DTCC Readies Next Step of Corporate Actions Changes

Depository Trust & Clearing Corporation (DTCC) is nearing another step within a multi-stage process for retiring proprietary legacy corporate actions systems that have operated without graphic interfaces, and transitioning to its new Corporate Actions Web service, which began providing announcements to users in October, according to officials of the industry utility.

DTCC is currently in the third of five planned stages of its transition initiative, according to Dan Thieke, managing director and general manager of settlement & asset services. "Phase 3 is focusing on the population of corporate actions driven by distribution events," he says. "Anything pertaining to a cash or stock dividend, including principal and interest payments, are covered in this phase."

Retirement of Participant Terminal System (PTS) SDAR function and Participant Browser Service (PBS) reorg/redemption/dividend allocation functions, set for January 19, is the next to last step in the third phase, to be completed with retirement of all remaining functions in March.

The phase-outs of functions on the legacy PTS and PBS are occurring as processing is moved to the CA Web service. Announcements for all types of corporate actions are already available on CA Web. In the fourth phase, later in 2015, redemption events processing will move to CA Web, and in the fifth phase, after 2015, processing of re-organization events will also make the same move, completing all migration, Thieke explains.

"The overarching strategy of the project itself is really about modernizing how DTCC interacts with its customers and the marketplace as a whole, as it pertains to corporate actions," he says. "It covers the full lifecycle of an event, from announcement to handling instructions, and ultimately through to the payments process."

CA Web, with its graphical user interface, changes the client experience, according to Thieke. "It has a fully robust dashboard, which lets clients get to information a lot easier, and more intuitively," he says. CA Web uses the ISO 20022 standard, which will require phase-out of use of ISO 15022, the prior standard, in keeping with DTCC's promotion of migration from 15022 to 20022.

"For many vendors, and especially a lot of European banks, moving from [ISO] 15022 to 20022 may be a slighter advantage," says Patrick Barthel, product manager, DTCC. DTCC's migration is spurring its users to follow suit, according to Barthel.

"Many of our clients are budgeting for 20022 as a requirement because it's a move that DTCC is enforcing," he says. "There have been several years of parallel adoption. That will continue and will still be a phased approach, but there will be an end date for proprietary [formats]. We won't co-exist with proprietary formats and ISO 20022 in the future."

Overall, the initiative leapfrogs from an old legacy system to an up-to-date service, as Barthel describes it. "The analogy we heard from our customers is that this is going from a rotary phone to an iPhone 6," he says. "It's going from end-of-day batch files to real-time messaging." There are 25 percent more data fields available in DTCC's ISO 20022 messages, according to Barthel.