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Government Securities Clearing Corporation (GSCC)

Contents

  1. Unraveling the GSCC: A Comprehensive Guide
  2. Delving into the Operations of GSCC
  3. The Evolution: GSCC to FICC
  4. Notable Facts About GSCC:

Unveiling the Government Securities Clearing Corporation: A Pillar of Market Integrity

Unraveling the GSCC: A Comprehensive Guide

The Government Securities Clearing Corporation (GSCC) played a pivotal role in clearing and settling U.S. government securities and agency debt securities. Established in 1986 by the National Securities Clearing Corporation (NSCC), the GSCC facilitated the clearing of both new issues and resale transactions of government securities.

Delving into the Operations of GSCC

The formation of the GSCC stemmed from concerns raised by major primary dealers and the Federal Reserve regarding the safety and efficiency of existing clearing and settlement processes for government securities. With representation from primary dealers, clearing banks, and NSCC, the GSCC's board of directors oversaw the corporation's operations, ensuring market liquidity and integrity.

The GSCC's responsibilities included reporting, validating, and matching securities transactions, serving as the counterparty for settlement purposes, and providing automated trade comparison and risk management services. The corporation's scope encompassed various securities, including Treasury bills, bonds, notes, agency securities, and inflation-indexed securities.

The Evolution: GSCC to FICC

In 2003, the GSCC merged with the MBS Clearing Corporation (MBSCC) to form the Fixed Income Clearing Corporation (FICC), a subsidiary of the Depository Trust & Clearing Corporation (DTCC). This consolidation resulted in the creation of separate divisions—the Government Securities Division (GSD) and the Mortgage-Backed Securities Division (MBSD)—to continue the operations of GSCC and MBSCC under the FICC umbrella.

Notable Facts About GSCC:

  1. GSCC cleared approximately $1.6 trillion daily in U.S. government securities trades until 2002.
  2. The merger of GSCC and MBSCC in 2003 marked a significant milestone in the evolution of fixed-income clearing services.
  3. The creation of FICC underscores the ongoing commitment to enhancing efficiency and risk management in the fixed-income market.