Who is The DTCC and What Are Their Legal Duties?

Market News: DTCC
Market News: Who is the DTCC?

Retail investors have pulled up some information on the DTCC regarding the blockage of margin calls.

The Reddit community is calling the organization corrupt.

But what exactly is the DTCC and how do they play an important role in our markets?

In this article I’m going to explain the duties of this corporation in simple terms and also touch topic on questions retail investors might have when it comes to AMC and GameStop.

Let’s get started.

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Who is the DTCC?

who is the DTCC?
Depositary Trust and Clearing Corporation

The DTCC (Depositary Trust and Clearing Corporation) is an American post-trade financial services company providing clearing and settlement services to the financial markets.

The DTCC processes trillions of dollars of securities on a daily basis.

As the centralized clearinghouse for various exchanges and equity platforms, the DTCC settles transactions between buyers and sellers of securities.

The information is recorded by its subsidiary, the NSCC.

After the NSCC has processed and recorded a trade, they provide a report to the brokers and financial professionals involved.

This report includes their net securities positions after the trade and the money that is due to be settled between the two parties.

Conflict of interest

Clearing corporations such as the DTCC may receive cash from a buyer and securities or futures contracts from a seller.

The clearing corporation then manages the exchange and collects a fee for this service.

The size of the fee is dependent on the size of the transaction, the level of service required, and the type of security being traded. 

Investors who make several transactions in a day can generate significant fees.

This means every naked share that has been created on the ‘short side’ has been recorded and bypassed by the DTCC/NSCC, all for a fee.

And this is where retail investors begin to question the integrity of the financial market.

One of the DTCC’s bigger partners is Bloomberg LP, a privately held media and software company.

Retail investors are weary about Bloomberg due to having a dark pool where institutions can make unregulated trades.

Bloomberg also happens to be a media platform where Citadel’s Ken Griffin is made to feel at home.

The short seller remains to this date one of the top 10 institutions shorting AMC stock.

Related: Wall Street Journal is Indirectly Owned by Citadel's Ken Griffin

DTCC removing margin calls

There is information going around in the retail community of the DTCC removing margin calls and it’s creating somewhat of fear, uncertainty, and doubt.

After digging around for a while, it’s important to note that the DTCC did indeed remove margin calls, but on January 28th of 2021.

This isn’t necessarily occurring right this moment.

A press released was published advising of the circumstances that occurred during the time ‘meme stocks’ were halted.

The DTCC waived $9.7 billion of collateral deposit requirement on January 28th, 2021, limiting institutional losses and limiting retail profits.

Could the DTCC have been playing the middleman to prevent the market from completely collapsing?

Or was this blatant market manipulation?

The organization allowed several naked shares to flood the market but never stepped in to level the playfield for retail investors.

So why step in to minimize institutional losses?

I think it’s safe to say those client fees really make things happen.

The SEC is by law responsible for regulating the DTCC, but the DTCC is a company who caters to a wide range of institutions in the financial market.

And according to the SEC Chairman Gary Gensler, they need whistleblowers to really tackle the issues at hand.

Is the DTCC corrupt?

Most retail investors openly think so.

The corporation is a business that processes orders between buyers and sellers but caters to financial institutions – not retail investors.

The DTCC along with the NSCC are very well aware of the naked shorting issue in our market.

But they’ve failed to put a halt to it.

One can view this negligence as being complicit.

I’m curious to learn what you think.

Leave your thoughts in the comment section of the blog down below.

Also, be sure to stick around for the latest market news.

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8 Comments

  1. Gary Anderson

    S.E.C. needs to investigate! And force them to close their position and pay everything owed for naked shorts, redrocks2020That is there job! What DTCC and Hedge funds are doing is criminal and they need to be held accountable. Including prison sentences!

  2. Gerry

    Very interesting
    Thank you.

  3. Mark Pellicane

    When banks stopped paying decent interest on money in savings accounts and employers stopped their pensions. We were coerced into putting our money into 401k’s. With this, all of the folks handling this massive amounts of money in the markets they are manipulating and stealing our potential to profit!
    It’s B.S.

    I’m not happy about the stagnant growth we have all had.

    Mark

    • Eric Ape Cuttill

      Spot on

  4. Daryl T Olson

    Per articles, the Federal Reserve created/owns the DTCC to in effect hide trades from public scrutiny and lawsuits. It seems the Federal Reserve is a big player in organized crime (aka stock market manipulation – unlimited naked shorting…). Why is the Fed (a privately owned bank) still able to exempt themselves from federal and state income taxes (and don’t even have to declare how much income they earn)? It has been estimated the Fed takes in as much as a trillion dollars tax exempt each year.
    Are the salaries paid to Fed employees exempt from taxes, also (such as J. Powell)?

    There needs to honest media for accountability. Some economic questions need to be asked of every Senate and House candidate before elections, such as:

    1. Will you mandate implementation of Consolidated Audit Trail (CAT) by an independent agency (SEC has proven corrupt and failed to implement for over 12 years since May 2010 declared intent to do so). CAT should catch naked shorts tied to options trades by reviewing historical trading data – and lead to prosecutions to stop it.

    2. Will you outlaw shorting stocks, which is illegal in other venues such as selling real estate that you don’t own? It can be used to manipulate any stock down with no accountability – see Gamestop and still no jail time for numerous outfits shorting it (overall over 140% of stock shorted at 1 point in Jan 2021).

    3. Will you return control of money and monetary policy to the Treasury and stop allowing private banks (Fed) to manipulate policy to loot retail investors? The repeated fear and greed cycles of interest rate manipulation tied to media “hit pieces” on stocks and economy has been very profitable to them.
    ….

  5. Frank Nez

    Let’s start a discussion! Leave your thoughts below.

    • Camafeu

      I am not a US citizen and I wonder if you guys have a government. How come this is going on and no one is ending this blatant corruption?

      • Frank Nez

        Money talks, lobbying seems to be a real issue here.

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