FICC-GOV,FICC-MBS,DTC,NSCC Alert! New Minimum Capital Requirements: the increased capital requirements take effect on August 26, 2023

https://www.dtcc.com/-/media/Files/pdf/2023/7/11/GOV1510-23.pdf

https://www.dtcc.com/-/media/Files/pdf/2023/7/11/MBS1248-23.pdf

https://www.dtcc.com/-/media/Files/pdf/2023/7/11/18775-23.pdf

https://www.dtcc.com/-/media/Files/pdf/2023/7/11/a9319.pdf

https://www.dtcc.com/-/media/Files/pdf/2023/7/11/a9319.pdfWut mean?

The National Securities Clearing Corporation (NSCC), along with the Depository Trust Company (DTC) and the Fixed Income Clearing Corporation (FICC), are increasing their minimum capital requirements for members. These changes were proposed in December 2021 and approved by the U.S. Securities and Exchange Commission (SEC) in August 2022.

The new requirements will take effect on August 26, 2023.

If a member doesn't meet the new requirements by this date, they'll have a 60-day grace period (until October 25, 2023) to comply.

The new requirements are tiered based on whether a member self-clears or clears for others, and the level of risk they present to NSCC.

This risk is measured by the member’s daily volatility calculations from NSCC’s value-at-risk (VaR) model.

Here's a quick look at the new requirements:

For self-clearing members:

If VaR is less than $100,000, they need $1 million in Excess Net Capital.
If VaR is between $100,000 and $500,000, they need $2.5 million in Excess Net Capital.
If VaR is more than $500,000, they need $5 million in Excess Net Capital.

For members who clear for others:

If VaR is less than $100,000, they need $2.5 million in Excess Net Capital.
If VaR is between $100,000 and $500,000, they need $5 million in Excess Net Capital.
If VaR is more than $500,000, they need $10 million in Excess Net Capital.