The Depository Trust Company (DTC) offers full lifecycle processing of distributions arising from the servicing of the approximately 3.5 million securities eligible at the depository, including cash and stock dividends, principal and interest, capital gain distributions, return of capital, spin-offs, stock splits, and other events.
DTC’s Corporate Actions Processing Service for Distributions provides full lifecycle processing, including announcing details of upcoming events, providing participants with information about their entitlements, accepting and acting on their instructions, and collecting, allocating and reporting payments.
The Distributions service includes processing events such as cash and stock dividends, principal and interest (P&I), capital gain distributions, return of capital, spin-offs, stock splits, and other events that arise from the servicing of the approximately 3.5 million securities eligible at the depository.
P&I Cash Processing interacts with over 7,000 paying agents and issuers annually to facilitate the allocation of P&I entitlements to DTC participants on the scheduled payment date. For cash distributions, DTC provides additional services related to tracking for stock loan, repo, and fail transactions. DTC also provides the opportunity for its members to receive dividend reinvestment, payment in a foreign currency, and tax relief at-source for tax withheld on dividends paid on non-U.S. issues (See Global Tax Services fact sheets). Securities eligible for this service include foreign shares eligible at the depository but held in custody by DTC with local custodians and depositories.
Who Can Use the Service
All DTC participants are eligible to use the service.
DTC participants holding eligible securities and entitled to the accompanying distributions will receive payments as part of their overall DTC settlement each day.
By centralizing corporate actions processing, including the receipt and allocation of cash and stock entitlements, the Corporate Actions Processing Service leverages the economies of scale and experience of DTC to provide processing efficiencies and cost savings to issuers, agents and participants – and ultimately to securities’ beneficial owners. The service enables a single payment by an agent or issuer to be seamlessly translated into multiple allocations to participants, eliminating the need for separate payments to multiple firms across the financial industry.
DTC’s Corporate Actions Processing Service for Distributions provides participating organizations cost savings, efficiencies, and reduced risk by:
- Alleviating the burden of securing timely payment directly from a multitude of paying agents and the reconciliation challenges it would entail.
- Providing timely and accurate distributions of dividends and interest.
- Reducing manual processing.
- Reducing financial exposure to market changes by allocating upon receipt of matched funds.
- Providing an array of information and processing services for which outside agencies were formerly used at a higher cost.
- Enabling qualifying beneficial owners to obtain tax relief “at-source” or via quick conditional refund on certain foreign source income payments.
How the Service Works
Using DTC's Corporate Actions Processing Service for Distributions, participating organizations can:
- Receive and track dividend, interest, and amortized principal payment information and collect the distribution of all dividend and interest allocations.
- Receive interest payments in the currency that a foreign security is denominated in, as applicable, if preferred over U.S. dollars.
- Electronically inquire about income processing transactions.
- Receive and view principal and interest adjustments on certain collateralized mortgage obligation (CMO) and other asset-backed securities (ABS) settling at DTC in the period between the accrual end date (beneficiary date) and the corresponding payable date.
- Receive interest payments on coupons deposited directly with DTC for collection.
- Process instructions for Dividend Reinvestment Program (DRP)-eligible securities.
- View and process disbursement instructions for optional dividend announcements.
- Receive income payments net of the favorable, unfavorable, or exempt rate(s) of foreign withholding tax or via a quick refund.
- View tax withholding information.
- Receive and view the tax classification of dividend payments.
- Receive income payments net of proper non-resident alien (NRA) withholding tax.
As funds are paid to DTC to support cash entitlements, matched funding (i.e., funds received by 3:00 pm and identified at a CUSIP level) is allocated to participants in batches running every 20 minutes from approximately 8:30 am to 3:30 pm. These allocation totals appear on the DTC Participant Settlement Statement. Participants can receive updates on their intraday allocations through several means including intraday cash settlement files and on-line inquiries and, if eligible, can also request intraday withdrawals of these funds. If not withdrawn intraday, these entitlements are settled through the combined DTCC Settlement process.
For More Information
For general questions about the Distributions service (including P&I Cash Processing) or for information regarding intraday cash settlement files, please contact your relationship manager. For inquiries about a specific Distributions event, please utilize the WINS inquiry system to submit the query.
For questions about payments to be sent to DTC, please see DTC’s Operational Arrangements and related Service Guides or email the appropriate departments at the following addresses: email@example.com, RedemptionNotification@dtcc.com, VoluntaryReorgAnnouncements@dtcc.com, firstname.lastname@example.org, email@example.com.
DTC’s Corporate Actions Processing Service is undergoing a multi-year transformation initiative. This initiative:
- Introduces a new “event-based” data model aligned with market practice standards; events will be announced under single announcements rather than via multiple “function codes” or “envelopes” as in Participant Terminal System (PTS)/Participant Browser System (PBS).
- Introduces near real-time systemic communications of corporate actions information.
- Replaces the PTS/PBS client interfaces for corporate actions with a new online client browser.
- Replaces the corporate actions CCF files with ISO 20022 messages.
- Allows customers to systemically submit instructions on all corporate actions events (including Distributions events) via ISO 20022 messages.
- Allows customers the option of receiving corporate actions information via SWIFT, in addition to the DTCC SMART Network.
Click here for additional information on the Corporate Actions Transformation initiative, including a brochure and documentation on mapping and adopting ISO 20022 messages for corporate actions. DTC participants can also utilize the Corporate Actions Transformation Learning Center listed below for additional information on the changes and benefits the project brings, instructions on connectivity to the new browser and to receive ISO 20022 messages, ISO 20022 analysis and mapping, and new browser functionality and training.