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DTCC SOLUTIONS Corporate Actions Reengineering Transition Plan BDUG Conference 2007 DTCC.

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Presentation on theme: "DTCC SOLUTIONS Corporate Actions Reengineering Transition Plan BDUG Conference 2007 DTCC."— Presentation transcript:

1 DTCC SOLUTIONS Corporate Actions Reengineering Transition Plan BDUG Conference 2007 DTCC

2 ` 2 Reasons for Reengineering Furthering DTCC’s Corporate Action Strategy to help participants manage risk, reduce cost and achieve greater levels of STP globally while upgrading an aging system  Alignment with industry standard event structure and naming conventions  Support for various security numbering schemes, Global events and multi- currency entitlements and payments  Establishment of platform for generation of single event ID for US markets  ISO and XML Messages for Event lifecycle  The existing domestic applications (totaling 60 systems) were implemented into production at various times since 1978  The application is very complex with over 4,000 programs and 12 million lines of code with portions written in assembler, and have become increasingly difficult to enhance

3 ` 3 Our Approach  Creation of a single announcement and processing engine, based on DTCC’s Global Corporate Action (WAVES) Announcement Event Driven architecture  Unified screen view for Operations & clients, using the new event structure  Continued utilization of Contra CUSIPs to segregate instructed positions to help maintain transparency, thereby limiting investment by industry  Publication of announcement, entitlement, and payment information as outbound messages, in ISO15022 & XML. Instructions can also be submitted via ISO15022 & XML  DTCC will continue to support existing legacy files which use function codes for all data transmissions for 2 years after the application is fully implemented

4 ` 4 Summary of External Deliverables – Released on September 28th  Guide to DTCC’s Corporate Actions Reengineering Transition Plan  Business/Operations Documentation  Data Reference Guide For Event Types  Corporate Action Event Scenarios  Quick Reference Guide to Business Event Scenarios  Technical Support Documentation  Technical Specifications Guide  Data Reference Guide For Fields  Transition Plan  File Field Mapping from Legacy to ISO/XML  ISO Message Specifications  XML Message Specifications

5 ` 5 Communication Plan – Post-Release  September 28th – Industry Awareness  Important Notice  blast to all Reengineering contacts  RM distribution to all contacts  Reengineering eLetter  Alert on  Regional Sessions – October thru November  Sessions held at various sites across the country, open to all Participants  Segments targeted to business users as well as technical project managers and BSA’s  Team of DTCC employees including PM, Ops and ADM to present each component of the plan to begin stimulating questions  Industry Presentations  SIFMA  BDUG  Weekly Webinar Sessions – December thru February  Open sessions to address remaining questions and concerns with regards to the transition plan  IT Working Group Sessions – Beginning in October  Monthly sessions including IT contacts at Participant firms as well as representatives from the Service Bureau community

6 ` 6 Guide to DTCC’s Corporate Actions Reengineering Transition Plan  Summary of supporting documentation  Summary of critical changes and enhancements including the continued utilization of Contra CUSIPs and support of legacy files  Overview of the new file formats  Delivery options for automated messages  Introduction of the customer dashboard and other enhancements to address the current practice of screen scraping  High level overview of the transition plan  Communication plan

7 ` 7 Summary of Critical Changes  Event Structure  Common structure  Unique Event ID  Single announcement  Event-level Naming Changes  New naming convention  Introduction of sub-event type  Enhanced Entitlement Processing  Expanded rate field  Additional data elements  Instruction Processing  Automated instruction processing  Single instruction processor  Payment Reporting  Enhanced audit capabilities  Allocations as gross entitlements

8 ` 8 Message Delivery Options  All data interfaces between DTCC customers and the new Corporate Action system will be via DTCC's Common Data Transfer System (CDTS)  CDTS is a "server-to-server" message and file transport facility that supports the following functionality:  Receives input data from DTCC customers and delivers to the appropriate business application  Allows DTCC customers to subscribe to and retrieve output data from DTCC business applications using various subscription options  CDTS provides DTCC customers with the option to transmit or receive their data over multiple protocols. Message can be sent via  FTP (File Transfer Protocol)  NDM (CONNECT:Direct, formerly Network DataMover) software  MQ (IBM WebSphere MQ)  SOURCE will introduce many new options that enable customers to customize the receipt and format of their interaction with DTCC

9 ` 9 Customer Browser and Dashboard Features  The new customer browser will contain a customer dashboard – a feature will provide customers with a personal home page that enables them to quickly identify important events.  Key features include:  Multiple views for reorganization, dividend, and redemption events  Link for users to directly access DTCC's Liability Hub  Scrolling broadcast message line  “Events expiring today" section that reports intraday updates to critical fields and positions  "Work item" section that identifies certain actions that a participant must take (e.g., approving instructions)

10 ` 10 Reengineering and Screen Scraping  Intra-day automated messages  For all aspects of the corporate action event lifecycle  Examples include intraday rate changes, allocations, and adjustments  Firms can choose to retrieve this information and match up to internal systems for critical issues  Customizable customer dashboard  At the individual user level, firms will be able to customize the dashboard to highlight events that are close to expiration  Download feature  For various functions, DTCC will provide the user with the ability to download a set of search results into a spreadsheet format

11 ` 11 Business/Operations Documentation  Data Reference Guide For Event Types  Revised version of the existing Reference Guide with a mapping of DTC’s legacy function codes, ISO event types, and GCA VS event types to the new event types  Corporate Action Event Scenarios  Approximately 65 event scenarios that describe the changes that will occur as a result of the new system  Covers events across reorganizations, redemptions, and dividends with variations on common events

12 ` 12 Technical Support Documentation  Technical Specifications Guide  Overview of how to best utilize all of the technical documentation  Data Reference Guide For Fields  Lists all of the fields in the new system including the following attributes:  Parent Level  Level  Field Name  Data Type  ISO  XML Tag  Includes data dictionary for field definitions  Contains the valid values for all announcement fields  Transition Plan  Details regarding the phased migration off of the existing system with external impacts and benefits  File Field Mapping from Legacy to ISO/XML  Mapping of current data fields an approximately 16 files currently available  ISO & XML message specifications  Revised versions of the specifications released at the end of 2006

13 ` 13 Transition Plan Overview Transition Approach / Principles  Multiple phases to allow incremental transition  Supports staggered development and testing  Allows earlier delivery of Global Announcement Capture component  Minimize Risk  Major phases with data migration / conversion during off-peak windows (Feb / Aug)  Minimize time between phases to reduce cross-platform processing risk

14 ` 14 CA SOURCE Processes  Announcements  Capturing and maintaining of event information  Includes announcement collection and validation processes  Entitlements  Identifying eligible participant positions and calculating the entitlement  Identification and notification stage of the life-cycle  Response Capture  Processing of all corporate action instructions  Election processing stage in the life-cycle

15 ` 15 CA SOURCE Processes  Reconciliation  Balancing entitlement positions, pre-balancing cash payments and resolving out of balances  Payments  Receipting and allocating event proceeds; post allocation bookkeeping  Event settlement and reconciliation stages of the life-cycle  Tax  Creating and maintaining information to support tax elections

16 ` 16 Transition Phase 1 (Q to Q1 2010) Phase 1: Announcements  Summary:  Announcement processor implemented for all corporate action events  Entitlements, response capture, reconciliation and payments continue in legacy system  Announcement creation and enrichment via new platform  Stock exchange feeds  Security master file announcement generation  Agent rate updates  Manual creation and enrichment from source documents  Existing dividend (DIVA), reorg and redemption (RIPS) announcements converted to new event structure  GCA VS Converted to new event structure

17 ` 17 Transition Phase 1 (Q to Q1 2010) Phase 1: Announcements  External impact:  New CA browser available for all announcement Inquiries  Customer dashboard launched with announcement functionality  Availability of ISO and XML event notification messages  PTS/PBS functions remain in parallel with new browser  Continued support of legacy files  New CA browser used by all GCA customers inquiries  Continued support of GCA legacy files

18 ` 18 Transition Phase 1 (Q to Q1 2010) Phase 1: Announcements  Benefits & Features:  Global announcement platform supporting events in Europe and Asia in addition to North America  New event structure based on ISO15022  Common event reference ID across all events  Related events  Expanded comment fields utilizing templates  Expanded corporate action data  Introduction of “No Action” option  GCA customers receive new ISO & XML messages  DTC and GCA VS are on common platform

19 ` 19 Transition Phase 2 (Q to Q3 2010) Phase 2: Reorg Events (Excludes redemptions, maturities and calls)  Summary:  All processing for mandatory and voluntary events except redemptions, maturities and calls are implemented e.g. mergers, reverse splits, name changes, tenders, rights, warrants, conversions, puts  Processes include:  Entitlements  Response capture  Reconciliation  Payments  In-flight events are converted – processing completed in the new system  All other non-mandatory/voluntary events remain in legacy system

20 ` 20 Transition Phase 2 (Q to Q3 2010) Phase 2: Reorg Events (Excludes redemptions, maturities and calls)  External impact:  CA browser available for all announcements, in addition to entitlement and payment inquiries on mandatory and voluntary events  All instructions entered via new system  Customer dashboard expanded to include instruction management tools  PTS/PBS retired for covered events  Availability of ISO and XML messages for entire life-cycle  Continued support of legacy files

21 ` 21 Transition Phase 2 (Q to Q3 2010) Phase 2: Reorg Events (Excludes redemptions, maturities and calls)  Benefits & Features:  Consolidated instruction processor for all voluntary instructions with instruction approval process  Option specific instruction cutoff dates and times  Automated instructions  Non-USD processing for impacted events e.g. reorganization events  Enhanced pledge release processing

22 ` 22 Transition Phase 3 (Q to Q3 2010) Phase 3: Distribution and Redemption Events  Summary:  Entitlement processing for cash and stock distribution events e.g. cash dividend, stock splits, stock dividend, spin-offs, interest, principal payments, optional dividends etc.  Entitlement processing for maturities, redemptions and calls  Instruction processing for optional dividends, TaxRelief, foreign currency, US tax withholding  Position balancing and reconciliation components  Payments will continue to be processed in the legacy system however payment inquiries (SDAR) will be available via new user interface  In-flight events are converted – processing completed in the new system

23 ` 23 Transition Phase 3 (Q to Q3 2010) Phase 3: Distribution and Redemption Events  External impact:  CA browser available for all announcement, entitlement and payment inquiries  All instructions entered via new system  Customer dashboard expanded to include instruction management tools for distribution events  All external PTS/PBS functions retired  Availability of ISO and XML messages for entire life-cycle; all external interfaces completed  Continued support of legacy files for 2 years

24 ` 24 Transition Phase 3 (Q to Q3 2010) Phase 3: Distribution and Redemption Events  Benefits & Features  All external customer interface impacts are completed  New ISO messages  New XML messages  New browser user interface  Instruction approval process  Automated instructions  Non-USD processing for impacted events  Accurate announcements and processing for equity derivatives  Miss/made transfer processing enhancements (position adjustment vs. cash adjustment)  Standing instructions for DRIP, foreign currency

25 ` 25 Post-Transition Post-Transition Phase: Focus on internal enhancements for the distribution and redemption payment process  Post Internal Payment Processor:  Cash pre-balancing for cash distribution events e.g. cash dividends, interest, principal payments, optional dividends etc.  Consolidated cash payment processor for cash distributions, maturities, redemptions and calls  Payment processor for all stock distributions  Post Legacy File Retirement Following Industry Conversion  Enhanced data precision e.g. fractional round-ups  Expanded rate data  Agent fees in greater detail  Solicitation fees processed though DTC  Pro-rata calls

26 ` 26 External Transition Schedule Key Milestones:  External customer UAT begins in Q  Phase 1 production migration completes in Q  All external customer impacts (UI / Message interfaces) completed after Phase 3 in Q  Retirement of legacy CCF files in Q3 2012

27 ` 27 Overview and Business Impact Questions? Additional questions can be sent to:


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