The DTCC subsidiary that acts as central counterparty for US equity trades, guaranteeing settlement and netting members' obligations down to a single figure per security.
NSCC steps between the two brokers on every trade it clears, so each faces the clearing house rather than each other. It then nets: a broker that bought and sold the same stock all day settles only the difference. Netting removes the vast majority of gross obligations before any money moves.
Because NSCC guarantees settlement, it collects margin from members, including a volatility-driven component. Those deposits jump when a stock becomes wildly volatile, which is why some brokers restricted opening trades in heavily squeezed names rather than post the required collateral.
Settlement itself happens at the depository under the t-plus-one cycle. Understanding this plumbing explains why a broker can change your buying power overnight without any rule changing.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.
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