NSCC Enhances ETF Solution with Automated Collateral Management Process

The Depository Trust & Clearing Corporation (DTCC), the market infrastructure for the global financial services industry, announced that its subsidiary, National Securities Clearing Corporation (NSCC), has launched an automated solution that streamlines and simplifies the Exchange-Traded Fund (ETF) collateral management process and adds new fixed income ETF capabilities, a critical step to freeing up capital and increasing operational efficiency during market uncertainty and volatility. Today, NSCC processes an average of 260,000 ETF create/redeem transactions every day. The new NSCC solution fully automates the exchange of ETF collateral, reducing risks in the ETF fund process from trade date to settlement date. With this enhancement, NSCC will process create/redeem instructions, generate payment orders, and ensure collateral is exchanged between authorized participants and servicing agents – all within a no-touch process. By closely integrating the collateral process within the existing NSCC settlement process, NSCC can free up capital for its members by reducing the amount of collateral required on components that are eligible for NSCC’s netting process.