National Securities Clearing Corp.

The stable outlook on NSCC reflects our expectation that the company's financial safeguards will continue to provide substantial protection against member default, from both a loss-absorbing and liquidity standpoint, in extreme but plausible market conditions. We could lower the ratings on NSCC if its financial safeguards materially weaken. This could be the case if liquidity uses in a stress scenario (in which one or several clearing members default) materially increase without a corresponding increase in liquidity sources. We are unlikely to raise the ratings in the next two years. Despite the fast pace of policy rate increases, demand pressures remain surprisingly resilient in the U.S. S&P Global Ratings economists now forecast a longer and shallower slowdown (and decreased recession probabilities),

...National Securities Clearing Corp. (NSCC) has a very strong competitive position as the sole clearinghouse for cash equities, exchange-traded funds, and municipal and corporate bonds in the U.S. NSCC is an effective monopoly in clearing cash equities, exchange-traded funds, and municipal and corporate bonds in the U.S. This supports our view of its excellent business risk. NSCC has material clearing risks. Considerable losses for the clearinghouse could arise if resources within the waterfall (margins or assessment powers) are insufficient to absorb losses stemming from the liquidation of a defaulting clearing member's portfolio. However, we think that NSCC benefits from strong risk management controls and robust financial safeguards. NSCC is also exposed to liquidity risk should one or several clearing members default. Potential liquidity uses in a stress scenario in which one or several clearing members default jointly are typically highest at a time close to the expiration of single-name...

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