ACSDA VIII GENERAL ASSEMBLY MARCH 31, 2006

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(No Transcript)
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ACSDA VIII GENERAL ASSEMBLYMARCH 31, 2006

• Larry Thompson
• Managing Director and General Counsel of The
  Depository Trust Clearing Corporation

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DTCCS EXPERIENCE WITH REFCO SECURITIES LLC
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DTCCBACKGROUND

• DTCCHolding Company
• DTCCs depositoryThe Depository Trust Company
  (DTC)
• DTCCs other subsidiaries
• Fixed Income Clearing Corporation (FICC)
• National Securities Clearing Corporation (NSCC)
• Other subsidiaries (e.g., DerivServ LLC)

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DTCCS 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

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THE REFCO EXPERIENCE

• October 10, 2005 news story
• Related to Refco Inc, an affiliate of the DTCC
  member
• NOT the member itself

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THE REFCO EXPERIENCEcontd

• Significance of regulated entity
• Loss of market confidence in all Refco entities
• Firm determines to wind down in an orderly
  fashion

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THE REFCO EXPERIENCEcontd

• Significant role of the DTCC clearing agencies
• Information providers and market facilitators
• Wind-down of significant activity
• Preparation for ceasing to act, if necessary

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THE REFCO EXPERIENCEcontd 

• Communications to clearing agencies memberships
• Communications with Regulators, the firms
  settling bank and other clearing corporations

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THE REFCO EXPERIENCEcontd

• Voluntary termination of DTCC memberships
• No loss to DTCC members

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THE REFCO EXPERIENCEcontd

• Lessons learned
• Rule changes
• Special collateral premium example