Government Securities Clearing Corporation (GSCC)
Candlefocus EditorThe GSCC was the market's central hub where participants reported, validated, and matched the buy and sell sides of securities transactions. It also provided central collection and payment system for all of the participants in the US government securities market and was also responsible for maintaining linkages with the central banks that flowed through the clearing system.
The GSCC operated through a board of directors comprised of representatives from primary dealers and clearing banks. Broker-dealers, commercial and investment banks, mutual funds, pension funds, and other institutional investors reported and matched trades with each other through these representatives.
The GSCC was a critical component of the US government securities market, allowing buyers and sellers to make instant payments, in a highly efficient and regulated manner. By providing a secure and streamlined way of settling and netting transactions, the GSCC greatly reduced operational, counterparty, and credit risk.
In 2003, the GSCC merged with the Mortgage-Backed Securities Clearing Corporation to form the Fixed Income Clearing Corporation (FICC). The FICC continues to serve as the centralized hub of the US government securities market, providing clearinghouse, depository, and real-time settlement services to a variety of participants.
Through the years, the GSCC and later the FICC has provided a reliable and efficient platform for the trading of government securities and mortgages that allowed for cost savings and substantially increased liquidity in the secondary markets. It has also helped to make the US government debt more easily traded in that it simplified the processing of these complex securities by introducing standardized rules and processes, thereby reducing the risk.