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DTCC Key Issue Review

DTCC Key Issue Review. Rich Lanning Director Relationship Management. Direct Registration System (DRS) Update. A Short Look Back Just one year ago…….. DRS Issues 1,245 issuers 1,087 cert/statement 158 Statement Only Transactions 43,000 Profile requests/month 38,400 DOs. DRS Update.

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DTCC Key Issue Review

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  1. DTCC Key Issue Review Rich Lanning Director Relationship Management

  2. Direct Registration System (DRS) Update A Short Look Back Just one year ago…….. • DRS Issues • 1,245 issuers • 1,087 cert/statement • 158 Statement Only • Transactions • 43,000 Profile requests/month • 38,400 DOs

  3. DRS Update Today…… • DRS Issues • 2,902 issuers • 2,614 cert/statement • 243 statement only • Transactions • 60,400 Profile requests/month • 53,800 DOs

  4. DRS Update Status • 4 Participants default to statement • 2 more are programming for it • 16 Participants at 50%/> for statements, • 7 with 100 or more DRS WTs per month • > 30% of WTs in statement form, and growing

  5. DRS Update DRS Status • 4,000 issuers to migrate/52 new agents • All newly listed equity issuers are DRS eligible • DRS eligible BUT not “participating”

  6. DRS Update 2007 – What we’ve done • Monitored migration of issuers to DRS • Ongoing communications with industry: exchanges, agents, etc. • Training new FAST/DRS agents - Brought in 16 new FAST agents - Working with 37 remaining - 16 in the pipeline - No agent left behind • DRS Usage Statistic Reports

  7. DRS Update 2007 – What we’re doing • DRS “Education Fact Sheet” with DMD • Fine tune FAST/DRS SEC rule filing • Discussions on updating exchange listing requirements • System enhancements

  8. DRS Update Next Steps - 2008 • Exchange listing requirement change: all issues • Participants agree to Default • DRS enhancements • Move “all” shares options • Profile surety upgrade • Default WTs to DRS “statement only” • Currently 63%+ of WTs are DRS eligible

  9. DRS Update By 2010: • Immobilization complete • Dematerialization 75% implemented • Less physical withdrawals = Less deposits • Few certificates in system • Listed issues in DRS • Bearers matured • Non-Transferables destroyed

  10. DRS Update • Industry efforts • SIFMA Letter – challenges broker dealer community to default to statements for all DRS eligible securities as of January 2008. • Educational Websites – • http://www.sifma.org/services/techops/stp/html/paperless.shtml • http://www.dtcc.com/leadership/issues/nomorepaper/

  11. BDUG / SIFMA • BDUG has a representative on the SIFMA DRS industry group for the past two years • Discussion on challenges to custodian community

  12. PBS 2.0 • PBS 2.0 is in production with 10 pilot firms consisting of a cross section of our Participant community. • Pilot firms have successfully processed PBS 2.0 transactions in the mainframe environment • Scheduled to start in November 2007 and concluding by 1st Q 2008, DTC will begin a phased rollout out of the new version to existing version PBS 1.0 users.

  13. PBS 2.0 • Based on the pilot customer experience, DTC has modified PBS 2.0 to be implemented without the need for customer networking changes or re-registration of existing users. • Existing PBS 1.0 users will simply login as they do today using their current ID and password.

  14. PBS 2.0 Migration • Implementation priority will be given to existing PBS version 1.0 customers. • A migration schedule and will be shared with individual customers starting Q4 2007.

  15. PBS 2.0 - JPTS Link • Throughout the rollout, the JPTS link that provides 1.0 users access to PTS functions not available in 1.0 will remain accessible on version 2.0 for those firms that have not been converted. • Upon migration of a firm, the JPTS link will be retired, as all PTS functions are available in PBS 2.0. • Important Notice with specific details will be distributed in late October.

  16. Stock Loan and Repo Tracking Program • Anticipate requiring Participants to acknowledge monthly reconciliation of stock loan / repo memo positions by year end 2004 • Banks should review their procedures surrounding reconciliation of these positions • Position information available via file transmission and via SMARTSearch

  17. Stock Loan and Repo Tracking Program Additionally, DTC will implement the following enhancements: • Systemic blockage of improper reason codes when reclaiming an original stock loan / reclaim reason code • Informational and warning messages in the stock loan and repo systems • Open SLRM adjustment request will not purge for 20 business days as opposed to the current 5 business days

  18. 2008 Developments • Syndicate Loans – with a working group of industry players developing business and functional requirements. Plan to launch a reconciliation and message hub service in early ’08. • OFAC Reliance Letters – will file with SEC shortly and administer in early ’08. Periodic acknowledgement by participants that their organization is properly monitoring customers and transactions. • Blanket Letter of Representation for DTC Eligible non-registered securities

  19. Questions?

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