Government Securities Clearing Corporation (GSCC)

What Is the Government Securities Clearing Corporation?

The Government Securities Clearing Corporation (GSCC) was a non-benefit organization that cleared and netted U.S. government securities and agency debt securities. The GSCC was first settled in 1986 by the National Securities Clearing Corporation (NSCC) to give clearing and settlement of U.S. government securities. The GSCC handles both new issues and the reselling of government securities.

Understanding the Government Securities Clearing Corporation

Unified clearance and settlement services in the U.S. government securities market was led through the Government Securities Clearing Corporation (GSCC). The corporation was laid out after several large primary dealers, and the Federal Reserve voiced worries about the safety and sufficiency of the existing processes for clearing and settling government securities, which incorporated the risks associated with the disappointment of a major firm, the shortcomings of manual paper processing of trade confirmations, and bilateral trade-for-trade settlement. The board of directors of GSCC was comprised of delegates from primary dealers and clearing banks, plus a management director (GSCC's leader) and two directors designated by NSCC.

GSCC was entrusted with reporting, approving, and matching the buy and sell sides of securities transactions. The GSCC analyzed transactions and went about as the counterparty for settlement purposes for each net position. This served an important job, as the organization kept up with the liquidity and integrity of the market for U.S. government securities. Moreover, the corporation gave automated trade comparison, risk management, and operational productivity to the U.S. Government securities market. Securities transactions handled by the GSCC included Treasury bills, Treasury bonds, Treasury notes, zero-coupon securities, government agency securities, and inflation-indexed securities. The last net settlement obligations of GSCC participants were settled through the Fedwire Securities Service by means of the participants' settlement bank. Up to 2002, GSCC cleared about $1.6 trillion daily in trades including U.S. government securities

In 2003, GSCC merged with the MBS Clearing Corporation (MBSCC) to form the Fixed Income Clearing Corporation (FICC), a subsidiary of the Depository Trust and Clearing Corporation (DTCC). FICC offers similar types of assistance GSCC and MBSCC gave, however through separate divisions called the Government Securities Division (GSD) and Mortgage-Backed Securities Division (MBSD). These two divisions keep on working basically as GSCC and MBSCC did, individually, offering their own services to their own individuals, with each keeping a separate collateral margin pool.