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Introduction to DTC’s Asset Servicing

Introduction to DTC’s Asset Servicing. Cheryl T Lambert ACSDA 2007. Definition. We take over after a trade is executed on an Exchange Sellers receive money and buyers receive securities Billions of dollars each day. Clearing and Settlement. Servicing Responsibilities.

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Introduction to DTC’s Asset Servicing

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  1. Introduction to DTC’s Asset Servicing Cheryl T Lambert ACSDA 2007

  2. Definition • We take over after a trade is executed on an Exchange • Sellers receive money and buyers receive securities • Billions of dollars each day Clearing and Settlement

  3. Servicing Responsibilities • Electronic ownership (book entry) of securities is the standard • Physical certificates (physicals) may be held by an investor (beneficial owner). This presents more risk and is more expensive to process than book entry • DTC services all securities

  4. Underwriting Announcements CashProcessing Asset Services Schematic • Assets Services represents a major part of Operations • Launched an employee engagement activity • Can be summarized in several logical process steps

  5. Examples of Asset Services • Name change • Redemption • Reverse split • Merger • Spin-off • Acquisition • Bond call • Cash dividend • Stock dividend • Stock split • Periodic cash payments

  6. Underwriting The DTC Underwriting area is responsible for the eligibility and distribution of newly issued securities, including municipals, corporate, and money markets instruments • Allows for book-entry distribution and settlement • Facilitates straight-through processing • Provides all asset servicing for the life of securities and other financial instruments

  7. Announcements – Start Process Collection • Collect corporate action event information • Consolidate data and prepare for comparison Validation • Normalize, reconcile and enrich data • Validate for accuracy and completeness • Produce “scrubbed” announcement record

  8. ’07 Volume Data - Announcements Dividends, Redemptions and Reorganizations

  9. Announcements – End Process Notification • Determine investors impacted by event and calculate entitlements • Notify investors of announcement information Reconciliations • Allocate entitlements to investors • Notify investors of final transactions • Close out the event Settlement • Deliver securities, if necessary • Receive securities and/or money payment

  10. Mandatory and Voluntary Events

  11. Average Monthly Fund Allocation $255 Billion Allocated * 99.9% * Cash Receipts and Reorganizations

  12. Leveraging Six Sigma Tools • 15 Green Belts in Asset Services • Monthly tracking and review • Improvement projects • Enterprise-Wide Scorecard reporting • Asset Services Sigma Level Index • Timeliness and Accuracy Metrics across 6 Business Units • Steady improving trend to 4.12 Sigma (0.44% defectives) in June

  13. Tracking The Results (June 2007) Our focus is on “continuous improvement”

  14. Upcoming Topics • Lori Trezza – Corporate Actions Reengineering • Bill Salva – International Tax Services • David Hands – Global Corporate Actions

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