Bringing you live news and features since 2006 

Bill Kapogiannis, DTCC

DTCC comments on firm’s enhanced offering


Bill Kapogiannis, Executive Director at The Depository Trust and Clearing Corporation (DTCC), comments on his firm’s enhanced offering and the impact of the ETF rule.

How big a change has the SEC Rule 6c-11 rule brought to the industry when it was introduced? 
The SEC Rule 6c-11 became effective a year after its adoption, giving the industry sufficient time to plan and prepare ahead of the compliance date.  

By eliminating the need to apply for individual exemptive relief, the adoption of the SEC Rule 6c-11 has also enabled faster entry of ETFs into the market, significantly benefiting sponsors, especially smaller sponsors.  
What new efficiencies/capabilities will DTCC’s enhancements to the ETF PCF process help firms achieve?  
The new capabilities have been designed to enhance the consumption and distribution of the ETF Portfolio Composition File (PCF) process in support of regulatory changes calling for ETF increased transparency under SEC Rule 6c-11. As part of these improvements, we have introduced multiple basket types to provide flexibility for Create/Redeem order customisation, pricing baskets and additional data elements to support the clearance of additional asset classes, such as fixed income ETFs, in the near future. The features and automated controls introduced by DTCC expand the firm’s existing ETF primary market clearing process to include processing of multiple basket types and flexibility for order customisation. It will allow DTCC’s clearing members to benefit from the customisation the Rule 6c-11 has allowed for.  

These enhancements are a result of close industry collaboration over the past few years, during which DTCC facilitated a very active large industry working group, including authorised participants, agent banks, and sponsors, working collectively to address key industry challenges and identifying opportunities to improve the functionalities of central clearing processing, not only from an operational standpoint, but also from a risk perspective.  Together, we have devised best practices as it relates to ETF clearing in order for authorised participants to clearly differentiate all basket types, thereby reducing risk for the industry. We plan to continue to closely work with the industry and aim to introduce common practices that will further increase efficiency and transparency in the market. 

What prediction does DTCC/NSCC have for the growth in the ETF industry going forward? 
Looking at the market data it is very clear that the largest inflows in ETFs have been, and will continue to be, in the fixed income space. Against this backdrop, future enhancements allowing for centralised clearing and settlement of fixed income ETFs will help facilitate this growth. Additionally, exemptive relief, which allows for faster and cheaper methods to launch new funds, could further boost ETF growth. Finally, the unprecedented market challenges and volatility earlier this year has unsurprisingly increased ETF trading volumes, leading to a 60 per cent increase in ETF clearing. The approaching November US Presidential election will likely further drive volatility and ETF growth. As a result, we can expect to see more market participants rally behind a centrally cleared ETF model, which significantly decreases operational risks and introduces multiple efficiencies.  

Latest News

MerQube has announced the appointment of Dave Mueller as Chief Financial Officer. Mueller brings 17 years experience operating in corporate..
Northern Trust Asset Management (NTAM), has announced that David Abner is joining as Head of Global ETFs and Funds...
Nvidia’s market cap surge to more than USD3 trillion making it the second most valuable company in the world almost..
BlackRock writes that May marked the highest inflow month of the year for both rates and high yield (HY) ETPs,..

Related Articles

Darren Johnson, Komainu
Custody specialist, Komainu, was launched in 2018 as a joint venture between Nomura, digital-asset investment manager, CoinShares and blockchain business,...
Stuart Chaussee
In January this year, global data and business intelligence platform, Statista reported that there are now more than 8000 ETFs...
Ethereum coin
Last week saw Australia launch spot bitcoin ETFs, with Matteo Greco, Research Analyst at Fineqia International, writing that Monochrome Asset...
Timothy Rotolo, Range Funds
In 2023, Timothy Rotolo launched his business, Range Fund Holdings, the parent company for Range Indices and Range ETFs, followed...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by