Understanding the key requirements for clearing and settlement through the Depository Trust & Clearing Corporation.
Introduction
In global debt markets, DTCC eligibility determines whether a bond can be cleared and settled efficiently through the Depository Trust & Clearing Corporation. This eligibility defines a bond’s accessibility to U.S. institutional investors and its ability to trade electronically without manual settlement.
For issuers, securing DTCC eligibility is more than a compliance formality — it’s a commercial necessity. The Bond Service helps issuers prepare and submit eligibility documentation that satisfies DTCC’s technical and regulatory standards, ensuring every bond is structured for market access and credibility.
Why DTCC Eligibility Matters
DTCC eligibility gives a bond instant access to the electronic settlement network used by major custodians, broker-dealers, and institutional investors. It ensures:
Book-entry custody instead of physical certificates.
Efficient trade settlement under standardized DVP (Delivery-Versus-Payment) terms.
Wider investor access through U.S. clearing systems.
Without eligibility, a bond remains outside the mainstream depository network, forcing manual transfers that deter institutional participation.
The Bond Service simplifies this process by aligning each issuance with the specific DTC criteria for registration, documentation, and identifier accuracy.
Core Requirements for DTCC Eligibility
1. Valid Identifiers
A DTCC-eligible bond must have:
A CUSIP assigned by CUSIP Global Services.
A matching ISIN from the Association of National Numbering Agencies (ANNA).
These identifiers must precisely match the issuer name, coupon, and maturity data.
2. Recognized Custodian and Paying Agent
Eligibility requires a qualified custodian or paying agent — typically J.P. Morgan, Citibank, or another DTC participant — to manage custody, payments, and corporate actions.
3. Eligible Security Form
Only book-entry only (BEO) or immobilized certificates registered to Cede & Co. (DTC’s nominee) qualify. Fully physical instruments are excluded.
4. Regulatory and Legal Compliance
Issuers must supply a legal opinion confirming the bond’s exemption or registration under relevant U.S. securities law (Reg D, 144A, or Reg S), and demonstrate compliance with SEC and FINRA disclosure standards.
5. Settlement and Payment Terms
Eligibility also requires:
U.S. dollar denomination.
T+2 settlement convention.
Delivery-versus-payment structure.
Predictable coupon and redemption schedules.
Factual Information
Custodian and Participant Approval
Only securities supported by a DTC-approved custodian are accepted. The custodian must be operationally connected to the DTC system.
Legal Opinions and Issuer Documentation
A written opinion from recognized U.S. counsel is required to confirm compliance with DTC book-entry and settlement standards.
Denominations and Currencies
DTCC processes bonds denominated in USD. Non-USD issues require additional review and approval.
Credit Ratings and Marketability
While not mandatory, investment-grade ratings enhance approval likelihood and secondary-market confidence.
Submission Process and Review Time
Once identifiers and documentation are complete, DTCC typically reviews eligibility within two to five business days.
Additional Information
How The Bond Service Supports Issuers
The Bond Service provides full end-to-end support:
Preparing eligibility request packages.
Coordinating with CUSIP, ANNA, and Bloomberg for identifier alignment.
Submitting documentation to DTCC’s Underwriting Department.
Validating that each security’s data flow between ISIN, CUSIP, and LEI is consistent.
Common Errors That Delay Approval
Mismatched identifiers between CUSIP and ISIN records.
Missing trustee or paying-agent appointments.
Legal opinions that omit DTC wording.
Each of these issues can delay or block DTCC acceptance — which The Bond Service helps issuers prevent.
Conclusion
DTCC eligibility is the bridge between a newly issued bond and full market functionality. It confirms structural soundness, enables smooth settlement, and provides investor confidence.
By managing compliance, identifiers, and submission workflows, The Bond Service ensures that your issuance moves seamlessly from documentation to institutional readiness.
Next Steps
Ready to make your bond DTCC-eligible?
Contact Us to start your eligibility assessment with The Bond Service team.