Transcript Document

Corporate Action Reengineering
BDUG Conference
October 18th 2006
SOURCE:
Securities Origination Underwriting Reliable Corporate
action Environment
A unified end-to-end platform from issuance through the entire asset
servicing life cycle: Underwriting – Corporate Actions – integrated
with Master files and other Core Depository functions
Security Master Files
Corporate Actions
2
Underwriting
* NIIDS
Shared
Interfaces
Reengineering Objectives
• Provide more accurate and timely servicing information
• Replace legacy sub-systems with newly architected platform
• Automate and streamline redundant processes and data storage
• Increase flexibility with rules-based system
• Enhance functionality: ISO15022, multi-currency
• Reduce ongoing technology support costs
• Consistency of processing – Common field definitions and
business rules
3
• Revamp New Issue Information Dissemination
Current State of New Issue Processing
• New Issue Information Dissemination
• Syndicate Desk – Communicate to members of the
underwriting syndicate – Automated/Manual
• Syndicate Desk – Communicate to the street (Vendors/non
syndicate members) – Manual
• Trading of New Issue
• Middle Office (Trade support) – Procurement/Receipt and Set
up of New Security Master Data - Manual at firm or vendor
• DTC Eligibility, Closing and Distribution
4
• Syndicate Operations – Communication to DTC and other
industry utilities - Manual
Future State of New Issue Processing
•
New Issue Information Dissemination – How will DTCC automate?
• DTCC is linking with major book building/running services (Bondesk
Syndicate, Dealogic, i-Deal, Marketpipe, NAPA, Bloomberg Deal, ZIA)
• DTCC has flexibility to link with underwriters proprietary book
building/running, trade processing, security master system(s) or
service bureau
• DTCC is linking to information service providers, service bureaus,
participants, and regulators
•
Trading of New Issue – How will DTC automate?
• DTC will provide for real time distribution of new issue information
required for security master set up for DTC Participants and Bank
Custodians.
5
•
DTC Eligibility, Closing and Distribution – How will DTC automate?
• Syndicate Operations – DTC will store new issue information for the
purposes of eligibility closing and distribution
Future State Benefits New Issue Information Dissemination
• Avoids re-keying – STP from bookbuilding/running systems
• Automated regulatory compliance of MSRB rule G34 and NASD
rule 6260
• Automated dissemination to vendors in real time – Bloomberg,
Interactive, S&P, ect
• Facilitates faster processing of secondary market trades Automated receipt of security data in real time
6
• Facilitates compliance of new SEC access = delivery rules for
prospectus delivery
NUWS / NIIDS Project Milestones
• Completed Proof of Concept Q3 2006
• Commence UAT Q4 2006
• Commence testing with vendors and pilot firms – Q1 2007
• Begin transition Q2 2007
7
• Go live - August 2007
8
Corporate Action Processing and
Announcements
Project Milestones
• Complete analysis and functional design Q2 2006
• Release file layouts to industry Q4 2006
• Complete development Q3 2007
• Initiate UAT Q4 2007
9
• Commence transition Q3 2008
Industry Outreach - Communication
• Aggressive outreach program includes
• Participants
• Vendor/service bureaus
• Agents
• Guidance Council
• Communications approach
• Focus sessions
• Website (host webcams, FAQs, and presentations)
• eLetter
10
• News releases
System Implementation (Transition and Migration)
• Current focus on data migration
• Parallel testing
• Execute migration procedures
• User access
• Testing of all functionality
• Phased approach
• MMI
• Distributions and Redemptions
• Mandatory events
11
• Voluntary events and Mandatory with Option events
System Implementation (Transition and Migration)
• Risk mitigation is key decision driver
• Process
• Architectural proof of concept
• Test concepts
• Test code compliance with industry standards
• Use of best practices
• Security analysis (code vulnerability)
12
• Iterative
System Implementation (Transition and Migration)
• Testing Game Plan
Final UAT - 9 months
Scripted - 4 months
Parallel - 5 months
• Execute “talkback” process between production and parallel
e.g. instructions
13
• Transition to begin post successful parallel
Training
• DTCC has partnered with a vendor for Underwriting as test
case
• Learning Approach
• Context sensitive help
• E Learning
• Instructor lead training
• Job aids
• User manual
14
• Service guide
Corporate Action Announcements - @Source
2007 Strategic Plans
• Service Offering
• Fees based on existing fee schedule
• No additional charge for the universe
• Implementation of more comprehensive service standards on
DTC-eligible announcements
• Remove dependency on selected vendors by strengthening
DTCC’s ‘manufacturing’ capability
15
• Introduce future rationalized events, fields and statuses as part
of the re-engineering of the existing announcement files
@Source Impact on Service Bureaus
• Service Bureaus will receive universe file from DTCC
• Service Bureau will be required to submit to DTCC a list of all
non-Participants they represent and respective SOI’s
• Service Bureau will be charged on behalf of all nonParticipant clients
16
• Service Bureau must execute a legal contract defining use of
the data
Guiding Principles for the New DTCC Corporate
Action Announcement: Event Content (A reminder)
• Single event ID for the life of the announcement
• Currently, announcement IDs are based upon
CUSIP/Activity Code
• Elimination of DTC function codes
• Simplify the Event Types and remove ‘processing’
references
• Provide more information on Options and Payouts
• Remove Contra CUSIPs
17
• Option tracking done by RRG Account
Guiding Principles for the New DTCC Corporate
Action Announcement: File Concepts
• Publish Information in 2 formats
• ISO15022
• XML
*Currently DTC publishes in propriety formats
• Publish ALL Events in a single file
18
* Currently DTC announces within 3 main files: REORG,
REDEM and DIVANN
Guiding Principles for the New DTCC Corporate
Action Announcement: File Concepts
• Publish Event Details in a single message
• General event information
• Option details
• Payout details
* Currently DTC provides separate messages per event option
• Intra-day delivery option for all announcements
19
* Currently end of day batch processing
The ISO15022 MT564 (notification) will be primary format and
supplemented, as needed, with the MT568
20
Receipt and Delivery of XML will take a similar path but
without defined XML standards for Corporate Actions, DTC
will take a lead with our own format.
ISO15022 Format: Data mapped where possible, otherwise
information will be published within the ‘Text’ Blocks
• The additional data will be provided in the Text blocks within MT564
Sequences D, E and F; mapped to the most appropriate Sequence
• For example:
• ‘Chill’ On/Off Days will be found in Sequence D under the qualifier
INCO (information Conditions)
• Tax information will be found in Sequence D under the qualifier
TAXE (Taxation Conditions)
21
• Fractional Share Information on payouts will be found in
Sequence E under the qualifier TXNR (Narrative Version)
• Additional information will flow onto the MT568 when the MT564
10k byte limit is reached
ISO15022 Format: Data mapped where possible, otherwise
information will be published within the ‘Text’ Blocks.
• ISO15022 ‘text’ blocks accommodate 10 lines of 35 bytes (10*35x) but can be
expanded by using tag 70e qualifiers, of which certain qualifiers are
repeatable
• Additional data presented with the same name as XML version, for example:
• ‘Hearing Date’ will be shown as <HearingDt> or ‘Chill Release Day for
Deposit’ will be shown as <ChillReleaseDayForDeposit>
• A single line will consist of only 1 data element name/value, for example:
• :70E::ADTX//<HearingDt>20060831</>
• Where the data name and the value exceed 35 characters the data will flow
into the second line, for example:
22
• (Line 1) :70E::INCO//<ChillReleaseDayForDepo
(Line 2) sit>20060831</>
A side by side example of a Cash Dividend in XML and
ISO15022
XML Version
ISO15022 Version
Event Type
Record Date
Non ISO Field
Placed in Tag 70E
‘General Details’ (Seq. D)
Option
23
Rate
:16R:GENL
:20C::CORP//1234567890123456
:20C::SEME//1234567890123456
:23G::NEWM
:22F::CAEV//DVCA
:22F::CAMV//MAND
:98C::PREP//20060718101500
:25D::PROC//PREC
:16S:GENL
:16R:USECU
:35B::ISIN/US/CUSIP1234
:16R:ACCTINFO
:97C::GENR
:16S:ACCTINFO
:16S:USECU
:16R:CADETL
:98A::RDTE//20060731
:98A::XDTE//20060730
:98A::PAYD//20060815
:70E::ADTX//<EXDATE>CA/20060728</>
<HistoryStatusDate>20060731</>
:16S:CADETL
:16R::CAOPTN
:13A::CAON//001
:22F::CAOP//CASH
:11A::OPTN//USD
:17B::DFLT//Y
:98A::PAYD//20060815
:92F::NETT//USD1.00
:16R::ADDINFO
:70E::PACO//<ADD1>DTC Customer
Support</>
<ADD2>55 Water Street</>
<City>New York</>
<State>NY</>
<Country>USA</>
<Phone>1-888-DTC-CUSP</>
<Fax>1-212-855-1000</>
<Email>[email protected]</>
:16S::ADDINFO
24
Unsupported Files in ISO Format published in XML
Function Name
File Description
Outbound
CSHDAL
MMI Cash Settlement Dividend Allocation File
Y
CSHDPJ
MMI Cash Settlement Dividend Projection File
Y
CSHDUN
MMI Cash Settlement Dividend Unallocated File
Y
CSHEUD
Cash Settlement End of Day Unallocated Funds File
Y
CSHPRJ
Cash Settlement Projection File
Y
CSHRAL
MMI Cash Settlement Reorg Allocation File
Y
CSHRPJ
MMI Cash Settlement Reorg Projection File
Y
CSHRUN
MMI Cash Settlement Reorg Unallocated File
Y
CSHSET
End of Day Cash Settlement
Y
CSHSTA thru G
Hourly Slice of Cash Settlement Activity
Y
CSHSTL
Dividend/Reorg Cash Settlement Information
Y
CSHUNL
Cash Settlement Unallocated Funds File
Y
RDMENT
Reorg Deposit Mandatory Entitlements
Y
STKPND
Next Day Projected Stock Loan ash Settlement Information
Y
25
Questions?