The volume of transactions handled by DTCC subsidiaries grew at double-digit rates across most major business segments. For equities processing, volume increased 21%; volume rose 17% for U.S. government securities, and mortgage-backed securities declined 4% due to the slowdown in this market; mutual fund volume was up 19%, and insurance services volume for commission, application and premium transactions increased 19%.
DTCC’s total revenue climbed to $1.1 billion from $947 million in 2003, up 11%. DTCC, which operates on an “at cost” basis, returned $219 million to customers in discounts and other refunds.
One of DTCC’s key achievements during the year was a world-class overall customer satisfaction rating of 90% and a rating of 89% for integrity in its customer survey. The survey also found that 86% of the respondents perceived DTCC as “a premier provider of investment servicing solutions,” which fulfills a major corporate goal established five years ago.
Among the key transaction highlights from 2004:
- Processed approximately $4.5 trillion worth of transactions each day. In effect, DTCC turns over the equivalent of the U.S. GDP every 2.7 days.
- Processed $100.4 trillion in equity, corporate and municipal bond transactions and $709.8 trillion U.S. government securities.
- Settled $275.2 trillion in institutional and money market instrument transactions.
- Processed $45.1 trillion in mortgage-backed securities.
- Handled 103.8 million mutual fund transactions valued at $1.5 trillion
- Processed $11.3 billion worth of insurance applications, premiums and commissions.
- Maintained custody of 2.5 million securities worth $28.3 trillion.
- Processed a record $2.3 trillion worth of corporate actions, including reorganizations, redemptions, dividends and interest.
“The new mission statement is intended to unify our purpose and focus our energy,” said DTCC Chairman and CEO Jill M. Considine. “There are many drivers of change that continue to challenge the financial industry, including demographics, technology innovations, the speed of consolidation and globalization. While not losing focus on our core responsibilities of clearing and settlement, we recognize that our customers want a broader range of investment servicing solutions. DTCC is well positioned to be this logical solutions provider to new market sectors and offer a wider array of services.”
Considine noted that examples of DTCC’s global focus were the launch of services for the over-the-counter derivatives markets worldwide, called Deriv/SERV, and the Global Corporate Action (GCA) Validation service, which provides corporate actions information globally.
Deriv/SERV showed exceptionally strong growth in 2004, breaking even in its first year of operation. Deriv/SERV quadrupled its customer base in its first full year of operation, and has rapidly expanded services to include payment reconciliation and equity derivatives. In 2005, it will expand to include matching and confirmation of interest rate derivatives. GCA Validation also showed strong growth, with major offices established in New York, London and Shanghai to collect and validate corporate actions data. In early 2005, the service added Credit Suisse First Boston and JPMorgan Securities as new clients.
Among the other major 2004 accomplishments:
- Opened a new operations center in Tampa, Florida, a critical part of the company’s business continuity strategy for further diversifying operations to multiple operating and data centers, ensuring continued operation under almost any circumstance.
- Obtained the highest rating (AAA/A-1+) for FICC from Standard & Poor’s, and confirmed that rating for both DTC and NSCC.
- Completed the insourcing of all NSCC technology applications to DTCC’s data complex from the Securities Industry Automation Corp. (SIAC), and began insourcing FICC applications from SIAC.
- Completed virtually all the planned straight-through processing phase steps, including a major redesign of the Continuous Net Settlement System and initial Inventory Management System phases, to allow a shorter settlement cycle if the industry decides to move to something less than T+3 settlement.
- Launched implementation of real-time trade matching (RTTM) for all fixed income securities, and continued development of links that will allow the matching system to support real-time price reporting through the RTTM system input.
- Implemented a series of initiatives designed to further eliminate use of physical securities certificates for equities and other securities.
