SECURITIES FINANCING TRANSACTION (SFT)CLEARING SERVICE
Q: WHAT IS THE SECURITIES FINANCING TRANSACTION(SFT) CLEARING SERVICE?
A: T he Securities Financing Transaction (SFT) Clearingservice is a National Securities Clearing Corporation(NSCC) product offering central clearing andsettlement services for overnight borrows and loans ofequity securities (collectively “SFTs”). To this end, theSFT Clearing service:■■■

Supports central clearing of clients’ equity SFTs
intermediated by Sponsoring Members or AgentClearing Members.
Supports central clearing of equity SFTs betweenNSCC full-service members.
Maximizes capital efficiency and mitigates systemicrisk by introducing more membership and clearedtransaction opportunities for market participants.

Q: WHAT ARE THE BENEFITS OF THE SFT CLEARINGSERVICE?
A: The SFT Clearing service provides NSCC members withthe ability to offset on their balance sheets theirobligations to NSCC on novated SFTs, including thosewith third-party NSCC members and those with their
institutional clients. Through novation to NSCC,members may also be eligible to take lesser capitalcharges on their SFTs than would be required to theextent that they engaged in the same activity outside ofa central counterparty.
By potentially alleviating balance sheet and capitalconstraints, participation in the SFT Clearing service
may afford NSCC members and their clients increased
lending and borrowing capacity.
Additionally, the need for Agency Lending Disclosure(ALD) reporting is no longer applicable for SFTs novatedto NSCC.

Q: WHAT IS THE NSCC SECURITY LENDING MODEL?
A: T o capture maximum capital and balance sheet
efficiencies, all SFTs are required to be executed asovernight term transactions. However, to minimize theoperational burden of settling overnight obligations,settlements are allowed to pair off daily against newactivity, with NSCC calculating and processing Price
Differential, that is price differences/mark-to-market(MTM), that are created by the daily pair off.
NSCC novates and guarantees the off-leg/return of an
SFT (i) when delivery of underlying SFT security
completes at DTC, (ii) at the point of validation in thecase of a bilaterally settled SFT or an SFT with aSponsored Member client or (iii) when the daily pair-offoccurs, in the case of a rolled SFT.

Q: CAN I USE MY EXISTING NSCC ACCOUNT FOR SFTACTIVITY?
 o, CNS® activity cannot be commingled with SFT
A: Nactivity. New NSCC accounts must be opened for SFT
activity. For more information, see the Separation ofAccounts section in the SFT Clearing General ServiceGuide.

Q: DOES NSCC COLLECT MARGIN ON THE SFT BUSINESS?
A: F or NSCC full-service members, SFT activity in themember’s proprietary account is margined on a netbasis. For example, offsetting SFT positions within themember’s proprietary account in the same CUSIP arenetted down for margining purposes. For Sponsoring
Members and Agent Clearing Members, SFT activity
for their clients are margined on a gross basis. Thisincludes the sum of the stand-alone volatility charges
for each client’s novated SFT activity calculated
separately. For more information, see the Separation ofAccounts section in the SFT Clearing General Service
Guide available in the DTCC Learning Center.

ADVANCING FINANCIAL MARKETS. TOGETHER.™

Q: WHO DO I CONTACT TO OBTAIN MORE INFORMATIONABOUT THE SFT CLEARING SERVICE?
A: For SFT Clearing questions, contact John Vinci by email
at jvinci@dtcc.com or by telephone at 212-855-5271 orTom Price by email at tprice@dtcc.com or by telephone
at 212-855-5453.

■

You can also login to the DTCC Learning Center(www.dtcclearning.com) to access the SFT Clearing Users
section, or scan the QR code below to see our extensive FAQ.

You can also use the following NSCC contacts forinformation about the SFT Clearing service:■■■General questions and product support:
Email NSCC Support at NSCCSupport@dtcc.com.
Setup and testing: Email NSCC Integration at
NSCCIntegration@dtcc.com.
Issues with logging on to the system:
Contact DTCC Client Support. Call the following number,and then follow the prompt for product support.
— For US and Canada, call 1 888–382–2721.
— For the UK, Europe, and Asia, call +1 212–855–8099.

© 2022 DTCC. All rights reserved. DTCC, DTCC (Stylized), ADVANCING FINANCIAL MARKETS. TOGETHER, and the Interlocker graphic are registered and unregistered trademarks of The Depository Trust & Clearing Corporation.
The services described above are provided under the “DTCC” brand name by certain affiliates of The Depository Trust & Clearing Corporation (“DTCC”). DTCC itself does not provide
such services. Each of these affiliates is a separate legal entity, subject to the laws and regulations of the particular country or countries in which such entity operates. See www.dtcc.
com for a detailed description of DTCC, its affiliates and the services they offer. DTCC Public (White). 27878-WK042422