Depository Trust Co. and National Securities Clearing Corp. announced a merger agreement Monday in a move to help the financial industry comply with shorter settlement schedules.
Jill M. Considine, chairman and chief executive officer of Depository Trust, said the merger would help mitigate risks associated with the move toward "T+1" - the reduction in the settlement schedule after a trade from three days to one.
Financial terms were not disclosed. The merger plan awaits regulatory approval.
Ms. Considine said the combination would give members a "unified voice" and more resources to tackle technological issues.
"One of our most critical resources is intellectual capital," Ms. Considine said. "This way, we will be able to work on one set of goals as we go forward.
"We were already doing a lot of things together. We more or less formalized what had already been going on."
Ms. Considine would be chief executive officer of the combined entity. Its name has not been determined.
Ms. Considine, a DTC board member for six years, was president and chief executive officer of the New York Clearing House Association before moving to DTC in January.
Mergers among the respective members "took away some of the obstacles" to merging the clearing organizations, she said.
David M. Kelly, president and CEO of National Securities, would be vice chairman. The position of chairman will be filled by an industry official later.
Depository Trust is co-owned by most Wall Street brokerage houses and the New York Stock Exchange. It provides custody services for U.S. stocks and corporate and municipal bonds, holding $19 trillion of assets.
National Security provides clearing and settlement services to brokerage firms and exchanges. It handled $44.6 trillion of transactions last year for 2,000 broker-dealers, banks, and mutual fund companies.
The decision to merge resulted from a nine-month study by Deloitte & Touche and 14 representatives appointed by DTC's and NSCC's boards of directors. The two entities will each become an operating subsidiary of a holding company.
