Transcript Brett Lancaster

ACSDA General Assembly
Panel 2 – Asset Services
Dan Thieke
Brett Lancaster
Friday 25 March, 2011
v03
Dan Thieke
Vice President – Asset Services
[email protected]
Brett Lancaster
Managing Director – Americas Securities
[email protected]
Corporate actions remain one of the most risky
areas within financial services
Issuers fulfill their obligation by sending out a
document, written in free text, causing issues
Regulatory
filings
Prospectus’
Letters of
transmittal
Press
releases
Agree
on event
types?
Agree
on data
elements?
Agree on a
unique ID?
Agree on
source
dissemination?
Along the chain, from issuer to the investor, data is
keyed and re-keyed manually, causing errors
With the recent financial crisis, clients tell us that
the operational risks need to be managed
Risks
Interpretation
Risk
Issuer messages are written in “free text, e.g. news
release and regulatory filing, that must be translated
and rekeyed by the financial services industry
Timing
Risk
Need for manual intervention results in delays in
communicating information to the end investor
Accuracy
Risk
Multiple players disseminating the same information
results in uncertainty as to the accuracy of the result.
Translation and manual rekeying increases the
potential for errors
Significant
Costs
The lack of straight-through processing throughout
the corporate actions chain results in additional cost
and liability being absorbed by the financial services
industry
http://xbrl.us/i2i/Pages/default.aspx
However, the planets have aligned to allow us to
finally sort out the problem … at least for the U.S.
Maybe, just maybe …
What’s it all mean? Savings …
Financial Crisis
DTCC CA Re-engineering
ISO 20022
XBRL Maturity
DTCC is working with SWIFT to implement ISO
standards for Corporate Actions
• DTCC is the world’s largest central depository
– Within Asset Services, it represents ~4,000 Participant accounts
– DTCC publishes ~20M unique Corporate Actions to its
Participants, per year
– In 2009, DTCC collected and paid ~$3T in Corporate Actions
• SWIFT is the Registration Authority for ISO standards
– Used by 9,500 firms across 209 countries
– Has 88% penetration for Americas Buy-Side, by AUM
– Has 96% penetration for Americas Sell-Side, by market cap
• DTCC is working with SWIFT to implement its new
Corporate Actions platform using ISO 20022
– Supports the entire lifecycle - all event types, all asset classes
– Mandatory cutover from proprietary formats by 2015
DTCC Corporate Actions Re-engineering features
were defined by the industry, for the industry
CA Re-engineering Features
Single
Event
Record
Unique CA
Identifier
Delivery
Over
SMART or
SWIFT
Supports
U.S. and
Global
Events
GUI
Integrated
Across CA
Lifecycle
Near
Real-Time
Events
Automated
Elections &
Payments
XBRL allows the issuers to disseminate electronic
data from the source
• XBRL revolution
– XBRL is an international, non-profit, consortium dedicated to
driving transparency
– XBRL enables issuers to tag data from within MS Word when
preparing the source document
– Some tools allow the tagged data to be ‘embedded’ within the
saved pdf or doc file
– Aside from tagging, the issuer, as they write the press release
or prospectus, follows the same process as they do today
• A range of XBRL tools are commercially available
• XBRL alignment with standards
– DTCC, SWIFT and XBRL-US have worked to seamlessly align
the XBRL taxonomy used in the tools with ISO 20022
XBRL enables free text to be structured to the
ISO standard and enables electronic dissemination
Tagged and Structured Data
300 page S-4 SEC Paper Filing
Highlight the text
then ‘drag & tag’
the data element
Our roadmap is phased with milestones to reduce
implementation risk. We have already started
Phase I
All DTC-specific data elements for payments incorporated into new platform
Oct ‘09
Phase IIa
Corporate actions announcements Pilot with ISO 20022 & new customer interface
Apr ‘11
Phase IIb
XBRL Interface into DTCC for dividend announcements
Q4 11
Phase III
End-to-end lifecycle for distributions events covering announcements and
processing, including unique ID
2012
Phase IV
End-to-end lifecycle for redemption events covering announcements and
processing, including unique ID
2012
Phase V
End-to-end lifecycle for reorg events covering announcements and processing,
including unique ID
2013
Phase VI
All DTC and GCA proprietary files and ISO 15022 files will be retired
2015 or
sooner
The initial ‘announcements’ pilot starts Apr 23 with
BBH. Separately, Citi are already piloting XBRL
Pilot Clients
The industry is aligned to deliver significant
benefits for all intermediaries along the chain
Qualitative Benefits
Issuers
•
Intent and content of the
originating offer are clear to
the investor, without fear of
misinterpretation due to
manual manipulation
•
Details are conveyed in a
timely fashion
•
Issuers will incur marginal
additional effort in tagging
the data
Sell-Side Intermediaries
•
Lowers risk exposure to an
investor decision based on
incorrect information
•
Interpretation, re-keying and
manual exceptions are
significantly reduced, and
STP rate increased
Buy-Side Investors
•
Make decisions based on
guaranteed accurate
information from ‘source’
document
•
Longer response time as
Custodians and IMs no longer
need to artificially compress
deadlines to compensate for
manual processing of election
information
The industry has quantified the expected gains in
operational efficiency - the benefits are tangible
Quantitative Benefits
Overall savings
What’s it all mean? Savings …
$400M
$230M
Sell-Side savings
$170M
Buy-Side savings
50%
80%
Improvement in
STP rate
Other Asian XBRL projects report actual error rates falling by x100 fold
Toronto
19-23 Sep 2011