The Fixed Income Clearing Corporation (FICC) is a clearing house that provides clearing and settlement services for the majority of fixed income securities traded in the United States. FICC is a unit of the Depository Trust & Clearing Corporation (DTCC).
FICC was created in 2003 as a result of the merger of the Government Securities Clearing Corporation (GSCC) and the Mortgage-Backed Securities Clearing Corporation (MBSCC). FICC provides clearing and settlement services for a variety of fixed income securities, including Treasury securities, agency securities, agency mortgage-backed securities, corporate bonds, and commercial paper.
FICC is the largest fixed income clearing house in the world, handling an average of $1.7 trillion in securities transactions per day. FICC is regulated by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
What is short-term fixed income?
Short-term fixed income is a type of investment that typically matures in one to five years. These investments tend to be less volatile than stocks and more predictable than longer-term bonds, making them a good choice for investors who want to preserve capital and earn a steady income. Common types of short-term fixed income investments include Treasury bills, commercial paper, and certificates of deposit.
How do I become a fixed income analyst?
There is no one-size-fits-all answer to this question, as the best way to become a fixed income analyst may vary depending on your specific goals and qualifications. However, some tips on how to become a fixed income analyst may include studying for and passing the Financial Industry Regulatory Authority (FINRA) Series 7 and 63 exams, working as an analyst for a fixed income trading desk at a financial institution, or pursuing a degree in finance or economics. Additionally, it may be beneficial to become a member of the Fixed Income Analysts Society (FIAS) and/or the Bond Market Association (BMA).
How much do fixed income traders make?
According to the Wall Street Journal, the average salary for a fixed income trader is $250,000. However, salaries can range from $100,000 to $1 million or more, depending on the trader's experience, the size of the firm they work for, and the markets they trade in.
In addition to their salary, traders may also receive bonuses and commissions, which can add significantly to their total compensation. Bonuses are typically based on the trader's performance and the profits they generate for their firm. How do fixed income investors make money? Fixed income investors typically make money in one of two ways:
1. By holding a bond until it matures and collecting the interest payments (coupons) along the way
2. By buying and selling bonds in the secondary market, in hopes of capitalizing on changes in interest rates
For example, let's say an investor buys a $1,000 bond with a 5% coupon and a 10-year maturity. If they hold the bond until it matures, they will receive $50 in interest payments each year ($1,000 x 0.05), for a total of $500. At the end of the 10 years, they will also get their original $1,000 investment back. So in this case, the investor would have made a total return of $1,500 ($500 in interest + $1,000 principal).
Now let's say that instead of holding the bond until maturity, the investor decides to sell it after five years. If interest rates have gone up in the meantime, the bond will likely sell for less than the $1,000 the investor paid for it. But if interest rates have gone down, the bond will likely sell for more than $1,000. So by buying and selling bonds in the secondary market, investors can potentially make money off of changes in interest rates.
Which division of FICC is responsible for settlement of Treasury securities?
The Treasury Division of FICC is responsible for the settlement of Treasury securities. This includes the processing of customer orders, the clearing and settlement of trades, and the management of the Treasury portfolio. The Treasury Division is also responsible for the management of the government's borrowing program and the issuance of new debt.