The shareholders of Government Securities Clearing Corporation (GSCC), MBS Clearing Corporation (MBSCC) and the Emerging Markets Clearing Corporation (EMCC) have approved a plan for the three organizations to become subsidiaries of The Depository Trust & Clearing Corporation (DTCC).
The integration, which took effect officially on Jan. 1, 2002, followed the completion of the share exchange offer on Dec. 20. A special DTCC shareholder meeting was held on Dec. 21 at which 19 directors were elected to serve on DTCC’s Board of Directors, along with the two directors that serve as representatives of the company’s preferred shareholders.
The new directors represent the diverse constituencies of the various clearing corporations and the depository, including custodian banks, investment banks, retail broker/dealers, clearing brokers, inter-dealer brokers, government securities dealers, mutual funds, and mortgage-backed securities dealers. The group will serve as directors of DTCC as well as each of the clearing and depository subsidiaries. Under the plan, GSCC, MBSCC and EMCC will each continue to function as a separate legal entity with their own participants, rules and procedures, and risk management profiles, while operating under an integrated management structure.
“We are very pleased that clearing corporation shareholders have approved this integration plan,” said Jill M. Considine, chairman and CEO of DTCC. “This represents a significant step in responding to industry needs for greater synergies and efficiencies in post-trade processing, particularly in the processing of fixed income instruments. With this consolidation, we’ll be in a much better position to respond to changes in the markets and technology, including the move to straight-through processing, as well as the demand for the delivery of new products and services.”
The Securities and Exchange Commission (SEC) gave regulatory approval to the proposal in October 2001.
The Synergy Committee established to oversee the integration was also charged with recommending individuals to serve as DTCC directors. This committee was directed to include among its choices one or more representatives of operating subsidiary participants.
The new slate of 21 directors is as follows:
Bradley Abelow,Managing Director and PartnerGoldman, Sachs & Co
Jeffrey C. Bernstein,
Senior Managing DirectorBear Stearns & Co.
Stephen P. Casper,Managing Director and Chief Operating OfficerFischer Francis Trees & Watts, Inc.
Jill M. Considine,Chairman & Chief Executive OfficerThe Depository Trust & Clearing Corporation
Frank J. DeCongelio,Managing Director
Credit Suisse First Boston
Dennis J. Dirks,Chief Operating OfficerThe Depository Trust & Clearing Corporation
Mary M. Fenoglio,Executive Vice PresidentState Street Corporation
George Hrabovsky,PresidentAlliance Global Investor Services
Ronald J. Kessler,Vice ChairmanA.G. Edwards, Inc.
Edward A. Kwalwasser,Group Executive Vice PresidentNew York Stock Exchange
Peter B. MadoffSenior Managing DirectorBernard L. Madoff Investment Securities
James H. Messenger,Chief Executive OfficerNational Financial Services
Eileen K. Murray,Chief Administrative OfficerMorgan Stanley Dean Witter’s International Securities Group
Thomas J. Perna,Senior Executive Vice President, Financial Companies Services SectorThe Bank of New York
Ronald Purpora,PresidentGarban, LLC
Peter Quick,PresidentAmerican Stock Exchange
Robert H. Silver,Executive Vice President & Director of Operations, Technology, Service andCorporate Employee Financial ServicesUBS PaineWebber, Inc.
Thompson M. Swayne,Executive Vice PresidentJP Morgan Chase
Melvin B. Taub,Corporate Technology OfficerCitigroup
Arthur L. Thomas,Chief Operating OfficerMerrill Lynch Securities Services Division
James W. Zeigon,Vice Chairman of the Global Transaction Bank andPresident of Bankers Trust Company andBankers Trust Corporation
(Bios for board members are available online at www.dtcc.com. Click on the “Press Center,” and then onto Board of Directors and Board Bios.)
The terms of the proposed integration plan were approved in July 2001 by the user-representative boards of DTCC, GSCC, MBSCC, and EMCC. These approvals followed a three-month study commissioned by the respective boards, and six months of further consideration by the Synergy Steering Committee made up of the chairpersons of each board and a second representative chosen from each board.
The committee concluded that the industry could achieve greater efficiencies in each of the following areas by combining the organizations:Streamlining core processes and information flows
Improving communication and quicken the pace of technology innovation
Further aligning clearing corporation strategies and services with customer needs
Strengthening risk management and expand opportunities for cross-margining
Enhancing management strength, governance, employee recruitment and retention
Positioning the industry for increased growth in global trading activity.