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DTCC Develops XML Format For Corporate Actions Data

DTCC is working to create a new XML based format for delivery of corporate actions announcement information via its Global Corporate Action Validation Service (GCA VS), scheduled for roll-out in early 2008. DTCC currently provides data in its own proprietary format and in ISO 15022. The inadequacy of the 15022 format for its purposes is one of the factors that has prompted it to migrate its proprietary format to XML and it is, it says, making ISO aware of its work.

According to DTCC managing director and head of its Global Corporate Action business James Femia, DTCC is working closely with a number of organisations in the US, including its own advisory and user groups, to develop the new file format. “Today we have a proprietary format which is very rich and robust, and an ISO 15022 format,” he says. “We find there are gaps in processing efficiency with ISO 15022. The amount of text required to fill in the gaps with ISO 15022 moves us away from STP.”

As DTCC works to migrate its proprietary format to XML, it is “keeping ISO aware” of what it is doing, Femia adds. “If there is a move of the MT564s to an ISO 20022 format, we are hopeful that they will look at least to our tagging and field structure.”

The development of a new file format is being welcomed by DTCC GCA VS clients, including the newly signed-up Raymond James & Associates, on the grounds that it will enable greater granularity of corporate actions information delivery, and be more easily integrated into corporate actions systems to improve STP and operational efficiency.

For DTCC, the creation of the new file format will enable it to improve its delivery of information to its clients – of which there are more than 20, including Goldman Sachs, Merrill Lynch, Credit Suisse and UBS. “There is the whole issue of statuses,” Femia says. “We are not an information provider, we are an information service – we tell our clients where we are in terms of the announcement, whether a field is incomplete or there are fields in conflict with each other. Whereas now we deliver files, in the future we will be more messaging oriented, so as changes occur we can distribute them in near real-time to our customers, improving our timeliness even further.”

Swift – the registration authority for ISO 15022 and the next generation ISO 20022 XML based message formats – has no plans to create XML versions of its corporate actions messages (MTs 564, 565, 566, 567 and 568, the corporate action narrative message type), although it has created ISO 20022 messages for proxy voting).

Malene McMahon, business manager, standards department, North American market at the co-operative, says Swift is “anecdotally aware of some granularity issues with the ISO 15022 messages” and deals with them within the maintenance process for ISO 15022 (the once-a-year annual cycle for Swift FIN standards). “ISO 20022 was created to standardise around a single business model and set of elements for the financial industry,” she says. “One of the side benefits of creating a central model (representation) is that additional granularity and/or new functionality can be introduced where appropriate (if it was not previously covered by either ISO 15022 or other industry standards).”

McMahon adds that Swift is aware of DTCC’s efforts, and is working closely with DTCC in the corporate actions arena. “Swift and DTCC often seek each other’s input when dealing with the idea of creating additional business justifications for ISO 20022,” she says. “This collaboration is ongoing.”

The new file format is one of a raft of enhancements DTCC is making to the GCA VS, according to Femia. It is currently testing with some North American firms coverage of scheduled interest payments and maturities, and later this year will launch structured securities coverage for mortgage-backs, asset-backs and CMOs, including money markets. “That will close out the last remaining block of securities eligible for the service, and is scheduled to be completed at the end of Q3 this year,” he says.

Efforts are also under way to improve automation for the handling of information outside of that provided by the data vendors. “Information flowing in through data suppliers is a key part of what is going on, but it is only a part. There is still a need to look at prospectuses, talk to exchanges and CSDs, and go out to agents and web sites – and that’s why it is still so much of a manual process, and why we employ 60 validators on three continents. We are looking at further automating the process to the extent possible, with automated web crawling – using cutting edge technology so parameters can be set and initially information presented for manual review and ultimately sourced directly,” Femia says.

DTCC’s “at source” initiative is focusing on ways to ensure corporate actions announcements are delivered electronically from the outset. “If that information could stem electronically from the source, it would be higher quality and available faster. So we are working closely with industry organisations here, and we have approached the regulators and the banks, to move towards automation for this. A key candidate is XBRL. This has been used in the financial community for other types of tag and field distribution. We are talking seriously with other CSDs and exchanges to develop an entire ‘at source’ vision.”

These enhancements build on the efficiencies DTCC created when in September 2006 it moved its corporate action announcement engine off a third party software application (XSP from Xcitek) into its mainframe environment.

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