The American CSD, the Depository Trust & Clearing Corporation (DTCC), through its National Securities Clearing Corporation (NSCC) subsidiary, processed a record 56.7 million transactions worth more than $1.05 trillion on January 3, the first day of trading in the year, surpassing by 13.2% the previous record of 50.1 million transactions set on June 8, 2006.
NSCC provides clearance and settlement services 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 January 2 closed U.S. 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 January 3 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.
Part of DTCC’s responsibility is to ensure that there is adequate capacity in its systems to handle not only average volumes from the markets, but also unpredictable spikes in volume. DTCC maintains multiple data centers and operating sites throughout the U.S. to ensure the markets’ safety, certainty and soundness.
NSCC says it brings the “significant value” it brings on high volume days, in addition to providing resiliency and capacity to process transactions, is to “net down” or reduce the number of trade obligations requiring financial settlement, thus both minimizing securities movement and reducing risk for the industry. On the peak day of January 3, NSCC reduced financial obligations requiring settlement by 98%.