Waters Rankings 2014: Best Sell-Side Clearing Provider — DTCC

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Dwight Gooden and Gregory Johnston

The reason for the change at the top is in part thanks to new regulations. In June 2013, the NSCC received regulatory approval from the Securities and Exchange Commission (SEC) on a rule change that requires all locked-in trade data sent to the NSCC from self-regulatory organizations (SROs)—national and regional exchanges and marketplaces—and qualified special representatives (QSRs) to be submitted immediately after a trade is executed. The rule prohibits any pre-netting practices, which disrupts the NSCC’s ability to accurately monitor market and credit risks as they evolve during the trading day. The rule, implemented on Feb. 14, 2014, enables market participants to better facilitate daily trade reconciliation and also helps drive down risks associated with a potential client default.

The NSCC has also launched a new exchange-traded fund (ETF) post-trade processing system to help support the growth and expansion of the $1.2 trillion ETF marketplace. The new ETF platform provides clients with more robust tools for increasing efficiencies by driving greater transparency in the ETF post-trade process, and offers greater access to detailed ETF portfolio and creation and redemption transaction data, according to the DTCC.

On the risk side, earlier this year, the DTCC launched DTCC Limit Monitoring, a new service that provides clients with a tool designed to serve as an early warning system, alerting firms that they are nearing their defined trading limits. According to the DTCC, this post-trade tool, in conjunction with other industry-wide controls at the client and marketplace level, enables firms to effectively address the need for enhanced risk controls in the equity marketplace.

The DTCC and the NSCC have also been active drivers in pushing the market to move to a two-day trade settlement period (T+2) for equities, corporate and municipal bonds, and unit investment trusts, designed to reduce risk across the industry.

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