2 What Reengineering Project? Underwriting Corporate Actions Security Master Files

3 A Bit of History Transforming Corporate Action Processing outlined DTCC’s strategy to help firms manage risk, reduce cost and achieve greater levels of STP Municipal Operational Underwriting Process and Corporate Operational Underwriting Process documented the operational underwriting process in plain English Guides Transforming Corporate Action Processing outlined DTCC’s strategy to help firms manage risk, reduce cost and achieve greater levels of STP Municipal Operational Underwriting Process and Corporate Operational Underwriting Process documented the operational underwriting process in plain English Guides

4 Reengineering Objectives Common Platform for Underwriting and integrated Corporate Action Processing Improve Customer Service by offering greater operational flexibility Streamline Processes and eliminate redundancies Reduce Risk through increased automation Common Platform for Underwriting and integrated Corporate Action Processing Improve Customer Service by offering greater operational flexibility Streamline Processes and eliminate redundancies Reduce Risk through increased automation

5 Reengineering Objectives Support International Standards and Best Practices ISO compatible Multi-currency enabled Support international numbering systems Support International Standards and Best Practices ISO compatible Multi-currency enabled Support international numbering systems

6 Current Underwriting Platform Does not capture all fields required to service security over its life Relies upon single security identifier Implemented over twenty years ago Consists of over six distinct customized sub-systems Does not capture all fields required to service security over its life Relies upon single security identifier Implemented over twenty years ago Consists of over six distinct customized sub-systems

7 Current Corporate Actions Platform Consists of over sixty distinct customized sub-systems Many implemented over twenty years ago Sub-systems individually maintained and have been significantly altered over time Relies upon single security identifier Consists of over sixty distinct customized sub-systems Many implemented over twenty years ago Sub-systems individually maintained and have been significantly altered over time Relies upon single security identifier

8 Current Corporate Actions Platform Batch processing mostly end-of-day Proprietary formats Unique procedures (e.g. contra-CUSIP, envelopes) Hard-coded processing rules Batch processing mostly end-of-day Proprietary formats Unique procedures (e.g. contra-CUSIP, envelopes) Hard-coded processing rules

9 Underwriting System Processes Underwriting Announcements Capturing and maintaining Underwriting event information Eligibility Review process to determine if issue can be DTC eligible Packaging Establishing DTC inventory for the new issues Underwriting Announcements Capturing and maintaining Underwriting event information Eligibility Review process to determine if issue can be DTC eligible Packaging Establishing DTC inventory for the new issues

10 Underwriting System Processes Closing Crediting Underwriters with position once issue closes Post Closing Activities Gathering and verification of asset servicing features Closing Crediting Underwriters with position once issue closes Post Closing Activities Gathering and verification of asset servicing features

11 Master File Changes Consolidate multiple Security Master Files within DTCC into one common structure Elimination of sub-issue types that drive processing and don’t describe the security Enhanced Support for Asset Services features Consolidate multiple Security Master Files within DTCC into one common structure Elimination of sub-issue types that drive processing and don’t describe the security Enhanced Support for Asset Services features

12 Corporate Action Processes Announcements Capturing and maintaining of event information Entitlements Identifying eligible participant positions and calculating the entitlement Response Capture Processing of all Corporate Action instructions Announcements Capturing and maintaining of event information Entitlements Identifying eligible participant positions and calculating the entitlement Response Capture Processing of all Corporate Action instructions

13 Corporate Action Processes Reconciliation Balancing entitlement positions, pre-balancing cash payments and resolving out of balances Payments R eceipting and allocating event proceeds; post allocation bookkeeping Tax Creating and Maintaining information to support tax elections Reconciliation Balancing entitlement positions, pre-balancing cash payments and resolving out of balances Payments R eceipting and allocating event proceeds; post allocation bookkeeping Tax Creating and Maintaining information to support tax elections

14 Top “10” Highlights 1.Security Master File will works in unison with Underwriting and Corporate Actions 2.Common rules engine supporting Underwriting, Corporate Action and Security Master File 3.Capture more comprehensive information on securities during eligibility process

15 Top “10” Highlights 4. Announcement Makeover Introduction of new naming convention Single Announcement processor for all events Process complex events within a single envelope Link related corporate action events

16 Top “10” Highlights 5.Improved Entitlement Calculations Common payment options across all event types Process pro-rata lotteries 6.Common Instruction Processor Event specific instruction cutoff times Customizable instruction “approval” mechanism

17 Top “10” Highlights 7.Improved payment reporting Taxes and fees will no longer be net from the declared rates Post Payable adjustments will be reversed and reallocated 8.ISO15022 messaging support for entire event life-cycle

18 Top “10” Highlights 9.Web browser access with enhanced reporting and export functionality 10.A Participant “dashboard” that “pushes” critical information to forefront

19 Current Status Business Requirements Documents finalized Currently in Analysis and Design Reviewing and Responding to Customer Feedback Launched Reengineering Website Business Requirements Documents finalized Currently in Analysis and Design Reviewing and Responding to Customer Feedback Launched Reengineering Website

20 Next Steps Customer Input Underwriting Focus Groups completed Corporate Action Focus Groups Round 2 to be held 4 th Quarter 2006 Finalize Analysis and Design Phase Ongoing Communication Strategy Customer Input Underwriting Focus Groups completed Corporate Action Focus Groups Round 2 to be held 4 th Quarter 2006 Finalize Analysis and Design Phase Ongoing Communication Strategy

21 Timeline – Key Dates Underwriting Initiate UATQ Commence TransitionQ Corporate Actions Initiate UATQ Commence TransitionQ Underwriting Initiate UATQ Commence TransitionQ Corporate Actions Initiate UATQ Commence TransitionQ3 2008

22 Questions