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DTCC Begins Aggregating Trade-for-Trade Obligations to Reduce Costs and Enhance Efficiencies for the Industry
Service Reduces the Number of Trade-for-Trade Transactions Requiring Financial Settlement

June 03, 2010 09:21 AM Eastern Daylight Time
NEW YORK--(EON: Enhanced Online News)--The Depository Trust & Clearing Corporation (DTCC) has begun aggregating each side of certain equities transactions that settle outside its systems into one receive and one deliver order to eliminate the need for financial firms to manually settle multiple transactions each day.

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How the Service Works

As transactions flow from the exchanges and trading venues into NSCC’s trade capture system each day, buy and sell orders between counterparties in a given security that are designated by the clearing corporation to settle trade-for-trade are aggregated into a single receive and a single deliver order. However, as is currently the case with trade-for-trade transactions, the aggregated obligations are not netted against each other and are not guaranteed by NSCC.

Here’s an example of how the service works: if Broker A had fifteen buys against Broker B in Security X, these items would be aggregated into one receive obligation for A and one deliver obligation for B for the total amount of shares for the 15 transactions in Security X. If Broker A also had 20 sells with Broker B on that same day for the same security, those items would also be aggregated into one deliver obligation for A and one receive obligation for B. In this example, A and B would each have two settlement obligations with the other for Security X rather than the 35 obligations they would each have without aggregation.

“Trade-for-trade aggregation further extends DTCC’s ability to leverage its core capabilities to develop solutions that automate securities processing and help reduce costs for financial firms while protecting the safety and soundness of the financial markets,” said Cosgrove.

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