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DTCC sluit succesvol faillissement Lehman Brothers af

Datum nieuwsfeit: 30-10-2008
Bron Bron: Business Wire
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DTCC sluit succesvol faillissement Lehman Brothers af

NEW YORK--(BUSINESS WIRE)--30 okt, 2008-- De Depository Trust & Clearing Corporation (DTCC), de toonaangevende post-trade clearance en settlement infrastructuur van de Amerikaanse kapitaalmarkten, meldt dat het succesvol meer dan 500 miljard dollar schuldpapier heeft afgesloten waaraan marktparticipanten door het faillissement van Lehman Brothers waren blootgesteld. Dit is de grootste close-out in de geschiedenis van DTCC. DTCC meldt dat het niet verwacht de 'closing-out' van de lopende obligaties geen impact zal hebben op zijn behouden inkomsten of op de clearing fund deposto's van marktparticipanten.


Engelstalig bericht:

 
( BW)(NY-DTCC) DTCC Successfully Closes out Lehman Brothers Bankruptcy 
 
    Business Editors 
 
    NEW YORK--(BUSINESS WIRE)--Oct. 30, 2008-- 
 
    Largest Closeout in DTCC History; Prevents Losses for Industry 
 
    The Depository Trust & Clearing Corporation (DTCC), the leading 
post-trade clearance and settlement infrastructure for the U.S. 
capital markets, announced today that it successfully closed out over 
$500 billion in market participants' exposure from the Lehman 
Brothers, Inc. (Lehman) bankruptcy which occurred the week of Sept. 
22. This was the largest close-out in DTCC's history. DTCC reports it 
does not expect there to be any impact to its retained earnings or to 
market participants' clearing fund deposits as a result of closing out 
these pending trade obligations. 
 
    "The liquidation of Lehman was complex, involved multiple asset 
classes, and required a methodical approach to mitigate potential 
losses from outstanding trading obligations," said Donald F. Donahue, 
DTCC chairman and CEO. "Without question, our ability to manage risk 
and see exposure from a central vantage point was instrumental in 
helping us ensure that market risk - and systemic risk - was avoided. 
 
    "During the crisis, DTCC also seamlessly processed four 
consecutive days of record high equity trading volume, which reached 
209 million transactions in a single day on Oct. 10, thus providing 
certainty and stability for the financial system at a time of extreme 
market volatility." 
 
    Lehman was a leading participant in DTCC's depository, clearing 
corporations and OTC derivatives business. It ranked as a top three 
user of DTCC's Mortgage Backed Securities Division (MBSD); in the top 
five largest users of the Government Securities Division (GSD) and 
Deriv/SERV and in the top 10 participants of National Securities 
Clearing Corporation (NSCC) and The Depository Trust Company (DTC). 
Lehman Brothers International (Europe) was a participant of DTCC's 
European Central Counterparty Ltd. (EuroCCP) subsidiary. 
 
    DTCC subsidiaries, NSCC, the Fixed Income Clearing Corporation's 
(FICC) GSD and EuroCCP, are central counterparties (CCPs) guaranteeing 
that most trades outstanding at the time of a bankruptcy of a member 
firm such as Lehman will be settled on the original terms. By acting 
as CCPs, the clearing corporations step in between the seller and 
buyer of each trade to assume the counterparty risk and the 
responsibility to deliver the securities to the buyer and payment to 
the seller. 
 
    Mortgage-backed and Government Securities 
 
    FICC's MBSD handled the liquidation of a gross position of $329 
billion in par value of Lehman's book of "to be announced" 
mortgage-backed securities trades that were outstanding at the time of 
its bankruptcy. Working with all the dealers, banks and other firms 
with which Lehman had conducted trades, and acting as a "CCP for a 
day," FICC MBSD was able to net down and resolve almost 90% of the 
forward trades. Over the following few weeks, FICC gradually sold the 
remaining net obligations into the market with no losses assessed 
against MBSD members' clearing deposits and with no observed market 
impact. 
 
    Lehman's pending U.S. Government securities trades ran to $190 
billion (gross positions) at the time of the bankruptcy. FICC's GSD 
guarantees the settlement of these trades once it accepts them for 
clearing. In order to make good on its guarantee, FICC had to close 
out the various positions, which ranged from repos to government 
bonds. FICC successfully closed out these positions without impact on 
customers. 
 
    Equities, Municipal and Corporate Bonds 
 
    NSCC, which is responsible for clearing and settlement of 
virtually all broker-to-broker trades in the U.S. in equities and 
corporate and municipal debt securities, faced total exposure of 
approximately $5.85 billion from Lehman Brothers at the time its 
accounts were closed. 
 
    NSCC's goal at this stage was to mitigate risk for its members and 
avoid significant disruption in the marketplace. This included 
processing and guaranteeing $3.8 billion in options exercises and 
assignments from The Options Clearing Corporation for the quarterly 
expiration on Friday, Sept. 19. The close out of these Lehman 
positions at NSCC is substantially complete. Most of these positions 
have been liquidated, and there are not expected to be any losses in 
excess of the Lehman clearing fund held, resulting in no losses to be 
allocated to other NSCC members. 
 
    A portion of Lehman's obligations at NSCC was successfully 
resolved when DTCC's subsidiary, The Depository Trust Company (DTC), 
took the lead in working with Lehman's pledgee bank to arrange for the 
release of $1.9 billion in securities, which were used to satisfy open 
trades at NSCC. As a result, NSCC did not need to go to the 
marketplace to purchase securities to complete these trades. In 
addition, DTC managed the net debit cap controls on Lehman's accounts 
throughout this period to limit any potential loss to the depository 
and its participants. 
 
    FICC and NSCC retained a third party adviser to assist in 
liquidating positions held by the clearing corporations. The third 
party adviser provided advice and helped determine the best strategy 
to hedge the portfolios, minimize risk and conduct an orderly 
liquidation without disrupting the markets. 
 
    EuroCCP 
 
    EuroCCP, a U.K.-based subsidiary of DTCC which is providing 
pan-European clearing and settlement services for multilateral trading 
facilities, also had to deal with closing out trading positions for 
Lehman Brothers International (Europe) just one month after its start 
of business and even before EuroCCP officially went into full 
production on Sept. 22. 
 
    EuroCCP suspended Lehman from new trade input on Sept. 15, but 
continued to settle as many of the open positions as possible with 
Lehman's agent banks so it could deliver the securities to other 
participants on the same day. Lehman had open trades in 12 markets and 
six currencies, totaling almost EUR 21 million. About EUR 5 million in 
trades were settled by Lehman's agents on Sept. 15. 
 
    The next day, EuroCCP ceased to act for Lehman once it became 
clear that Lehman's agent banks would no longer be settling the 
remaining positions. EuroCCP engaged a broker to close out the EUR 16 
million in remaining positions. EuroCCP settled with the broker on 
T+1, instead of the usual T+3 cycle, which accelerated the fulfillment 
of its obligations to participants who were awaiting delivery of 
securities. EuroCCP successfully completed its closeout of Lehman's 
open positions without the need to use EuroCCP's Guarantee Fund. 
 
    OTC Derivatives Trade Information Warehouse 
 
    DTCC also acted to minimize risk for its OTC derivatives customers 
from the Lehman bankruptcy. The actions included stopping the 
automated central settlement of credit default swap (CDS) payment 
obligations on Sept. 15 that were maintained in DTCC's Trade 
Information Warehouse (Warehouse) for counterparties of Lehman 
Brothers International (Europe) and Lehman Brothers Special Financing, 
Inc. DTCC also assisted counterparties in removing from the Warehouse 
more than 300,000 CDS contract positions that market participants held 
with Lehman. 
 
    On Oct. 21, DTCC also completed, without incident, the automated 
credit event processing of Lehman Brothers Holdings Inc. (LBHI) 
involving $72 billion of credit default swaps. DTCC calculated and 
bilaterally netted all amounts due on credit default swaps written on 
LBHI. This resulted in approximately US$5.2 billion owed from net 
sellers of protection on LBHI to net buyers of protection. The portion 
of this net funds settlement allocable to trades between major dealers 
was handled through the normal settlement procedures of CLS Bank 
International, DTCC's settlement partner for the Warehouse and the 
world's central settlement bank for foreign exchange. 
 
    DTCC's Comprehensive Risk Management and Strategy 
 
    With a 35-plus year history in clearance and settlement, DTCC was 
able to draw upon its proven experience in effectively managing and 
controlling risk associated with a financial firm failure. As part of 
its comprehensive risk process, DTCC regularly puts its risk and 
operating systems, as well as staff, through intensive testing that 
simulate the possibility of a crisis. These exercises involve 
simulating the steps DTCC would have to take to respond to a major 
financial firm failure. Even though it seemed like a far-fetched 
scenario at the time, on two occasions over the past 12 months, DTCC 
actually conducted tabletop exercises simulating the failure of a 
major investment bank. Members of DTCC's Board and representatives of 
various regulatory authorities participated in the second of these 
exercises as observers. 
 
    "Although we didn't really expect to have to put the experience we 
gained from those exercises to work any time soon, events proved 
otherwise," said Donahue. "They both provided highly useful practice 
runs for what DTCC and our market participants have been dealing with 
in recent months." 
 
    About DTCC 
 
    DTCC, through its subsidiaries, provides clearance, settlement and 
information services for equities, corporate and municipal bonds, 
government and mortgage-backed securities, money market instruments 
and over-the-counter derivatives. In addition, DTCC is a leading 
processor of mutual funds and insurance transactions, linking funds 
and carriers with their distribution networks. DTCC's depository 
provides custody and asset servicing for more than 3.5 million 
securities issues from the United States and 110 other countries and 
territories, valued at US$40 trillion. In 2007, DTCC settled more than 
US$1.86 quadrillion in securities transactions. DTCC has operating 
facilities in multiple locations in the United States and overseas. 
 
    --30--DB/ny* 
 
    CONTACT: DTCC 
             Judy Inosanto, 212-855-5424 
             or 
             212-855-4837 
             jinosanto@dtcc.com 
 
 
 
Disclaimer: Deze bekendmaking is officieel geldend in de originele  
brontaal. Vertalingen zijn slechts als leeshulp bedoeld en moeten  
worden vergeleken met de tekst in de brontaal welke als enige,  
juridische geldigheid beoogt. 
 
 

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