Global Securities Markets: Navigating the World's Exchanges and OTC Markets

THE DEPOSITORY TRUST AND CLEARING CORPORATION

As the largest of the CCPs and CSDs, the Depository Trust & Clearing Corporation (DTCC) custodied more than $27 trillion worth of securities and cleared and settled $455 trillion worth of transactions in 2008. With principal offices in New York, DTCC comprises the Depository Trust Company (DTC; the CSD) and a number of product-specific clearing corporations (the CCPs). These CCPs are the National Securities Clearing Corporation (NSCC), the Fixed Income Clearing Corporation (FICC) and the Emerging Markets Clearing Corporation (EMCC) for stock, bonds and emerging markets, respectively. A distinguishing feature of DTCC is that it is mutually owned by members of the market—the banks and brokers that participate in it. DTCC is not designed to be a profit-making enterprise. In this regard, this business model differs from, for example, the German model, where the exchange also owns the CSD and CCP and clearing and settlement fees enhance the profitability of the affiliated exchange. Most Asian exchanges follow the German business model.1

The basic premise of DTCC and other similar industry-created and -owned entities is to immobilize securities in a central location and to allow participants to net trade settlement multilaterally.

Physical stock and bond certificates are deposited at DTC, similar to how you might deposit cash at a bank. In fact, DTC is a limited purpose bank. Again similar to a bank, the depositor can see what it has on deposit ...