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ACSDA VIII GENERAL ASSEMBLY MARCH 31, 2006

ACSDA VIII GENERAL ASSEMBLY MARCH 31, 2006. Larry Thompson Managing Director and General Counsel of The Depository Trust & Clearing Corporation. DTCC’S EXPERIENCE WITH REFCO SECURITIES LLC. DTCC—BACKGROUND. DTCC—Holding Company DTCC’s depository—The Depository Trust Company (DTC)

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ACSDA VIII GENERAL ASSEMBLY MARCH 31, 2006

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  1. ACSDA VIII GENERAL ASSEMBLYMARCH 31, 2006 Larry Thompson Managing Director and General Counsel of The Depository Trust & Clearing Corporation

  2. DTCC’S EXPERIENCE WITH REFCO SECURITIES LLC

  3. DTCC—BACKGROUND • DTCC—Holding Company • DTCC’s depository—The Depository Trust Company (DTC) • DTCC’s other subsidiaries • Fixed Income Clearing Corporation (FICC) • National Securities Clearing Corporation (NSCC) • Other subsidiaries (e.g., DerivServ LLC)

  4. DTCC’S RELATIONSHIP WITH REFCO • Refco Securities LLC (Refco) • Regulated by the SEC and NASD • Registered broker-dealer • Member of DTC, FICC (both Divisions) and NSCC • Must maintain minimum financial standards • Open positions at all 3 • Collateral deposited at all 3 to support activity

  5. THE REFCO EXPERIENCE • October 10, 2005 news story • Related to Refco Inc, an affiliate of the DTCC member • NOT the member itself

  6. THE REFCO EXPERIENCE—cont’d • Significance of regulated entity • Loss of market confidence in all Refco entities • Firm determines to wind down in an orderly fashion

  7. THE REFCO EXPERIENCE—cont’d • Significant role of the DTCC clearing agencies • Information providers and market facilitators • Wind-down of significant activity • Preparation for ceasing to act, if necessary

  8. THE REFCO EXPERIENCE—cont’d • Communications to clearing agencies’ memberships • Communications with Regulators, the firm’s settling bank and other clearing corporations

  9. THE REFCO EXPERIENCE—cont’d • Voluntary termination of DTCC memberships • No loss to DTCC members

  10. THE REFCO EXPERIENCE—cont’d • Lessons learned • Rule changes • Special collateral premium example

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