Financial institution outlines recovery objectives and client requirements

The Depository Trust and Clearing Corporation (DTCC) has outlined its infrastructure resilience priorities for 2004. The details, which are part of DTCC's 2004 Development Agenda, offer a snapshot of infrastructure resilience practices in wholesale financial services.

In the two years since the 9/11 attacks, the financial services sector has negotiated stringent business continuity expectations. The Federal Reserve, Office of the Comptroller of the Currency, and the Securities Exchange Commission initially outlined many of these practices in a 2002 White Paper, Interagency Paper on Sound Practices to Strengthen the Resilience. Since then, leading financial institutions such as DTCC have promoted an infrastructure resilience agenda, which is more sophisticated and demanding than business continuity best practices in other infrastructure sectors.

The DTCC Development Agenda covers offsite recovery, synchronisation, out-of-region staffing, and testing requirements for partners. The DTCC groups these and additional requirements in four areas of focus:

1. Business continuity: Implement new remote data processing capabilities and advance other business continuity efforts.

2. Clearing corporation insourcing: continue to migrate technology support services from the Securities Industry Automation Corporation (e.g., Secure Financial Transaction Infrastructure, or SFTI) to DTCC.

3. Communication upgrades: continue service availability and business continuity by migrating customer communications to more robust services.

4. Interruptions processing: gain industry input on a white paper that will outline plans for processing interruptions. The white paper will address specific actions during an unscheduled closing of one or more of the major markets or exchanges and/or the closing of the Federal Reserve.

Source: DTCC Development Agenda at pages 4-8 (January 2004).

What are DTCC and NSCC?
DTCC is the world's largest securities depository and a clearinghouse for the settlement of securities trading activity. DTCC provides a wide range of custody, asset and related tax services for its participant banks, broker-dealers and clearing agencies. DTCC is a registered clearing agency with the US Securities and Exchange Commission (SEC), a member of the Federal Reserve System and a limited purpose trust company under New York Banking Law.

The National Securities Clearing Corporation (NSCC) acts as a central counterparty, provides trade guarantee, netting and risk management services for equity and debt transactions from US stock exchanges and markets worth more than $89 trillion in 2001. Its principal activities are centralized clearance, settlement and post-trade information services for equities, bonds, mutual fund and annuity transactions to more than 2,000 brokers, dealers, banks, mutual funds, insurance carriers and other financial intermediaries.

Together, DTCC and NSCC represent the primary infrastructure for the clearance, settlement and custody of securities in the United States. Like DTCC, NSCC is registered as a clearing agency with the SEC.

Source: Zeichner Risk Assessment Newsletter. To subscribe to this weekly newsletter, click here.

•Date: 25th February 2004 •Region: N.America •Type: Article •Topic: Financial sector
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