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Building Trust & Value During Times of Uncertainty

Perspectives from DTCC at SIFMA Ops

At a time of increased uncertainty in the operating environment, financial markets have been experiencing significant volatility, leading to wide swings in the major indices and the VIX index topping 60 in recent weeks. With the external landscape so unpredictable, the issues of trust and value creation have taken on greater prominence as many firms look to organizations like DTCC to provide much-needed stability and support.

This was evident in April as our company managed record volumes across platforms and services, including our clearing agency subsidiaries, NSCC and FICC, as well as ITP. Despite the heightened volatility, we seamlessly handled this activity on behalf of the industry, which demonstrated both the resilience of our technology and risk management capabilities and reinforced that DTCC always rises to the occasion for our clients.

Trust and value creation are at our company’s core. These concepts are deeply interconnected, and they are essential to our role as a critical market infrastructure and strategic partner to our clients. We have built trust over the course of more than 50 years by acting with integrity, honesty and always operating in the best interests of the industry. We add value by developing innovative solutions that mitigate risk and enhance efficiencies, leading large-scale implementations like T+1, and solving complex business challenges to enable our clients to meet their objectives.

During the recent SIFMA Ops Conference, I had the pleasure to moderate a panel with my DTCC colleagues to explore the issues of trust and value in more detail. Here are six key takeaways from our conversation.

#1: Delivering on the Benefits of T+1

While accelerating settlement in North America required a massive effort by market participants over nearly three years, it has delivered significant settlement and operational efficiencies to the industry, including returning over $3 billion in margin relief. In addition, during the recent peak activity this past April, the cleared 1-day trading values at NSCC were consistently larger than the cleared 2-day trading values from a period of similar volatility in 2020, highlighting the enormous benefits of removing a full day of risk from the market. It is also noteworthy that fail rates during this time have remained consistently low despite our clearinghouse managing a record $5.5 trillion in a single day. We appreciate the industry’s trust in us to lead on a critical initiative like T+1, and as the EU and UK plan for their own conversion in 2027, we are sharing our learnings with a wide group of stakeholders to help them navigate the complexities of the move.

#2: Building the Control Room for the US Markets

DTCC recognizes the trust that the industry places in us to provide stability, certainty and reliability to the markets, especially during times of high volatility. We’re committed to building on this legacy by establishing additional resiliency tools to allow DTCC to proactively assess the health of post-trade infrastructure as well as identifying potential issues using AI-powered anomaly detection and data-driven analytics. In doing so, we can partner with our clients to remediate matters before they have a broader impact.

#3: Using Trustless Networks to Strengthen Trust

While it may seem counterintuitive to use “trustless networks” like blockchain as a tool to build trust, they are actually essential to achieving that goal. As we all know, collateral is the means by which the financial system manages risk, with mobility of collateral essential to safeguarding the system. Our “Great Collateral Experiment” last month, which included participation by a diverse cross-section of more than 20 firms globally, demonstrated how firms can instantly move collateral at a global scale across CCPs in real time using blockchain networks. As we continue to drive innovation and lead on the digitization of the financial markets, we see significant opportunities to build greater trust with and generate more value for our clients as we support their digital assets journeys.

#4: Leveraging AI to Solve Long-Standing Challenges

Despite DTCC being one of the most heavily-regulated bodies in the industry, we see enormous potential in AI to increase transparency, enhance the client experience and to build new solutions – while being committed to the industry to innovate responsibly. We believe AI can address legacy challenges in creative ways that were simply not feasible just a few years ago. For example, we’re exploring creating query-able chatbots that clients can use to efficiently access information, and we’re empowering our people with knowledge-based agents to leverage data insights to more effectively manage risk, support client escalations and enable the most efficient day-to-day processing.

#5: Modernizing Market Structure

As interest in near round-the-clock trading of U.S. equities grows, there’s an opportunity to deliver new value to the industry, including reducing counterparty risk by applying our central counterparty guarantee to overnight activity across different time zones for global participants We implemented the first phase of our plan last September, and we intend to operate 24×5, from Sunday at 8:00 PM ET to Friday at 8:00 PM ET, to support overnight trading activity from Alternative Trading Systems (ATS) and Exchanges starting in Q2 2026, pending regulatory approval. As we pursue this initiative, we also recognize that it could pose risks to the markets, which we will need to evaluate and address to maintain stability and further grow trust with the industry.

#6: Supporting US Treasury Clearing

The move to central clearing of US Treasuries represents one of the most noteworthy changes to US market structure in decades. It will significantly reduce settlement risk and further protect market stability. In addition, Treasury clearing potentially will enable new opportunities for cross-margining and balance sheet netting, which will increase capital efficiencies, maximize liquidity and generate margin savings. Earlier this year, we announced plans to enhance our cross-margining arrangement with CME by extending the benefits to eligible end users by December 2025, subject to regulatory approval. We also look forward to continuing our collaboration with firms, including providing enhanced support for done-away transactions and appropriate accounting treatment for client repo activity cleared in our enhanced Agent Clearing Service.

There’s an old saying that trust takes years to build and seconds to destroy. While the weeks and months ahead may be filled with unanticipated events, DTCC will continue to protect the markets and provide stability during times of volatility. We will also keep driving value by supporting our clients with innovative solutions and strategic insights.

Author

Sharon Biran serves as Chief Client Officer at DTCC, where she leads the firm’s global client management and engagement strategy, including sales, relationship management, partners, and marketing and communications. She also leads the firm’s enterprise-level businesses, DTCC Consulting Services and Data Services, as well as DTCC’s Report Hub. In addition, Sharon is a member of the DTCC Executive Committee.

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