Part One - Preliminary Onboarding Engagement



What does it mean to become an NSCC member? What are the services such membership offers? What is required of you to become an NSCC member? What are the steps involved in the onboarding process for NSCC membership?

 

You will find the answers to these and other questions in this area of the NSCC Membership Onboarding Learning Center!

 

Part One: Preliminary Onboarding Engagement answers these questions:

  1. What are DTCC's Mutual Fund Services? What are the benefits of membership?
  2. What steps will you have to take to complete the NSCC Membership Onboarding process?
    To help answer this question we provide a step-by-step, interactive overview of the NSCC Membership Onboarding process!
  3. What is the Prequalification Wizard and when should you complete it?
  4. What are the preliminary eligibility requirements for membership?
  5. What are some of the most commonly asked questions & answers about the NSCC Membership Onboarding process?

Click Next to learn more about DTCC's Mutual Fund Services!

In order to utilize DTCC's Mutual Fund Services, participants are required to be members of National Securities Clearing Corporation (NSCC). NSCC is committed to serving the growing needs of all of its customers. Applicants are asked to satisfy reasonable requirements in order to ensure the financial integrity of the system.

 

After reviewing all the membership information provided for you in Part One: Preliminary Onboarding Engagement, we encourage you to contact Mutual Fund Services at (212) 855-8877 with any questions between 8:30 am and 5:30pm EST, Monday through Friday. An Onboarding Specialist is ready to assist you with your application process along every step of your journey to becoming an NSCC Member!

 

What types of memberships does DTCC offer?

DTCC itself is a holding company and does not offer memberships directly. It does, however, offer various types of memberships through its subsidiary entities and joint venture entities, which cater to various business needs. These entities include, but are not limited to The Depository Trust Company ("DTC"), National Securities Clearing Corporation ("NSCC"), The Fixed Income Clearing Corporation ("FICC") through its Government Securities(GSD) and Mortgage Backed Securities (MBSD) divisions and, DTCC Solutions.

 

The NSCC Onboarding Learning Center is dedicated to applicants pursuing a Broker/Dealer-U.S. Registered/Regulated (Code 44) NSCC Limited Membership with DTCC. It is available to any broker/dealer that meets NSCC requirements and is registered under the Securities Exchange Act of 1934. (For information/benefits regarding other memberships, including:

  • Distributor Membership;
  • Bank or Trust Company Membership;
  • Insurance Company Membership;
  • Data Services Only Membership; and
  • TPA Membership

please see the Membership page on dtcc.com.)

 

Member Benefits

DTCC has been working closely with its clients, industry members and the Investment Company Institute's (ICI) Bank, Trust and Retirement Advisory Committee (BTRAC) and Broker/Dealer Advisory Committee (BDAC) in an effort to standardize, centralize and reduce the operational burden associated with the information exchange of defined contribution plans that occurs among broker/dealers, asset managers, third-party providers and clearing providers.

 

Input From The Industry

"We are very pleased to join DTCC in leading an initiative that will help transform the current industry practices for sharing retirement information among plan sponsors and administrators," said Michael Ward, Executive Director, Morgan Stanley Smith Barney. "We remain committed to advancing the funds industry and are confident that wider adoption of these new standards will continue to progress."

 

A Two-Phased Approach To Service Enhancements

DTCC has enhanced its Networking service and its Profile Security Issue database. The Networking service was leveraged to create additional files specifically for communicating information such as fee payments, plan level information and compensation between third-party providers and broker/dealers.

 

To the Profile Security Issue Database, which contains comprehensive fund prospectus and operational rules data as well as sales charges, finder's fees and expense ratio data, DTCC added new fields to address the industry's compliance with ERISA, Section 408(b)(2). These enhancements enable DTCC to capture necessary data located in related source documents and auto-populate new fields in the Profile database to help its users comply with the new ERISA requirements.

 

A second phase of the project, targeted for later in 2013, will address the exchange of information among broker/dealers, trust companies, clearing firms and the fund companies with which they do business.

 

Next: Learn more about Prequalification and the Onboarding Process

Before you can begin the "Official Onboarding Process" (see below) there are some preliminary steps you must take. In addition to reviewing the information in Part One of this Learning Center, all candidates for membership must complete the "Prequalification Wizard." This is a short online form designed to reduce the time it takes to determine a candidate's membership eligibility and connect them with an Onboarding Specialist. Once you have completed reviewing the information in Part One and have determined, at least preliminarily, that beginning the membership process at this time is appropriate, complete the Prequalification Wizard located on dtcc.com (we provide a link to the 'Wizard on the next page.)

 

Please note: The 'Wizard is not an application for membership. Completing it provides DTCC with information relative to your business needs. It should take approximately 5 minutes, assuming the necessary information is quickly available to you. Once the information is submitted, a DTCC Account Administration representative will contact you.

 

You can learn more about the 'Wizard on the next page - but first we'd like to show you an overview of the NSCC Membership Process.

 

Overview of the NSCC Membership Process

Here you can see an overview of the NSCC Membership Process. There is an intregal relationship between the successful completion of this process and the time candidates spend reviewing the information provided in this Onboarding Learning Center. Click the image below for a closer look - and note how at every step along the way you can find helpful information in this learning center designed to streamline your membership process!

Click to view the Interactive Overview of the NSCC Membership Process in fullscreen.

 

The Onboarding Learning Center is designed to provide you with a good understanding of what you need to do to become a Member, and give you the supplementary information that will help you complete the onboarding process in the most efficient way possible. As you can see from the image on this page, there are a few important steps in the Preliminary Onboarding Engagement phase. You're completing one of them right now by reviewing Part One (the "Preliminary Onboarding Engagement") area of this learning center. The next step involves completing the Prequalification Wizard. Read on to learn more about completing the 'Wizard - but remember you can always come back to this page for an overview of the NSCC Membership Process! 

 

Next: Learn more about the Prequalification Wizard

The Prequalification Wizard is designed to reduce the time it takes to determine your membership eligibility and connect you with an Onboarding Specialist. We've identified some of the commonly asked questions about the "Prequalification Wizard" and answered them here.

 

What is the "Prequalification Wizard?"

The DTCC Prequalification  Wizard is designed for clients to provide DTCC with basic information relative to their business needs so that DTCC can determine whether our products and services fit their needs.

 

Where can I locate the Prequalification Wizard?

The Prequalification Wizard can be located on DTCC’s website dtcc.com under Membership.

 

How long does it take to complete the Prequalification Wizard?

Assuming all relevant information is readily available to you, the Prequalification Wizard will take approximately 5 minutes to complete.

 

How many steps are there in the Prequalification Wizard?

Step 1: Asks for basic information about yourself and your company (this includes full legal name of your company).

Step 2: Asks what country in which your company operates.

Step 3: Asks what memberships and services you would like for your company. (Since you're reading this, your intent should be to apply for NSCC Broker/Dealer US Fund Ltd membership.)

Step 4: Outlines the capital and regulatory requirements for NSCC membership.

Step 5: Reports some preliminary qualification results based on the answers you've provided.

Note: Completing the wizard begins the process of alerting DTCC that you are interested in membership and ensures an Onboarding Specialist will contact you regarding that interest. Any information you enter in the 'Wizard carries over to an application, if one is submitted. Please review our Information Privacy Policies & Procedures.

 

If you are already a DTCC Member you do not have to complete the 'Wizard; instead, please call Customer Service at 888-382-2721.

 

What happens after I complete and submit my information using the 'Wizard?

Once you have completed the 'Wizard, an Onboarding Specialist receives and reviews the information you have provided. If they determine that your firm meets the preliminary requirements for membership, they will contact you and conduct a Needs Assessment for candidates interested in membership. (You may be contacted prior to the Needs Assessment and asked to verify or provide additional information depending on the completeness of your submission - this is not to be confused with the Needs Assessment.) The results of the Needs Assesment is what determines whether or not you are eligible to begin the "Official Onboarding Process."

 

Next: Learn more about Preliminary Membership Requirements

There are some basic requirements that your Onboarding Specialist will need to verify with you right away. We want you to understand these requirements now to ensure you will be able to complete the process once you begin. Even if you don't meet them at the present time, armed with this knowledge you can return here once you meet the requirements and are ready to begin the membership process. When reading the requirements listed below, think carefully if it will makes sense for you to proceed further.  For your convenience we also provide a document which includes information about both Membership Requirements and the Required Legal Documentation for NSCC Limited Membership: pdf Membership Requirements - NSCC Limited Fund Member Distributor - US Registered Broker/Dealer (531 KB) .

Of course, you can always call if you have more questions!

 

GENERAL REQUIREMENTS

To help the government fight the funding of terrorism and money laundering activities, procedures have been established to obtain, verify and record information that identifies each entity that opens an account. When a firm applies for membership, we request information and documents that allow us to identify the firm.

This article outlines basic requirements only. Applicants are subject to additional requirements/standards for membership pursuant to NSCC Rules. NSCC Rules and Procedures may be viewed online, at http://www.dtcc.com/legal/rules-and-procedures.aspx.


The National Securities Clearing Corporation ("NSCC") is a subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). NSCC is an SEC-registered clearing agency and a "self-regulatory organization" under the Securities Exchange Act of 1934, as amended.

 

REGULATORY REQUIREMENTS

Applicants are required to obtain regulatory approval from their primary regulator to conduct the business for which the applicant is completing this application. Before applying for membership, applicants should obtain the required approval and provide the information supporting and documenting the approval.

 

OPERATIONAL REQUIREMENTS

Each applicant must have an established business history of a minimum of six months and be able to satisfactorily communicate with NSCC and to otherwise meet NSCC's operational requirements. In addition, the NSCC Limited Fund Membership entity must be formed in the U.S. Non-U.S. applicants must apply for a NSCC Non-U.S. Limited fund Membership, which has additional membership requirements.

 

CAPITAL REQUIREMENTS

Each applicant must have $50,000 in excess net capital over the minimum net capital requirement imposed by the SEC or such higher minimum capital requirement imposed by the applicant's primary regulator, and aggregate assets under management for all investment companies registered under the Investment Company Act of 1940 for whom it distributes shares of at least $500,000.

 

SETTLING BANK ARRANGEMENTS

A NSCC Member is required to appoint a bank to act as its NSCC settling bank. The settling bank must be a NSCC approved settling bank and will be responsible for paying to NSCC on behalf of the Member any balances owed to NSCC and paying to the Member any balances owed to it by NSCC. A listing of NSCC approved U.S. based entities can be provided upon request.

 

GUARANTEE OR LETTER OF CREDIT

In some instances, the Applicant may be required to obtain either an unconditional guarantee or a clean Letter of Credit in the form provided by our organization. A U.S. issuer acceptable to our organization must provide the guarantee or the Letter of Credit. Whether a guarantee or Letter of Credit is required will be determined by our organization after reviewing the Applicant's organization and financial information requested as part of the supporting documentation requirements. Applicant will be notified if this is a requirement, in such instances.

 

Next: Commonly Asked Questions