 2011, the

International Swaps and Derivatives Association The International Swaps and Derivatives Association (ISDA ) is a trade organization of participants in the market for derivative (finance)#Over-the-counter derivatives, over-the-counter derivatives. It is headquartered in New York City, and has c ...

selected DTCC to build up a global industry-wide infrastructure to comply with the G20 mandate, and the service was started in December 2011. The trade repository service was branded Global Trade Repository (GTR) in 2012. It was deployed that year in the U.S. under CFTC supervision, and in 2013 in Australia under

ASIC An application-specific integrated circuit (ASIC ) is an integrated circuit (IC) chip customized for a particular use, rather than intended for general-purpose use, such as a chip designed to run in a digital voice recorder or a high-efficien ...

supervision, Hong Kong as an agent of HKMA, Japan under FSA supervision, and Singapore under MAS supervision. In November 2013, DTCC obtained a license from

ESMA Esma or ESMA may refer to: Acronyms * ''Escuela Superior Militar de Aviación "Cosme Rennella B."'', Ecuadorian Air Force * Former ''Escuela Superior de Mecánica de la Armada'', used as a detention centre in Argentina 1976–1983, now Navy Petty- ...

to operate its trade repository in the European Union, based in London and starting in February 2014, and in 2019 that service was extended to Switzerland under

FINMA The Swiss Financial Market Supervisory Authority (FINMA) is the Swiss government body responsible for financial regulation. This includes the supervision of banks, insurance companies, stock exchanges and securities dealers, as well as other fin ...

supervision. From 2018, DTCC built up its GTR infrastructure to also support securities financing transaction reporting in the European Union under the EU Securities Financing Transactions Regulation (SFTR). In the wake of

Brexit Brexit (, a portmanteau of "Britain" and "Exit") was the Withdrawal from the European Union, withdrawal of the United Kingdom (UK) from the European Union (EU). Brexit officially took place at 23:00 GMT on 31 January 2020 (00:00 1 February ...

, DTCC created an EU entity based in Dublin, which ESMA registered as an EU trade repository in late 2020, which on 1 January 2021 took over part of the activity previously reported to the UK trade repository. In compliance with legislation in the individual jurisdictions, DTCC operates trade repositories under several legal entities across the world, but keeps the original vision of a globally integrated reporting utility. In 2019, DTCC rebranded its derivatives and trade repository businesses, including the GTR and TIW, as Repository and Derivatives Services (RDS).

EuroCCP

European Central Counterparty (EuroCCP) used to be a European subsidiary of DTCC from 2008 to 2020. It provides equities clearing services on a pan-European basis. Headquartered in

London London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...

, EuroCCP is a UK-incorporated Recognised Clearing House regulated by the UK's

Financial Services Authority The Financial Services Authority (FSA) was a quasi-judicial body accountable for the regulation of the financial services industry in the United Kingdom between 2001 and 2013. It was founded as the Securities and Investments Board (SIB) in 1985 ...

(FSA). In December 2019, EuroCCP announced it would be purchased by Cboe Global Markets. EuroCCP began operations in August 2008, initially clearing for the pan-European trading platform

Turquoise Turquoise is an opaque, blue-to-green mineral that is a hydrous phosphate of copper and aluminium, with the chemical formula . It is rare and valuable in finer grades and has been prized as a gemstone for millennia due to its hue. The robi ...

. EuroCCP has subsequently secured appointments from additional trading platforms and now provides central counterparty services for equity trades to Turquoise, SmartPool, NYSE Arca Europe and Pipeline Financial Group Limited. EuroCCP clears trades in more than 6,000 equities issues for these trading venues. In October 2009, EuroCCP began clearing and settling trades made on the Turquoise platform in 120 of the most heavily traded listed Depositary Receipts. Citi Global Transaction Services acts as settlement agent for trades cleared by EuroCCP, which now provides clearing services in 15 major national markets in Europe: Austria, Belgium, France, Denmark, Germany, Ireland, Italy, Finland, Netherlands, Norway, Portugal, United Kingdom, Switzerland, Sweden and Spain. Trades are handled in seven different currencies: the Euro, British Pound, U.S. Dollar, Swiss Franc, Danish Krone, Swedish Krona, and Norwegian Krone.

Other operations

DTCC Solutions is DTCC's subsidiary, formerly named Global Asset Solutions, delivering information-based and business processing solutions relative to securities and securities transactions to financial intermediaries globally, such as Global Corporation Action Validation Service (GCA VS) and Managed Accounts Service. GCA VS provides a centralized source of information about

corporate action A corporate action is an event initiated by a public company that brings or could bring an actual change to the debt securities—Share capital, equity or debt—issued by the company. Corporate actions are typically agreed upon by a company's ...

s, including

tender offer In corporate finance, a tender offer is a type of public takeover bid. The tender offer is a public, open offer or invitation (usually announced in a newspaper advertisement) by a prospective acquirer to all stockholders of a publicly traded corp ...

s, conversions,

stock split A stock split or stock divide increases the number of shares in a company. For example, after a 2-for-1 split, each investor will own double the number of shares, and each share will be worth half as much. A stock split causes a decrease of mar ...

s, and nearly 100 other types of events for equities and fixed-income instruments traded in Europe, Asia Pacific, and the Americas. In 2006, GCA VS processed 899,000 corporate actions from 160 countries. Managed Accounts Service, introduced in 2006, standardizes the exchange of account and investment information through a central gateway. DTCC Learning provides financial, technology, and career training and educational services to the global financial industry. Loan/SERV provides services to loan

syndicate A syndicate is a self-organizing group of individuals, companies, corporations or entities formed to transact some specific business, to pursue or promote a shared interest. Etymology The word ''syndicate'' comes from the French word ''syndic ...

s and agents. Omgeo is a central

information management Information management (IM) is the appropriate and optimized capture, storage, retrieval, and use of information. It may be personal information management or organizational. Information management for organizations concerns a cycle of organiz ...

and processing hub for broker-dealers, investment managers, and custodian banks. It provides post-trade, pre-settlement institutional trade management solutions for the securities clearance and settlement industry, processes over one million trades per day, and serves 6,000 investment managers, broker/dealers, and custodians in 42 countries. Omgeo was formed in 2001 as a joint venture between DTCC and

combining various trade services previously provided by each of these organizations. In November 2013 DTCC bought back Thomson Reuters' interest in the firm, so it is now wholly owned by DTCC.

Leadership

* William T. Dentzer Jr, DTC Chairman & CEO, 1973-1994 * William F. Jaenike, DTC Chairman & CEO, 1994-1999 * Jill M. Considine, DTC then DTCC Chairman & CEO, 1999-2006 * Donald F. Donahue, Chairman 2006-2011 and CEO 2006-2012 * Robert Druskin, Executive Chairman 2011-2015 and Non-executive Chairman 2015–2023 * Michael Bodson, President & CEO 2012-2022 * Frank La Salla, President & CEO since 2022 * Kevin Kessinger, Non-executive Chairman since The board was composed of 21 members as of 2019. Two board members are selected by "preferred shareholders"

ICE Ice is water that is frozen into a solid state, typically forming at or below temperatures of 0 ° C, 32 ° F, or 273.15 K. It occurs naturally on Earth, on other planets, in Oort cloud objects, and as interstellar ice. As a naturally oc ...

and

FINRA The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that financial regulation, regulates member brokerage firms and exchange (organized market), exchange markets. ...

, while 14 are from international clearing agencies.

References

External links

* {{DEFAULTSORT:Depository Trust and Clearing Corporation Financial services companies of the United States Central securities depositories Clearing houses Payment systems Self-regulatory organizations in the United States Financial services companies based in New York City American companies established in 1999 Financial services companies established in 1999 Holding companies established in 1999 1999 establishments in New York City Companies based in New York City 1999 establishments in the United States