System and Operational Flows

A.   NSCC operates the input interface for the two systems that handle the life cycle of an SFT. The UTC system accepts the SFT from the Approved SFT Submitter and SAS, used for SFT Clearing, warehouses the SFT and keeps track of status changes. DTC performs the function of moving securities and cash based on instructions from SAS. SAS is responsible for maintaining the settlement status of an SFT and acts as a hub between UTC and DTC. It determines what to send to DTC for settlement and when to send it. It also updates NSCC’s risk systems of settlement events to make sure the most current status of an obligation is provided to the risk systems for risk management. For more information about the SFT Clearing service processing, see the SFT Clearing General User Guide available in the DTCC Learning Center.

A.   As a part of their output, members are provided with DTCC Reference IDs for their SFTs. These are 14-byte unique identifiers created for each transaction processed in the UTC system. All messaging referencing a particular SFT (whether from UTC, SAS, or DTC) uses or necessitates the use of this identifier. In addition, as a part of your input, you can include other reference IDs, such as your firm specific IDs. Although NSCC does not perform any processing on these reference IDs, they are carried over and passed through on the output.

A.   SFTs are settled on a deliver-versus-payment (DVP) and receive-versus-payment (RVP) basis.

A.   At times, a security underlying an SFT may, for reasons outside of NSCC’s control, become ineligible for processing at NSCC. An example is if the security is undergoing a corporate action that cannot be supported through central clearing processing. In these circumstances, NSCC may need to exit the obligation from its systems.

NSCC provides the affected members with as much notice as possible that such an action is anticipated to allow them to attempt to close out the SFT or, otherwise, exit it from central clearing prior to an NSCC-initiated exit. However, in the unlikely event an NSCC-initiated SFT exit must occur, NSCC will mark-to-market the position to the end of day price from the prior business day (collect/pay the difference in end-of-day settlement) and update the SFT as settled on NSCC’s books.

A.   Login to the DTCC Learning Center, and then view the Message Flows section in the SFT Clearing General User Guide to obtain scenario descriptions and diagrams about the message flows.

A.   The SFT Clearing services uses both CUSIP and ISIN in the messages. However, due to the limitations of various ISO messages, only one identifier may be used. For more information about formats, see the SFT Clearing Technical Resources available from the DTCC Learning Center.

A.   NSCC supports the following mandatory dividends and corporate actions as part of the SFT Clearing service:

All other corporate actions, either voluntary or mandatory, are not supported. Corporate actions, where there is a conversion of one security into multiple securities or a convergence of multiple supported corporate actions on the same day, are not supported. Moreover, proxy (assignment of proxy votes) are not supported in the SFT Clearing service.

A.   Yes. Lenders can use the SFT Clearing service to process recalls and buy-ins. Lenders can submit recall messages at any time during the business day between 8:00 AM and 11:59 PM Eastern Time for any outstanding off-leg return. A Recall can be for full or partial shares of a DTCC Reference ID. If a Recall message exceeds the number of shares already recalled for a DTCC Reference ID, it is rejected. When a Recall message is submitted, NSCC generates a unique Recall ID that is used to track the Recall.

When the Allowed Buy-In Execution Date has been reached, the lender is allowed to process a buy-in execution equal to or fewer than the total number of shares of all Recalls for that DTCC Reference ID which has reached the Allowed Buy-In Execution Date.

For more information, including cutoff times, examples, and processing details, see the SFT Clearing General User Guide available in the DTCC Learning Center.

A.   CNS eligible equity securities with a per share price of at least $5 are eligible for processing through the SFT Clearing service. NSCC would accept a new SFT only when the underlying CNS-eligible equity security is priced at $5 per share or more. However, daily rolls of existing SFTs continue to be accepted by NSCC even if the current price falls below $5 per share, but NSCC imposes 100% margin for those rolled SFTs where the per share price of the underlying equity is below $5.

A.   In addition to messages, you can view information about your business using the Securities Financing Transaction (SFT) Clearing service or accessing the MRO output files. For more information about the service or MRO output files, see the SFT Clearing Users section of the DTCC Learning Center.

Q.  What are the SFT Clearing service daily cutoff times?

A.   The output from the UTC system is based upon how the input was submitted. The following table provides a description of all the SFT Clearing message types along with the cutoff times:

A.   The following table shows the holiday closures: