National Securities Clearing Corporation - NSCC

DEFINITION of 'National Securities Clearing Corporation - NSCC'

A subsidiary of the Depository Trust & Clearing Corporation (DTCC) that provides centralized clearing, risk management, information and settlement services to the financial industry. The NSCC offers multilateral netting so that brokers can offset buy and sell positions into a single payment obligation, thereby reducing financial exposure and capital requirements.

BREAKING DOWN 'National Securities Clearing Corporation - NSCC'

The National Securities Clearing Corporation was established in 1976 and is a registered clearing corporation regulated by the U.S. Securities and Exchange Commission (SEC). Before its inception, huge demand of paper stock certificates were a reality for stock brokerages, causing the stock exchanges to close once a week. To overcome this problem, multilateral netting was proposed, leading to the formation of the NSCC. The corporation serves as a seller for every buyer, and buyer for every seller for trades settled in U.S. markets.


The NSCC and DTC (another subsidiary of the DTCC) play a major part in the settlement and clearing of securities transactions. They are the largest providers of these services, worldwide.

RELATED TERMS
  1. Depository Trust & Clearing Corporation ...

    Established in 1999, the DTCC is a holding company consisting ...
  2. Qualified Special Representative ...

    An agreement between broker-dealers to clear trades without the ...
  3. Multilateral Netting

    An arrangement among multiple parties that transactions be summed, ...
  4. Depository Trust Company - DTC

    One of the world's largest securities depositories, it holds ...
  5. Clearing Corporation

    An organization associated with an exchange to handle the confirmation, ...
  6. Clearing Broker

    A member of an exchange that acts as a liaison between an investor ...
Related Articles
  1. Investing

    Principal Trading and Agency Trading

    Ever wonder what happens behind the scenes when you buy or sell a stock? Read on and find out!
  2. Insights

    DTCC And Digital Asset Bring Blockchain To Repos

    The rising interest in blockchain has attracted none other than the Depository Trust & Clearing Corporation (DTCC), an entity at the core of post-trade market infrastructure to test bitcoin’s ...
  3. Investing

    What Do Central Counterparty Clearing Houses Do?

    A central counterparty clearing house facilitates trading in European derivatives and equities markets.
  4. Markets

    Depository Trust Company

    The Depository Trust Company, founded in 1973 and based in New York City, is one of the world's largest securities depositories.
  5. Investing

    What's a Subsidiary?

    A subsidiary is a corporation owned 50% or more by another corporation. The owning corporation is usually called the parent or holding company. A company that is 100% owned and controlled by ...
  6. ETFs & Mutual Funds

    What is a Settlement Date?

    A settlement date is the day a security trade must be settled.
  7. Investing

    Inside National Payment Systems

    Investopedia explains: The global interconnection of U.S. payment systems makes commerical and financial transfers possible.
  8. Markets

    A Brief History of International Trade Agreements

    Since the mercantilist era, world trade has become increasingly multilateral, but since WW2 there has been a definite rise in regional trade agreements.
  9. Markets

    The Foundation Of Structured Settlements

    This annuitized payment setup should be arranged through impartial attorneys and tax agents.
  10. Markets

    What is a Wholly Owned Subsidiary?

    A company whose common stock is 100% owned by another company, called the parent company.
RELATED FAQS
  1. When is a share purchase marked as 'settled' by a brokerage?

    Understand the process of purchasing stock, including ordering, clearing and settlement, and learn when a stock trade is ... Read Answer >>
  2. What is the difference between payment netting and close-out netting?

    Learn about the risk reduction practice of netting, and specifically the differences between payment netting and close-out ... Read Answer >>
  3. Are domestic and foreign subsidiaries included on a company's financial statements?

    A subsidiary is a company that is controlled by another 'parent' company. The subsidiary acts and operates like its own entity ... Read Answer >>
  4. How do mutual fund trades clear and settle?

    Learn how mutual fund trades are cleared and settled, and when the money owed must be available or the proceeds due must ... Read Answer >>
  5. Do I own a stock as of the trade date or the settlement date?

    When it comes to buying shares, there are two key dates involved in the transaction. The first date is the trade date, which ... Read Answer >>
  6. What is the difference between a broker and a market maker?

    A broker is an intermediary who has a license to buy and sell securities on a client's behalf. Stockbrokers coordinate contracts ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center