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DTCC files with SEC to provide CCP services for trades in mortgage-backed securities

The Depository Trust & Clearing Corporation (DTCC) has filed an application with the US Securities and Exchange Commission (SEC) to provide central counterparty (CCP) and pool netting services for trades in US mortgage-backed securities.

DTCC said that the Mortgage-Backed Securities Division (MBSD) of its Fixed Income Clearing Corporation subsidiary has filed the application and the initiative is designed to reduce the risks and costs associated with trading in the $100 trillion-a-year market.

MBSD will guarantee settlement on all matched trades once it has regulatory approval and implements the service which will ensure the completion of these long-settling trades if either of the trading parties defaults on its initial trade commitment or pool delivery obligations.

DTCC managing director and general manager of Clearing Services Murray Pozmanter said that they anticipate that their central counterparty services will reduce risk by greatly streamlining the settlement of mortgage-backed securities trades.