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DTCC Implements Tools to Ensure its Networking Infrastructure is Ready for Anything


Given the high number of stock transactions DTCC handles, it needs a robust IT infrastructure. Pictured here, from left, are engineers Sigfrido Perdomo, Richard Warren and Anthony Smith at the DTCC-Dallas location. Photography by Aggie Brooks

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Customer: The Depository Trust & Clearing Corporation
Headquarters: New York City
Business: Provider of clearing, settlement and information services for the equities market
Challenge:Ensure its networking infrastructure is rock solid
Solution: Using several tools from Inside Products to proactively address and solve networking issues
Hardware: Two IBM zEnterprise 196s
Software: Inside Products’ Inside the Stack, Application Checker and Availability Checker; WebSphere; DB2 for z/OS

The days when stock market trades were paper-based with certificates being physically transferred from sellers to buyers are long past. Those handoffs are now managed electronically, in seconds or less, and without paper. They’re stored as digital records of who owns what as of when.

This change was inevitable given the increasing number of trades every second of every trading day. In the past, some markets would shorten their working days to ensure required certificates—often cartons of documents and messenger bags of checks—were delivered from one location to another.

This is, in part, why The Depository Trust & Clearing Corp. (DTCC) was established: To streamline the transfer of security ownership and settle trade obligations. It’s no small feat, to be sure, and one that requires fast, secure and always-open channels of communication. To that end, DTCC enlisted the assistance of Inside Products and its TCP/IP-monitoring tools to keep up with the increasing number of transactions it processes and meet rigorous service-level agreements (SLAs).

 

The Paper Crisis

Headquartered in New York City, DTCC was founded in 1999 when The Depository Trust Company and National Securities Clearing Corporation were combined to create a single entity. The organizations were initially created to address the “paper crisis” of the late 1960s and early 1970s.

As Charles Fabius, DTCC manager of Network Software and Planning, describes it: “The clearance and money settlements of trades between broker/dealers and stock exchanges were largely manual, and because the volumes of those trades had grown so enormous, Wall Street would come to a halt one day a week just to handle the paperwork,” he says. “We—meaning the National Securities Clearing Corporation and The Depository Trust Company—were formed to address that issue by automating large parts of it.”

You don’t hear a lot about us, but we’re the hub of the financial industry.”
—Richard Warren, senior network engineer, Depository Trust & Clearing Corp.

Today, DTCC clears around 99 percent of trades in the United States, providing clearing, settlement and information services for equities, corporate and municipal bonds, government- and mortgage-based securities, money-market products, and a variety of derivatives. (In Europe, one of its subsidiaries, the European Central Counterparty Limited, has a similar role.) In 2011, its depository offered custody and asset servicing for nearly 3.7 million securities issues—valued at some $39.5 trillion—in the U.S. and 121 other countries and territories. In total, the organization settled close to $1.7 quadrillion in securities transactions last year.

Richard Warren, DTCC senior network engineer, explains the business model in this way: “Say there are two brokers conducting a transaction—one is selling and one is buying. This sounds relatively straightforward, but there is a great deal of information that has to go back and forth between these brokers before a transaction can be completed, with trading information being sent from one organization to another and then to another. We handle all of that so the brokers don’t have to. In fact, the major exchanges can’t run without our help. You don’t hear a lot about us, but we’re the hub of the financial industry.”

 

Critical Technology

Given the mind-boggling number of transactions DTCC handles, it needs a robust IT infrastructure, at the core of which are two IBM zEnterprise* 196s, with about 18 LPARs between them. All of the transactions DTCC completes are handled by industry-specific applications running on these mainframes.

Key to the organization’s operations is its network infrastructure. After all, every trade posted by its business partners flows through it, from one broker/dealer to another and then back again. Most of this, according to Sigfrido Perdomo, a DTCC lead network engineer, is handled via TCP/IP using several data-transfer protocols and tools, including FTP, WebSphere*, MQSeries* and ConnectDirect.

The organization has to oversee routing, security and firewalls. It must track network statistics and indicators to provide the resources needed to honor its SLAs regarding network availability and performance. And it does so with great success. However, occasional problems do occur. For example:

  • Issues regarding routing between LPARs to servers has resulted in excessive CPU usage on one of the mainframe LPARs.
  • On one occasion, several servers and clients had excessive network retransmissions, which affected response times and increased transmission times over TCP/IP.
  • Additionally, an application on the mainframe that was incorrectly running an ongoing internal trace was increasing file-transmission times.

Jim Utsler, IBM Systems Magazine senior writer, has been covering the technology field for more than a decade. Jim can be reached at jjutsler@provide.net.


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