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Corporate Action Processing Innovations

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  1. Corporate Action Processing Innovations

  2. Corporate Action Processing Innovations • Standardize Corporate Actions Liability Notices • Improving Complex Security Income • Agency Lending Disclosure • Global Corporate Actions Validation Service

  3. Corporate Action Processing Innovations Standardize Corporate Actions Liability Notices

  4. SMART/Track: Corporate Actions Liability • What is it? • SMART/Track for Corporate Actions Liability Notification Service is a web-based application for the communication and tracking of voluntary corporate action liability notices • Allows participants to create, send, process and track liability notices and links the various parties involved with corporate action processing

  5. Corporate Actions Liability Notification Service • Announcement Collection • Collect corporate action announcement information • Consolidate data and prepare for comparison • Announcement Validation • Normalize, reconcile and enrich data • Validate for accuracy and completeness • Produce scrubbed announcement record DTCC Corporate Action Initiatives • Identification and Notification • Determine investors impacted by event and calculate entitlements • Notify investors of announcement information 1. 2. Corporate Actions Liability Notification Service • Election Processing (for Voluntaries) • Reconcile elections • Communicate elections from investors thru various financial intermediaries • Submit instructions before deadline 3. • Event Settlement • Deliver securities, if necessary • Receive securities and/or money payment 4. • Reconciliation • Allocate entitlements to investors • Notify investors of final transactions • Close-out event 5. 6.

  6. SMART/Track: Corporate Actions Liability Bank B Broker B Bank A Broker C Broker A Bank C SMART/Track Tracking Database RIPS

  7. SMART/Track: Corporate Actions Liability Functions: • Create and transmit liability for a voluntary corporate action to a single or multiple counterparties • Accept/reject a liability notice • Reduce liability quantity • Cancel a notice • Track status of notices sent/received

  8. SMART/Track: Corporate Actions Liability Features: • Web-based • Automated tracking including numbers of notices sent/received and status of each • Link to DTC’s RIPs system for corporate offer information • Automated Alerts for date changes in RIPs that affect a liability notice • E-mail notices at start of day and intra-day for notices requiring action that day • Automatic archiving and retrieval of archived notices with 7-year data retention

  9. SMART/Track: Corporate Actions Liability Benefits • Eliminates the manual paper-based fax and phone notification process • Standardizes market practice for communicating liability notifications • Provides a single point of entry for all participants • Manages message delivery risk through tracking

  10. SMART/Track: Corporate Actions Liability Pilot Program • Pilot launched in November 2004 with 19 participants • 64 pilot participants representing 123 users • 822 notices transmitted

  11. SMART/Track: Corporate Action Liability What’s next? • Expect that use of the automated Service will be the standard way of sending liability notices • Working with the NYSE on changing NYSE Rule 180 to mandate use of SMART/Track for sending voluntary corporate actions liability notices

  12. Corporate Action Processing Innovations Improving Complex Security Income

  13. Improving Complex Security Income • Elimination of contra-CUSIPs for Variable Rate Demand Obligation (VRDO) partial calls • Implement a unified end-to-end platform for the asset servicing life cycle • Establish best practices and performance metrics for the handling of complex securities

  14. Improving Complex Security Income Elimination of Contra-CUSIPs VRDO partial calls • Effective with the November 1, 2005 redemption date • Called positions will be segregated into the Called Account under the regularly assigned CUSIP number • Lotteries for late call notices or revisions to previously paid out items received after November 1, 2005, will also be processed without contra-CUSIPs

  15. Improving Complex Security Income Implement a unified end-to-end platform from issuance through the entire asset servicing life cycle • Underwriting • Corporate Actions • Masterfiles

  16. Improving Complex Security Income Establish best practices and performance metrics for the handling of complex securities • Post-payable adjustments for complex securities decreased by 6% from Q1 to Q2 • Work continues with the major paying agents to identify root causes of errors and implementing process improvements where feasible • DTCC is also planning on broadening its working relationship with other industry associations and participants to collaboratively progress the streamlining of Asset Backed Securities processing

  17. Corporate Action Processing Innovations SMART/Track for Agency Lending Disclosure

  18. SMART/Track: Agency Lending Disclosure What is Agency Lending Disclosure? • Industry initiative to provide greater transparency in securities lending transactions • Agent lenders will be required to disclose principal lender information on open loans to borrowers on a daily basis for credit monitoring and capital requirement purposes in 2006

  19. SMART/Track: Agency Lending Disclosure What is DTCC’s Role? Approached by the Task Force for Agency Lending Disclosure in 2003 to develop a communications facility for the transmission of periodic and daily loan files between agent lenders and borrowers

  20. SMART/Track: Agency Lending Disclosure SMART/Track has two functions: • Communications facility for transmitting data files • Web application for viewing file transmission status and searching/requesting unique identifiers

  21. SMART/Track: Agency Lending Disclosure Transmission of loan files • Agent lender and borrowers can send loan files directly to SMART/Track or through a vendor (SunGard or EquiLend) using: • FTP • NDM – CONNECT:Direct, or • FTP over the internet

  22. Borrower Borrower Borrower Agent Lender Loanet Equilend SMART/Track: Agency Lending Disclosure Agent Lender Agent Lender SMART/Track For Agency Lending Disclosure

  23. SMART/Track: Agency Lending Disclosure Web Application allows users to: • Search for or create unique identifiers for those principal lenders that do not have U.S. tax identification numbers (required in the data files) • View the transmission status of files sent directly through SMART/Track to a counterparty

  24. SMART/Track: Agency Lending Disclosure To sign up: • Contact your DTCC Account Executive, or • Call DTCC Relationship Services at 800-422-0582

  25. SMART/Track: Agency Lending Disclosure For more information about the Agency Lending Disclosure initiative, visit the Task Force’s website at: www.agencylending.capco.com

  26. Corporate Action Processing Innovations Global Corporate Action Validation Service

  27. Global Corporate Action Validation Service The Global Corporate Action (GCA) Validation Service provides a centralized source of scrubbed information about corporate actions for nearly 100 event types for instruments traded in Europe, Asia-Pacific and the Americas

  28. Global Corporate Action Validation Service • Announcement Collection • Collect corporate action announcement information • Consolidate data and prepare for comparison • Announcement Validation • Normalize, reconcile and enrich data • Validate for accuracy and completeness • Produce scrubbed announcement record DTCC Corporate Action Initiatives • Identification and Notification • Determine investors impacted by event and calculate entitlements • Notify investors of announcement information 1. 2. • Election Processing (for Voluntaries) • Reconcile elections • Communicate elections from investors thru various financial intermediaries • Submit instructions before deadline GCA VS 3. • Event Settlement • Deliver securities, if necessary • Receive securities and/or money payment 4. • Reconciliation • Allocate entitlements to investors • Notify investors of final transactions • Close-out event 5. 6.

  29. Global Corporate Action Validation Service The GCA Validation Service delivers standardized, comprehensive and timely information to financial institutions of all types and sizes. Broker/Dealers Banks Investment Managers Hedge Funds Any firm that tracks corporate action information and its impact on securities positions

  30. Global Corporate Action Validation Service How does it Work? • The service validates data through an intricate process of mapping, normalizing and consolidating announcement information • Skilled professionals enrich the data through follow-up research relying on a wide array of sources • Customers submit a “securities of interest” file and have the GCA VS monitor and report on these specific securities throughout the day

  31. Global Corporate Action Validation Service How does it Work? (continued) • Customers receive a common composite record for each announcement • A file of these records is available six times a day and includes event data for each composite record created or updated since the last publication • Real-time, around-the-clock access to information through a secure, Web-based inquiry tool provides the most current version of the composite record • A custodian verification feature compares and validates customer’s corporate action announcement information from other sources (e.g. Custodians, Prime Brokers)

  32. Global Corporate Action Validation Service Benefits • Reduce operational losses • Optimizes front-office trading • Simplifies operations globally • Streamlines data sources • Provides a smooth access to information

  33. Global Corporate Action Validation Service • London Service Center • Service Delivery • Help Desk Support • Hours of Operation • Monday through Friday • 8am - 6pm (local time) • Shanghai Service Center • Service Delivery • Help Desk Support • Hours of Operation • Monday through Friday • 8am - 6pm (local time) • New York Service Center • Service Delivery • Help Desk Support • IT Infrastructure • Vendor Management • Client and Service Management • Governance • Hours of Operation • Monday through Friday • 8am - 6pm (local time) • Language Coverage • English • Spanish • Portuguese • German • Italian • French • Chinese • Japanese • Arabic • Turkish • Bengali • Help Desk Support Phone Logistics • Domestic: 866-DTCC-GCA • International: +1 212-855-2366 • Online Inquiry URL Logistics • https://gca.dtcc.com • GCA Web Page • www.dtcc.com/GCA • E-mail Support Logistics • gcabusiness.support@dtcc.com • gcatechnical.support@dtcc.com

  34. Global Corporate Action Validation Service

  35. Global Corporate Action Validation Service

  36. Global Corporate Action Validation Service Find out how we can help you drive efficiency for corporate actions Contact us at: 1-866-382-2422 or gcainfo@dtcc.com

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