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Corporate Actions Reengineering Transition Plan BDUG Conference 2007

DTCC. Corporate Actions Reengineering Transition Plan BDUG Conference 2007. 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

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Corporate Actions Reengineering Transition Plan BDUG Conference 2007

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  1. DTCC Corporate Actions Reengineering Transition Plan BDUG Conference 2007

  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. 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. 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. Communication Plan – Post-Release • September 28th – Industry Awareness • Important Notice • E-mail blast to all Reengineering contacts • RM distribution to all contacts • Reengineering eLetter • Alert on www.dtcc.com • 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. 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. Summary of Critical Changes • Event Structure • Common structure • Unique Event ID • Singleannouncement • 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. 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 supportsthe 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. 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. 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. 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. 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 15022 • 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. 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. 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. 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. Transition Phase 1 (Q3 2009 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. Transition Phase 1 (Q3 2009 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. Transition Phase 1 (Q3 2009 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. Transition Phase 2 (Q1 2010 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. Transition Phase 2 (Q1 2010 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. Transition Phase 2 (Q1 2010 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. Transition Phase 3 (Q1 2010 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. Transition Phase 3 (Q1 2010 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. Transition Phase 3 (Q1 2010 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. 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. External Transition Schedule • Key Milestones: • External customer UAT begins in Q3 2009 • Phase 1 production migration completes in Q1 2010 • All external customer impacts (UI / Message interfaces) completed after Phase 3 in Q3 2010 • Retirement of legacy CCF files in Q3 2012

  27. Overview and Business Impact Questions? Additional questions can be sent to: reengineeringmailbox@dtcc.com

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