What is ‘National Securities Clearing Corporation – NSCC’
Financial sector clearing, risk management, information, and settlement services are provided by the Depository Trust & Clearing Corporation (DTCC), a subsidiary of the Depository Trust & Clearing Corporation (DTCC). In order for brokers to combine their buy and sell positions into a single payment obligation, the NSCC provides multilateral netting. This allows brokers to reduce their financial risk and capital needs.
Explaining ‘National Securities Clearing Corporation – NSCC’
Established in 1976, the National Securities Clearing Organization (NSCC) is a licensed clearing corporation governed by the Securities and Exchange Commission of the United States of America (SEC). The demand for paper stock certificates was enormous prior to the establishment of the stock market, prompting the exchanges to shut once a week to accommodate the demand. As a solution to this issue, multilateral netting was recommended, which ultimately resulted in the founding of the NSCC. Trading in the United States requires the company to act as a seller for every buyer and vice versa for deals resolved in the country.
The National Securities Clearing Corporation (NSCC) and the DTC (another subsidiary of the DTCC) play an important role in the settlement and clearing of securities transactions. They are the world’s biggest suppliers of these services in terms of revenue.
National Securities Clearing Corporation FAQ
What is the difference between DTCC and NSCC?
Depository Trust & Clearing Corporation (DTCC) owns National Securities Clearing Corporation (NSCC), which is a wholly owned subsidiary of DTCC that offers financial sector with centralized clearing, risk management, information, and settlement services. As a result, their financial vulnerability and capital needs are reduced as well.
Who runs the National Securities Clearing Corporation?
Robert Druskin was appointed Executive Chairman of the DTCC in 2010, and Michael Bodson was appointed President and CEO of the organization in 2012. As of 2019, Michael Bodson served as the company's chief executive officer, who was overseen by an additional 20 members of the company's board of directors.
Who are NSCC members?
The NSCC has around 3,000 members, which include financial institutions such as banks, brokerage firms, and insurance companies. The National Securities Commission (NSCC) was classified as a Systemically Important Financial Market Utility under Title VIII of the Dodd-Frank Wall Street Reform and Customer Protection Act of 2010 (the Dodd-Frank Act) (SIFMU).
What is the NSCC clearing fund?
The National Securities Clearing Corporation (NSCC) offers clearing, settlement, risk management, and central counterparty (CCP) services for transactions involving stocks, corporate and municipal debt, exchange-traded funds, and unit investment trusts in the U.S.
Further Reading
- Defining financial services – search.proquest.com [PDF]
- The Development of the Government Securities Clearing Corporation – papers.ssrn.com [PDF]
- The economics of naked short selling – heinonline.org [PDF]
- Cross-border securities clearing and settlement infrastructure in the European Union as a prerequisite to financial markets integration: challenges and perspectives – papers.ssrn.com [PDF]
- Guiding Global Finance – www.jstor.org [PDF]
