Depository Trust & Clearing Corp., the clearing and settlement system for the U.S. capital markets, announced Thursday that it had closed out more than $500 billion of market participants' exposure to the Lehman Brothers Inc. bankruptcy, the largest close-out in DTCC's history.
Before its bankruptcy, which occurred the week of Sept. 15, Lehman was a Top Three user of DTCC's mortgage-backed securities division, among the five largest users of the government securities division, and in the Top 10 of participants in National Securities Clearing Corp. and the Depository Trust Co.
"Without question, our ability to manage risk and see exposure from a central vantage point was instrumental in helping us ensure that market risk — and systemic risk — was avoided," said Donald F. Donahue, DTCC chairman and chief executive, in a press release. DTCC reported that it expects no impact on its retained earnings or on market participants' clearing fund deposits from the closing out of these pending trade obligations.
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Corrected October 31, 2008 at 6:29PM: The headline in an earlier version of this item understated the exposure to Lehman Brothers' bankruptcy that was closed out for market participants. As the item correctly stated, it was $500 billion.