But at the offices of The Depository Trust & Clearing Corporation in New York in the summer of 2005, chairman and chief executive Don Donahue and a team of risk managers at the vast clearer and settlement system provider, had already been “war-gaming” just such a scenario.
Mr Donahue says that back then there were a “whole host of issues” that led him to think it would make sense for DTCC to have a few practice runs at dealing with a big bank liquidation, just in case something should happen. It was remarkably prescient.
“It was [a case of] just seeing all the numbers going up, in terms of volumes, in terms of clearing fund demands, of trading positions that people had. We really need to start thinking more about what our risk systems are capable of doing,” he tells FTfm.