The Depository Trust & Clearing Corporation ("DTCC") identified continuing post-crisis risks and emerging threats and offered recommendations to improve the financial stability of the global financial industry.

In the white paper, the DTCC recommended:

  • expanding central clearing for both cash and derivatives markets;
  • enhancing regulatory harmonization and cooperation to better identify the early warning signs of systemic risk within derivatives trade repositories;
  • increasing risk transparency through the mandatory use of Legal Entity Identifiers in regulatory reporting; and
  • greater control by enterprises over the quality of their data used in risk management.

The DTCC also advocated for:

  • more holistic risk management, and the use of cross-disciplinary experts to address interconnected risks;
  • closer management of "exposure associated with the proliferation and increasingly esoteric nature of certain [exchange-traded funds]" by managing the exchange-traded funds "more closely to match their specific risk profiles";
  • efforts to "optimize and accelerate the U.S. equity settlement cycle beyond T+2" in order to "further reduce the exposure associated with unsettled trades";
  • continuing regulatory efforts to (i) harmonize regulatory requirements and (ii) encourage innovation "while ensuring a level playing field"; and
  • cybersecurity defenses "emphasizing resilience and recovery as much as prevention, incorporating tabletop exercises and promoting public-private partnerships."

The white paper is the latest in a series of publications by DTCC intended to "identify, monitor and contain, where practical, potential systemic threats." (See DTCC Launches Systemic Risk Office Webpage.)

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