DTCCC – Case Study
Improving Insight, Accuracy, Auditability and Control with the
The backbone of America's Financial Services Infrastructure
The Depository Trust & Clearing Corporation (DTCC) plays a central role in America’s financial markets. Its family of companies has helped automate, centralize, standardize and streamline processes that are critical to the safety and soundness of the capital markets worldwide.
DTCC was formed as a shared service organization 25 years ago among the large securities firms to increase efficiencies and reduce the paper involved in back office processing. DTCC has evolved into a key national organization safeguarding the transfer of securities ownership and the settlement of trillions of dollars in trade obligations. Its work is completed under tight deadlines every day. Its primary mission is to reduce costs while protecting and mitigating risk for its members.
DTCC, through its subsidiaries, provides clearing, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks.
DTCC’s importance can be seen through the role it played in the recent financial crisis. Following the Lehman bankruptcy in 2008, the firm played a critical role in protecting the industry from loss. Because of its ability to manage risk and see exposure from a central vantage point across asset classes, DTCC worked with market participants and regulators to successfully wind down over $500 billion in open trading positions from trades in equities, mortgage-backed and US government securities, without any loss to the industry – and avoiding additional burden on US taxpayers. Likewise, DTCC’s overseas subsidiary, European Central Counterparty Limited (EuroCCP), closed out and settled €21 million in pending trades by Lehman Brothers International (Europe).
DTCC’s depository provides custody and asset servicing for more than 3.6 million securities issues from the United States and 121 other countries and territories, valued at US$36.5 trillion. In 2010, DTCC settled nearly US$1.66 quadrillion in securities transactions.
“Going live with Kansys’ billing and customer care product is a significant step for our organization. We recognize that a billing solution will be a key asset as we expand our product line, client base and geographic reach, and will allow us to manage our business in an efficient and cost-effective way. The Kansys Edge will help us achieve those goals.”
– Anthony Savarese, managing director, Finance, for DTCC
The Challenge of flexible pricing, fee management and billing
The financial crisis of 2008 created an immediate need for DTCC to provide increased transparency and provide the ability to report exposures resulting from multi-party transactions. In addition as it expanded globally, DTCC identified the need to simplify complex multi-business unit agreements, as well as provide a more flexible pricing, fee management and billing solution with multiple currency and language capabilities.
The system would empower its IT team to handle pricing and billing internally versus relying on a vendor for changes. Furthermore, it would enable the single pricing, fee management and “billing as a shared service” across all the DTCCs subsidiaries to reduce manual processes and control costs. DTCC, in fact, operates through its 13 subsidiaries and joint ventures – each of which serves a specific segment, fee schedule and risk profile within the securities industry.
Additionally, DTCC also believed a new system would better meet the requirements of the more than 30 regulators across the globe to whom it reports, including the Federal Reserve Bank, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the European Central Bank, the Banque de France, the U.K. Financial Services Authority, the Bank of Japan and the Hong Kong Securities and Futures Commission.