[On the Record] DTCC: The Fully-Paid-For Account
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The Fully-Paid-For Account
dtcc.com
Overview
The Fully-Paid-For Account is a special sub-account within NSCC's Continuous Net Settlement (CNS) System that assists participants in maintaining compliance with possession and control requirements pursuant to Rule 15c3-3 of the Securities Exchange Act.
The Fully-Paid-For Account allows participants to complete delivery obligations based on anticipated same-day allocations from CNS. The Fully-Paid-For Account is available for CNS-eligible equities, corporate bonds, Unit Investment Trusts, rights and warrants. (Municipal bonds are not eligible.)
Who can use the service
All qualified NSCC members are able to use the service, and it is especially advantageous to those that serve both a retail and institutional client base. Members must have the ability to settle at NSCC.
Benefits
The service makes the settlement process more efficient, reduces risk associated with conditional "iffy" borrows and eliminates unnecessary carrying costs:
Through the service, participants are no longer forced to arrange for "iffy" borrows or to wait for expected allocations and separately process third-party deliveries
The Fully-Paid-For Account expedites and synchronizes street-and customer-side settlement, facilitating cash-flow planning, and reducing interest and carrying costs
The protection of participants' customer securities is enhanced and maintained
How the service works
Brokers who are expecting to receive a security in CNS may make deliveries of the same amount of customer securities to third parties. If CNS does not allocate the position, the member must move its CNS long position from the general CNS account (A) to the Fully-Paid-For-Account (E). To move positions in and out of these accounts, participants submit instructions to NSCC by mid-morning.
On the money settlement side of the Fully-Paid-For Account, NSCC debits the participants' money settlement accounts for the current market value of long securities positions in the Fully-Paid-For Account.
These debits are accounted for separately. Thereafter, participants' daily net money settlements are adjusted to reflect price changes (if any) through daily marks-to-the-market, until CNS security allocations offset positions in participants' Fully-Paid-For Accounts.
For more information:
Please call Relationship Management at (800) 422-0582.
The Fully-Paid-For Account is a service offering of National Securities Clearing Corporation, the nation's leading provider of centralized clearance, settlement and information services to more than 2,500 brokers, dealers, banks, mutual funds, insurance carriers and other organizations. NSCC develops standardized, automated solutions that promote connectivity, efficiency and lower risk in the financial services marketplace. NSCC is a subsidiary of The Depository Trust & Clearing Corporation (DTCC). |
