Examkin

Soru

Zorluk: ZorDepositories, Clearing Corporations, and Settlement Entities

A broker-dealer executes a regular-way market trade in equity securities on behalf of an institutional client. Prior to settlement, the trade undergoes novation, where a central clearing entity interposes itself between the buying and selling member firms to net all daily positions down to a single net delivery or receipt obligation. Once netted, final settlement occurs via electronic book-entry transfer without physical certificate movement. Which entities fulfill the central clearing/netting function and the central depository/custody function in this settlement lifecycle, respectively?

  1. The National Securities Clearing Corporation (NSCC) performs trade clearance and central counterparty netting, while the Depository Trust Company (DTC) provides central custody and book-entry asset settlement.Cevap
  2. B
    The Depository Trust Company (DTC) performs trade clearance and central counterparty netting, while the National Securities Clearing Corporation (NSCC) provides central custody and book-entry asset settlement.
  3. C
    The Options Clearing Corporation (OCC) performs trade clearance and central counterparty netting, while the Securities and Exchange Commission (SEC) provides central custody and book-entry asset settlement.
  4. D
    The executing broker-dealer performs trade clearance and central counterparty netting, while the Options Clearing Corporation (OCC) provides central custody and book-entry asset settlement.

Cevap

The National Securities Clearing Corporation (NSCC) acts as the central clearing corporation performing novation and trade netting through its Continuous Net Settlement (CNS) system, whereas the Depository Trust Company (DTC) acts as the securities depository holding physical custody and processing electronic book-entry settlement.
In the United States equity infrastructure, the National Securities Clearing Corporation (NSCC) serves as the central clearing house that clears trades and nets settlement positions (acting as central counterparty via novation), while the Depository Trust Company (DTC) serves as the securities depository providing custody, asset servicing, and electronic book-entry transfer of ownership.

Adım Adım Çözüm

1
Identify the entity responsible for clearance, novation, and trade netting in US equity markets.
The National Securities Clearing Corporation (NSCC), a subsidiary of DTCC, acts as the central counterparty (CCP), interposing itself between buyers and sellers to net trade obligations.
Clearance entities manage counterparty risk reduction and obligation netting.
2
Identify the entity responsible for custody, immobilization, and electronic movement of equity shares.
The Depository Trust Company (DTC), also a subsidiary of DTCC, acts as the central securities depository (CSD) maintaining custody and effecting ownership transfer via book-entry accounting.
Depositories eliminate the physical movement of paper securities certificates during settlement.

Anahtar Kavram

Depository vs. Clearing Corporation Operational Distinctions
Tahmini Süre:1m 30s
Bu soruyu puanla

Konular

Depositories, Clearing Corporations, and Settlement Entities

Bu konudan daha fazla soru