During the post-trade time interval (“T+
x”) while the instructed trade is executed, cleared and settled, those market participants involved are subject to interim risk (both market and counter-party credit risk). Those interim risks are greater during periods of market stress and high volatility. To protect against those risks, participants in the process require their downstream counter-parties to post cash deposits (“margin”).
DTCC’s subsidiary, National Securities Clearing Corp. (“NSCC”) is an SEC-regulated entity that provides
“clearing, settlement, risk management, central counterparty services and a guarantee of completion for certain transactions for virtually all broker-to-broker trades involving equities, corporate and municipal debt, American depositary receipts, exchange-traded funds, and unit investment trusts.