The Depository Trust & Clearing Corporation (DTCC) expressed support for reducing the settlement times of securities from two days to one in written testimony submitted as part of the GameStop hearing, Financial Times reports.
The Robinhood trading app is under investigation for preventing their users from trading in GameStop stocks during the company's stock price surge which began in late January. According to Robinhood, they made the move in response to margin calls from DTCC.
During the stock price surge, DTCC’s National Securities Clearing Corp processed an unprecedented volume of shares. During this time, the company instituted extra fees on Robinhood for processing trades in GameStop. They justified this on the basis that traders should be discouraged from taking on more risk than their capital levels can support.
"NSCC exercises this discretion carefully, often in unique circumstances. In such cases, NSCC’s sole objective is to balance the need to protect the system from a potential clearing member default against the damage and other risks that could result if NSCC were to cease-to-act and liquidate a clearing member’s portfolio."
The call for reducing settlement times received support from Robinhood CEO Vlad Tenev, who suggested that settlement should be instant, going a step further than DTCC. Such measures require approval from the FTC, however.
Nevertheless, DTCC assured the House Financial Services Committee that it currently possesses the technology required to reduce settlement times.
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