Depository Trust & Clearing Corporation announces timetable for settlement optimization.
New York City: The Depository Trust & Clearing Corporation announced a timetable for the first phase of settlement optimization, a significant enhancement aimed at removing an entire market day of settlement exposure without eliminating a calendar day from the standard trade settlement process.
The Depository Trust & Clearing Corporation is the premier post-trade market infrastructure for the global financial services industry. By focusing initially on re-engineering the night cycle, a processing batch occurring in the overnight hours, DTCC seeks to significantly increase settlement rates going into the next morning. Today's more sequential algorithm results in a night cycle settlement rate of about 45% for all transactions during that period. However, DTCC estimates it can increase that same settlement rate to as high as 90% as a result of the re-engineering.
Based on support and feedback from the Settlement Optimization Working Group, DTCC is taking a phased approach to the implementation of Settlement Optimization, beginning with Night Cycle Re-engineering.
This increase in settlement in the night cycle is a prerequisite for the Working Group to explore the implementation of Settlement Optimization Phase 2, the introduction of morning settlement in addition to today's end-of-day settlement process. By moving from the afternoon of settlement date to the morning before market open, the risk associated with funds settlement will be reduced.