Welcome » IT Booklets » Wholesale Payment Systems » Securities Settlement Systems » U.S. Government Securities » Fixed Income Clearing Corporation (FICC)
FICC,FICC is a subsidiary of the Depository Trust and
Clearing Corporation, a holding company that also includes the
National Securities Clearing Corporation and the Depository Trust
Company. In January 2003, the Mortgage-Backed Securities Clearing
Corporation merged with the Government Securities Clearing
Corporation to form the FICC. For further information about the
Government Securities Division and the Mortgage-Backed Securities
Division, see www.ficc.com. composed of the
Government Securities Division (GSD) and the Mortgage-Backed
Securities Division (MBSD), compares and nets trades of U.S.
Treasury securities, agency debt securities, and mortgage-backed
securities. As the name implies, GSD clears and nets U.S.
government securities and agency debt securities. MBSD provides
automated post-trade comparison, netting, risk-management, and pool
notification services to the mortgage-backed securities market.
Securities eligible for MBSD clearing are mortgage-backed
securities issued by the Government National Mortgage Association
(GNMA), the Federal Home Loan Mortgage Corporation (FHLMC), and the
Federal National Mortgage Association (FNMA).
FICC uses real time trade matching; trade details are compared
and matched as soon as trade information is submitted. Successfully
compared trades result in binding and enforceable obligations for
settlement. Unmatched trades may be revised to achieve a trade
Successfully matched trades of eligible securities, for FICC
netting service participants, are netted against offsetting
net-receive or net-deliver obligation of the same security. Once
the government securities net positions are determined GSD
interposes itself between the original trading parties and becomes
the legal counter-party to FICC members for settlement purposes.
Therefore, GSD members' net settlement obligations are delivered to
or received from GSD. MBSD, however, engages in multilateral
position netting and does not stand in the middle of transactions.
Final net settlement obligations of GSD and MBSD participants are
settled through the Fedwire Securities Service via participants'