In reengineering its Underwriting and Corporate Actions applications, DTCC will be taking precautions to mitigate the risks associated with a project of this complexity, size and scope, particularly in light of the role its DTC subsidiary plays as the industry's securities depository. In particular, DTCC will collaborate on the development of the new underwriting and corporate action processing systems, but will not outsource the operation and maintenance of its core depository capabilities and responsibilities.

These measures will:

• Mitigate total project risk while insuring a higher probability of overall project success,

• Ensure a high degree of knowledge transfer from TCS to DTCC,

• Minimize DTCC's dependency on TCS for long-term application maintenance and production support,

• Provide added measures of support during critical system implementation phases.

The project methodology steps include:

Vendor Selection and Due Diligence

• TATA Consultancy Services (TCS) was selected based its position as a global leader in IT and applications development, the financial strength of the company, and its demonstrated financial services domain knowledge.

• DTCC consulted with industry participants and peer companies which had undertaken similar engagements with TCS to benefit from their experiences in working with TCS and to refine DTCC's development and delivery approach.

• An appropriate team of DTCC personnel conducted a site visit of TCS' offshore facility (Q2 2005) to ensure that TCS' facilities and operations met our standards for access security, applications development, data security and BCP.

Collaborative Knowledge Input

• DTCC business and technical personnel participated in daily Joint Advisory Development sessions with TCS to contribute knowledge into the design of the Business Requirements Documents for Underwriting, and Corporate Actions.

• DTCC personnel will write and execute all test scripts as part of system development and delivery.

Application Language Selection

• DTCC consulted with internal industry experts and collaborated with external experts such as IBM, the Gartner Group, and Forrester in selecting the application programming languages (J2EE).

• Scalability, performance, estimated longevity, and availability of testing and performance monitoring tools were critical factors in language selection.

• This decision was also guided by the DTCC's hands-on familiarity with COBOL and support requirements, and the current and anticipated availability of J2EE support tools and resources.

Joint Development

• Joint applications development will be conducted both in the TCS development center and at DTCC's headquarters, with co-located staffs from both firms.

• DTCC will maintain a consistent core team — comprising operations, systems developers and a project manager — throughout life of project.

• TCS will maintain a core group of key project members from the start of the project through the customer transition phase.

Compliance with Project Development Standards

• DTCC will execute this project in accordance CMMI Level 2 standards.

• The project will be executed in accordance with DTCC's internally developed application development best practices, and will utilize DTCC internal project tracking, budgeting, and forecasting tools.

Interim Deliverables

• The project deliverable schedule requires two interim code deliveries for Underwriting to gauge progress towards critical development milestones. Three interim code deliveries will be the minimum requirement for the Corporate Actions application.

• A prototype system will be delivered and reviewed prior to the initiation of full-scale development.

Production Support "Insurance"

• DTCC will engage TCS for production support for each application during and for a period after customer transition.