How has DTCC’s business evolved over the past year?
In 2023, DTCC celebrated its 50-year anniversary as a trusted steward and industry partner in safeguarding the global financial markets. Important moments like this are as much about reflection as they are about preparing for the future. To position the firm for long-term success, we executed an action plan grounded in our vision to lead the advancement of the global financial markets as the most influential, strategic, and tech-focused partner.
Among our top priorities, we refreshed our corporate strategy and updated our strategic positioning and cultural framework. We also reorganized our company to align around products, platforms and clients. Our more simplified, integrated organizational structure is enabling us to work more efficiently, drive greater innovation and respond faster to clients’ needs. We also successfully executed a corporate-wide program to foster enhanced expense management, which demonstrated to our clients that we’re empathic to the financial pressures they’re experiencing. In addition, it enabled us to sharpen prioritization and create capacity to drive long-term growth.
One of our significant achievements of 2023 was our acquisition of Securrency, a leading developer of institutional grade digital asset infrastructure. This transaction is a gamechanger because it positions or company to drive market-wide transformation and assist our clients on their digital asset journeys.
What will be the biggest opportunities for DTCC in 2024?
We’re seeing transformational change to financial market structure in the United States. Most notably, on May 28, 2024, the equity markets in North America will transition to T+1 settlement, a move that is expected to reduce counterparty credit risk and decrease cost as a result of lower clearing fund requirements. T+1 is also expected to enhance operational efficiencies by encouraging firms to automate manual processes and adopt industry standards and best practices. We’re continuing to work closely with our clients and the industry to test systems and processes to ensure readiness and a seamless transition.
In addition, now that the SEC has issued its formal rule on U.S Treasury clearing, we have begun to actively prepare for implementation. This mandate will significantly transform Treasury market structure, standardize risk management, reduce settlement risk, centralize default management and increase transparency. We’re continuing to support the industry through education efforts, by evolving our access models and providing solutions that will help enable compliance with the expanded rule. At the same time, we’ll continue to lead discussions and provide education around the implications of this mandate to ensure a successful implementation for the industry.
Furthermore, as the industry further embraces tokenization, we see a significant opportunity to leverage the new capabilities we’ve gained through our acquisition of Securrency to help drive consensus on standards, processes and governance and determine the right architecture to establish a robust infrastructure where digital assets can be exchanged in a safe and compliant manner.
As you proceed with these initiatives, what obstacles will DTCC need to overcome? How are you planning to address these challenges?
The consensus across financial services and businesses more generally is that we’re confronting an unprecedented set of risks in 2024. Geopolitical risk is the most significant as ongoing and escalating conflicts can potentially disrupt the markets and supply chains. Inflation also remains a top risk despite monetary policy changes to ease its impact. In addition, growing cyber threats and the uncertainty in the U.S. political landscape and outcome of the 2024 U.S. presidential election are dynamics that all businesses need to prepare for and manage.
DTCC assesses the potential impact of these risks to operational resilience and financial stability and advises clients and other stakeholders to do the same. It’s critical that all firms regularly review and adapt their risk management practices to the changing risk landscape. This includes conducting scenario planning exercises, implementing modernized business continuity, recovery and resilience capabilities, and continuing to educate employees on managing the material risks that can impact their companies. Everyone has a part to play in managing risk, and awareness is the first step.
What excites you most about 2024?
DTCC’s vision is to be a strategic partner to our clients and the industry, and this requires us to further elevate our organization. DTCC plays a unique role in the financial markets, and we’re helping lead some of the most significant changes to market structure that we’ve seen in decades. These opportunities compel us to think from our clients’ perspectives and strategize on how we can fulfil their needs effectively, exceed their expectations and help them solve issues to achieve their business objectives and grow. 2023 was the year we prepared the foundation for our future. 2024 will be a year of execution. We’re committed to delivering seamlessly for our clients, and I’m excited about the journey and the outstanding team at DTCC that that will get us there.
The views, thoughts and opinions contained in this Focus article belong solely to the author and do not necessarily reflect the WFE’s policy position on the issue, or the WFE’s views or opinions.