A retail investor purchases shares of a corporate equity security through a registered broker-dealer. During the post-trade settlement process, automated trade comparison, netting, and central counterparty clearance are executed to streamline the movement of funds and securities between member firms. Which entity is directly responsible for performing these trade clearance and netting functions for equity transactions?
- National Securities Clearing Corporation (NSCC)Answer
- BDepository Trust Company (DTC)
- COptions Clearing Corporation (OCC)
- DSecurities Investor Protection Corporation (SIPC)
Answer
National Securities Clearing Corporation (NSCC)
The National Securities Clearing Corporation (NSCC), a subsidiary of the Depository Trust & Clearing Corporation (DTCC), serves as the central counterparty (CCP) for equity, corporate bond, municipal bond, and ETF trades. It provides trade comparison, automated clearing, and continuous net settlement (CNS) services to reduce trade obligations and financial exposure among member broker-dealers.
Step-by-Step Solution
Key Concept
Clearing vs. Depository Functions (NSCC vs. DTC)
Estimated Time:1m 0s