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DTCC Publishes Updated ISO 20022 Specifications for Corporate Actions Processing

The Depository Trust & Clearing Corporation (DTCC) today published updated drafts of new ISO 20022 corporate action announcement specifications, which will be used in a pilot test with custodian banks, broker-dealers and other corporate actions users beginning this April.

While the pilot of the DTCC system using ISO 20022 announcement messages will involve a limited number of financial services providers, all firms using DTCC corporate actions will ultimately have to switch to ISO 20022 messages to receive corporate action information.

The new documentation was developed in collaboration with Swift, a global provider of secure financial messaging services and the ISO 20022 (International Organisation for Standardisation) Registration Authority.

ISO 20022 provides the financial services industry with a common platform for the development of messages in a standardised syntax and defines a number of key elements used in messaging. Supplementary data that does not fit into the current standard message format, or is specific to a particular country or market, can be added by extending the messages with an additional component. DTCC determined what supplemental information was needed in these extensions for corporate actions processing in the US.

“It was important that DTCC, Swift and the industry thoroughly examine these messages, since they will be the principal way we announce corporate actions and will be the basis for the corporate actions messaging pilot program that DTCC will launch this spring,” said Patrick Kirby, DTCC managing director, Asset Services.

“DTCC and Swift conducted several workshops in the past five months with custodian banks and broker/dealers to review the new message specifications proposed for the announcement phase of the corporate actions reengineering initiative,” said Kirby. “The workshops were held to make sure that the message specifications accommodate the wide range of industry needs.” DTCC also reviewed the supplementary data with the International Securities Association for Institutional Trade Communication (ISITC), an industry association, which acts in part as the US National Market Practice Group for ISO messaging standards.

A new browser-based user interface for corporate actions also will begin pilot testing in April to coincide with the ISO 20022 messaging pilot. This initial version of the browser will consist of announcements for all event types across distributions, redemptions and reorganisations, and later will incorporate the entire corporate actions lifecycle, including elections, instructions and payments. This unified corporate actions platform will eventually replace the varied corporate actions functionality in the legacy systems that customers use today.

“The browser’s enhanced functionality will boost firms’ operational efficiencies and allow them to manage all corporate action events through the entire lifecycle in one platform,” said Robert Epstein, DTCC vice president, Asset Services.

Earlier this year, DTCC released the original draft messages for public comment on corporate actions including announcements, entitlements, elections and payments using the new ISO 20022 standard. Revisions have been made in several technical documents posted on DTCC’s Corporate Actions web pages, including: the Documentation Guide; ISO 20022 Messages Specifications for Announcements; the Corporate Actions Scenario Documents; and Corporate Actions Events Dictionary and Data Elements Dictionary.

DTCC plays a critical role in processing virtually all corporate actions affecting equities and corporate and municipal bonds in the US and processes more than US$3 trillion in corporate actions annually. DTCC’s reengineering initiative will upgrade and replace many of the 60 legacy systems that currently support corporate actions, creating a platform capable of handling increasingly sophisticated types of securities, both domestic and international. DTCC will phase in its corporate action reengineering over several years, with the goal of retiring all legacy file formats on or before 2015.

The ISO 20022 message specifications are part of DTCC’s corporate actions reengineering initiative that will help mitigate risk and automate and transform the way corporate actions are announced and processed in the United States.

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