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Definition: National Securities Clearing Corporation – NSCC
The NSCC was founded in 1976 and is regulated by the United Stated Securities and Exchange Commission. A subsidiary of the DTCC- Depository Trust & Clearing Corporation, the NSCC is a clearing house/clearing corporation that acts as an intermediary and facilitates the settlement of accounts amongst the exchanges, brokerage firms as well as other clearing corporations. It also provides risk management, information etc. to the financial industry.
It allows multilateral netting out of accounts such that buys can be offset by sell positions in a single payments obligation. This reduces the number of transactions, financial exposure and thus the capital requirements for a broker. This is made possible as the NSCC takes offsetting positions in each transaction, acting as a buyer for every seller and seller for every buyer for all the trades that are settled in the US markets. Along with DTC, which is another subsidiary of DTCC, NSCC plays the major roles in clearing and settlements of securities transaction and are the largest provider of such services.