The National Securities Clearing Corporation (NSCC), a subsidiary of the American CSD, the Depository Trust & Clearing Corporation (DTCC), processed a record 56.7 million transactions worth more than $1.05 trillion on 3 January, the first day of trading in the year, surpassing by 13.2% the previous record of 50.1 million transactions set on 8 June 2006.
NSCC handles clearing and settlement of virtually all trades done on the New York Stock Exchange, Nasdaq, the American Stock Exchange and for all regional exchanges, electronic communications networks (ECNs) and alternative trading systems in the United States.
The new record volume came the day after a National Day of Mourning for former President Gerald R. Ford on 2 January closed US stock exchanges, and may have represented some pent-up demand. Composite share volume on the New York Stock Exchange was 3.44 billion shares, and Nasdaq recorded about 2.5 billion composite shares traded, both under record share turnovers. The number of transactions is different than shares, since a single transaction can have any number of shares connected with it.
The transaction volume on 3 January represented an increase of 69% over the average transaction volume for the first 11 months of 2006, and 55% over the peak volume in 2005. The growing volumes are at least partially the result of increased algorithmic trading and the impact of decimalization, as well as increased trading volume generally.
NSCC says the “significant value” it brings on high volume days includes “netting down” or reducing the number of trade obligations requiring financial settlement, thus both minimizing securities movement and reducing risk for the industry. On the peak day of 3 January, NSCC reduced financial obligations requiring settlement by 98%.