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Mortgage-Backed Securities Division (MBSD)

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Fixed Income Clearing Corporation’s (FICC) Automated Funds-Only Settlement Service provides a standardized, automated method for settling non-trade, funds-only obligations each day between FICC and its customers’ settling banks.

FICC’s service eliminates manual processing and reduces costs by aggregating payments due to or from a customer and then automatically transferring the funds into or out of the customer’s settling bank.

For mortgage-backed securities, non-trade cash obligations can include the net settlement balance order market differential (SBOMD) derived from the TBA Netting process on the days of the month when mortgage-backed securities trades traditionally settle, cash adjustments related to net pool obligation settlements, principal and interest payments for failing net pool settlement obligations, (to the extent that they are not handled by the Fedwire Securities Service Automated Claims Adjustment Process (ACAP), charges assessed by the Federal Reserve Bank of New York, the Treasury Market Practices Group (TMPG) for delivery fails, as well as other items, such as, interest income rebates and routine billing matters.

 

Who is the service for?

The service is automatic and mandatory for FICC members that have funds-only settlement obligations. This includes Mortgage-Backed Securities Division (MBSD) clearing members.

 

What are the benefits of using the service?

  • Automates the  process for the settlement of funds owed to and from the Mortgage-Backed Securities Division
  • Provides a tool for market participants to ensure that obligations due to FICC are made on a timely basis; and
  • Mitigates operational risk by automating the funds-only settlement process while streamlining and standardizing the collection of funds across clearing corporations.

 

How the service works

FICC utilizes the Federal Reserve Bank’s National Settlement Service (NSS) to debit and/or credit net settlement obligations at the settling bank level of MBSD clearing members. The individual debits and credits of all participants using the same settling bank are totaled, and the net result established at the settling bank level will be settled using NSS. FICC has further leveraged systems and procedures already in place at The Depository Trust Company to perform this function by using it as the agent to interface with the Federal Reserve Bank for settlement. The Depository Trust Company is also a subsidiary of DTCC.

The service creates a funds-only settlement file containing all of the participants’ debits and credits for the current business day. This file is sent to DTCC’s Fed Funds Settlement (FFS) system. The DTCC Participant Browser Service (PBS) is then used to send broadcast messages containing net settlement figures to settling banks. MBSD participants will also receive report output in advance of the cash settlement due date.

Please refer to the MBSD and GSD rules regarding the timelines for funds-only settlement.  

 

What the Service Covers

For MBSD, cash settlement is the accumulation and projection of aggregated payable/receivables resulting from the following cash obligation items:

  • Pool Transaction Adjustment Payments
  • Clearance Adjustments
  • Principal Payments
  • Interest Payments
  • Broker Commissions
  • MBSD Clearing Billing Fee
  • Electronic Pool Notification (EPN) Billing Fee
  • Clearing Fund Interest
  • Settlement Balance Order Market Differentials
  • TMPG charges
  • Customer Protection Rule (CPR) Claims
  • TMPG Financing Amounts
  • Miscellaneous from To-Be-Announced (TBA) Clearing
  • Miscellaneous from Pool Netting

 

For more information

If you would like further information regarding Automated Funds-Only Settlement processing, please contact your relationship manager via the Relationship Services Group Hotline at (800) 422-0582, or by email at This email address is being protected from spambots. You need JavaScript enabled to view it..

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The MBSD section of the DTCC Learning Center provides information about all of the products and services of the Fixed income Clearning Corporations's Mortgage-Backed Securities Division.

The Mortgage-Backed Securities Division (MBSD) is the sole provider of automated post-trade comparison, netting, electronic pool notification, pool comparison, pool netting and pool settlement services to the mortgage-backed securities market thus providing greater efficiency, transparency and risk mitigation to this specialized market.

What Members Need To Know


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Fixed Income Clearing Corporation (“FICC”) would like to remind the Mortgage Backed Securities Division (“MBSD”) and the Government Securities Division (“GSD”) member firms of the guidelines that should be followed in the event that they are experiencing internal system issues and require an end-of-day extension to submit trade input.

In the event that members are experiencing system issues and require an extension beyond the 8:00 p.m. EST cutoff, please contact the IT Operations Group at 888-382-2721 (option 5-5).

Please note the following important key points:

  • Members must contact the IT Operations Group by 7:30 pm EST to request a trade submission extension.
  • Any request received after 7:30 p.m. EST will be handled on a best efforts basis.
  • Upon request by a member, an automatic extension will be granted for a period of up to 30 minutes through 8:30 p.m. EST.
  • If a member requires an additional 30 minute extension through 9:00 p.m. EST, FICC Operational staff may request additional information (i.e. volume, system status, etc.) in order to assess the request.
  • If FICC Operations agrees to grant an additional 30 minute extension through 9 p.m. EST, an email notice will be sent to all members alerting them of the delay in the transmission of end-of-day output beyond typical distribution timeframes. FICC will send status update alerts to member every 15 minutes thereafter with the estimated timeframe for publishing the end-of-day data output.

If you have any questions, please contact your Relationship Manager.


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