DTCC SEEKS APPROVAL TO ALLOW NON-US INSTITUTIONS TO USE FIXED-INCOME CLEARING AND RISK MANAGEMENT SERVICES

Posted January 21, 2009

NEW YORK – The Depository Trust & Clearing Corporation (DTCC) has filed with the Securities and Exchange Commission (SEC) seeking approval to extend its fixed-income subsidiary’s clearing and risk management services to include direct participation by non-US broker-dealers and banks.

“Foreign purchases of US government securities are critical to the market,” says Murray Pozmanter, Managing Director, DTCC Fixed Income Clearance and Settlement Group. “This a global market that trades 24 hours a day, and the easier and safer we can make it for foreign firms to have their US government securities trades cleared with guaranteed settlement within FICC [Fixed income Clearing Corporation], the better it will be for all participants.”

Although many foreign financial firms are major participants in the US government securities market, only overseas firms with US branches or agencies are currently eligible for membership in DTCC’s FICC unit. Currently governments, institutions and individuals outside the US hold just about half of the outstanding debt securities issued by the US government.

In 2008, FICC cleared US government securities trades worth more than $1 quadrillion, or an average of more than $4.2 trillion each day. Additional trades coming in from the proposed expansion of netting members, FICC estimated, might push clearing volume up by 15 to 20 percent.