Eleven companies have had lawsuits against the DTCC dismissed in the last few years.
The claims against DTCC have to do with its role in the trade settlement process.
Now BCG has developed a report for the DTCC which says now is the time.
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DTCC, or two that compete, could simplify the services and cut their cost to individual investors.
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The clearing house is a joint venture between NYSE EuroNext and the Depository Trust Clearing Corporation (DTCC).
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It has developed what it is careful to call the CICI, operated by SWIFT and the DTCC.
It's a low-margin but steady business: DTCC charges six-tenths of a cent per trade to net out purchases and sales.
The DTCC has been the target of 14 lawsuits by companies accusing it of facilitating naked shorting, though all but three have been dismissed.
The DTCC media statement that is the subject of Global Links' defamation suit was first published by the DTCC on Aug. 31.
The DTCC was referring to two Forbes.com stories about Global Links, but it didn't mention Forbes.com by name in its media statement.
While SIFMA and American banks prefer a centralized approach with industry utilities like SWIFT and DTCC, others see advantages to a federated model.
Coupled with a unique identifier from DTCC, the system will allow a corporate actions user to track an event from instruction through payment.
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After some criticisms, the DTCC and CFTC changed the name of their ID code from LEI to CICI for CFTC Interim Compliant Identifiers.
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This prompted a flurry of letters between the DTCC and Global Links, culminating in Global Links' filing of the federal lawsuit late last month.
The DTCC has fought back by saying the regulation of trading activities is the job of the SEC and the national exchanges, not its own.
The DTCC not only settles the bulk of U.S. equity transactions.
Right now if you wanted to buy government securities you could go and buy them from an institution in New York, they would clear at DTCC.
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The U.S. initiative, pushed by SIFMA and affiliated organizations, has been backing a combination of SWIFT and the DTCC to register and maintain the LEIs globally.
In a statement last week, he said the DTCC reported 8, 970, 394 Overstock.com shares on deposit, while Nasdaq reported short interest in Overstock.com of 9, 578, 481 shares for the same week.
It has expanded with aggregated retail FX trades in a deal with Traiana, an ICAP subsidiary, credit derivatives settlement with DTCC and nondeliverable forwards and FX options.
There are reasons why failure to deliver can be legitimate, such as glitches in transferring physical certificates, and the DTCC says most of the time the trades are resolved within ten days.
This isn't the first time a company has locked horns with the DTCC, the brokerage-owned private company that handles the bulk of the clearing and settlement in U.S. securities transactions.
They pointed to Target 2 Securities and a foreign exchange trade depository being developed by DTCC and SWIFT as examples of industry platforms which will be used by multiple institutions.
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Faster settlement requires a high degree of automation so trades can go from the buy-side to the DTCC untouched by human hands once they are entered into an order management system.
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Daniel Thieke, managing director at the DTCC and another participant in the public letter, wrote that ISO 20022 will reduce the risk of misinterpretation of data and improve identification of events.
FORBES: Is SWIFT Lagging On Corporate Actions Or Serving Its Global Membership?
Global Links has also sued the DTCC for defamation over a line in the media statement that suggested sub-penny stock companies try to artificially raise their stock prices by doing 350-to-1 reverse splits.
This reminds me a bit of the discussions over Legal Entity Identifers (LEI) where U.S. firms with leadership from DTCC and SIFMA, have defined, implemented and advocated a solution ahead of other regions?
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The SIFMA-led study of how to implement Legal Entity Identifers has led to its recommending the ISO 17442 as the standard, with SWIFT and the DTCC to be the core issuing and facilities manager.
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