The Depository Trust & Clearing Corp. said that it will not change any valuations of securities required as collateral for the activities of Fixed Income Clearing Corp. as a result of Standard & Poor's downgrade of its rating on U.S. government debt.
The collateral is used in the FICC’s Government Securities Division Clearing Fund and the Mortgage Backed Securities Division’s Participants Fund. FICC is a subsidiary of DTCC.
“We continue to monitor market developments and volatility in the coming days to assess if we will need to make any changes in our processes FICC will operate under its normal schedule for input and reporting during the week of August 8,” said DTCC in a statement issued on Sunday.. “DTCC is confident in its ability to protect the capital markets and our members throughout a wide variety of market scenarios including this current situation.
On late Friday, market fears were confirmed when Standard & Poor’s downgraded U.S. Treasury debt a notch to AA+ from AAA. The downgrade was quickly criticized by the White House which cited a mistake in S&P’s calculations. However, the ratings agency was steadfast in its decision.