Two institutional broker-dealers complete dozens of inter-dealer corporate stock transactions throughout a trading day. At the end of the day, all offsetting purchase and sale obligations between the firms are netted down into single daily net settlement positions through novation. On settlement day (), the ultimate change in securities ownership occurs electronically without physical certificate movement.
Which entities perform (1) the continuous netting and central counterparty clearance of these equity transactions, and (2) the central custody and book-entry ownership transfer of the securities?
- (1) National Securities Clearing Corporation (NSCC); (2) Depository Trust Company (DTC)Cevap
- B(1) Depository Trust Company (DTC); (2) National Securities Clearing Corporation (NSCC)
- C(1) Options Clearing Corporation (OCC); (2) Federal Reserve Wire Network (Fedwire)
- D(1) Financial Industry Regulatory Authority (FINRA); (2) Securities and Exchange Commission (SEC)
Cevap
(1) National Securities Clearing Corporation (NSCC); (2) Depository Trust Company (DTC)
The correct response accurately identifies the distinct roles of the subsidiaries within the Depository Trust & Clearing Corporation (DTCC). The National Securities Clearing Corporation (NSCC) provides trade clearance, risk management, novation, and Continuous Net Settlement (CNS) for equities, corporate and municipal debt. The Depository Trust Company (DTC) serves as the central depository providing custody of securities and executing automated electronic book-entry settlement.
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Clearing vs. Depository Functions (NSCC vs. DTC)
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