National Securities Clearing Corporation - NSCC

A A A

DEFINITION

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.

INVESTOPEDIA EXPLAINS

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 Company - DTC

    One of the world's largest securities depositories, it holds in excess of US$1 ...
  2. Clearing

    The procedure by which an organization acts as an intermediary and assumes the ...
  3. Clearing House

    An agency or separate corporation of a futures exchange responsible for settling ...
  4. Options Clearing Corporation - ...

    An organization that acts as both the issuer and guarantor for option and futures ...
  5. Depository Trust & Clearing Corporation ...

    Established in 1999, the DTCC is a holding company consisting of 5 clearing ...
  6. Threshold List

    A daily public accounting of market settlement system failures (or 'fails') ...
  7. Accredited Automated Clearing House ...

    A professional designation awarded by NACHA (The Electronic Payments Association) ...
  8. Transit Item

    Any check or draft that is issued by an institution other than the bank where ...
  9. New York Clearing House Association ...

    An organization established in 1853 to simplify the settlement of interbank ...
  10. Night Cycle

    An option created in 1979 to process Automated Clearing House (ACH) transfers ...
Related Articles
  1. Principal Trading and Agency Trading
    Investing Basics

    Principal Trading and Agency Trading

  2. Derivatives 101
    Fundamental Analysis

    Derivatives 101

  3. An Introduction To Managed Futures
    Options & Futures

    An Introduction To Managed Futures

  4. What is the haircut rate imposed by ...
    Trading Strategies

    What is the haircut rate imposed by ...

  5. What does CHIPS UID mean?
    Investing

    What does CHIPS UID mean?

comments powered by Disqus
Hot Definitions
  1. Pension Risk Transfer

    When a defined benefit pension provider offloads some or all of the plan’s risk – e.g.: retirement payment liabilities to former employee beneficiaries. The plan sponsor can do this by offering vested plan participants a lump-sum payment to voluntarily leave the plan, or by negotiating with an insurance company to take on the responsibility for paying benefits.
  2. XW

    A symbol used to signify that a security is trading ex-warrant. XW is one of many alphabetic qualifiers that act as a shorthand to tell investors key information about a specific security in a stock quote. These qualifiers should not be confused with ticker symbols, some of which, like qualifiers, are just one or two letters.
  3. Quanto Swap

    A swap with varying combinations of interest rate, currency and equity swap features, where payments are based on the movement of two different countries' interest rates. This is also referred to as a differential or "diff" swap.
  4. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  5. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  6. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
Trading Center