The Depository Trust Company (DTC) offers full lifecycle processing of mandatory and voluntary reorganizations arising from the servicing of the approximately 1.3 million active securities eligible at the depository, including exchange offers, conversions, Dutch auctions, mergers, puts, reverse stock splits, tender offers, warrant exercises, and other events.
DTC’s Corporate Actions Processing Service for Reorganizations provides full lifecycle processing, including sourcing and announcing the details of upcoming events, accepting and acting on instructions, and collecting, allocating, and reporting on the resulting entitlements. The Reorganizations service includes the announcement and processing of events such as exchange offers, conversions, Dutch auctions, mergers, puts, reverse stock splits, tender offers, rights and warrant exercises, and other events arising from the servicing of the securities eligible at the depository.
Who Can Use the Service
All DTC participants are eligible to use the service.
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 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 Reorganizations provides participating organizations cost savings, efficiencies, and reduced risk by:
- Creating a central hub for all reorganization announcements for participants and a single point of contact for issuers and agents.
- Creating efficiency and reducing exposure by allowing clients to input through DTC instructions that are transmitted directly to agents.
- Providing an array of information and processing services formerly provided by outside agencies at a higher cost.
- Delivering quick and easy access to announcements about reorganization events.
- Automating the execution of conversion and warrant instructions with immediate credit for the underlying securities.
- Automating the transmission and processing of voluntary instructions to agents.
- Offering a book-entry environment in which participants can surrender securities and receive an entitlement without the need for a physical Letter of Transmittal.
- Automating calculation and charging of rights subscription payments following instruction submittal.
- Delivering swing movements to direct that entitlements are received by the entitled newly merged or consolidated organization.
- Providing an automated method for early Certificate of Deposit (CD) redemption.
- Providing an automated method for switching between different payment periods on Unit Investment Trusts (UIT) and Variable Mode Preferred stocks (VMP).
- Providing an automated method to roll over maturing UITs prior to redemption.
- Automating processing of mandatory reorganizations, including the submission of affected securities to agents and the collection and allocation of entitlements to participant firms.
How the Service Works
Using DTC's Corporate Actions Processing Services for Reorganizations, participating organizations can:
- Receive, view and track information regarding new and updated reorganization events.
- Receive and view the distributions of reorganization allocations.
- View announcements and submit instructions for tender offers, exchange offers or mergers with elections.
- View announcements about upcoming repayment options and mandatory tenders, as well as process instructions to exercise repayments, retainments and relinquishments.
- Exercise the early redemption privilege of eligible CDs.
- Process a participant’s rights subscriptions, conversion instructions, warrant exercise instructions and CMOP instructions.
- View announcements and mandatory reorganization activities being processed on participants’ behalf by DTC.
- View announcements concerning upcoming shareholder meetings, consent solicitations and bankruptcies, as well as exercise share/bondholder rights.
For More Information
For general questions about the Reorganizations service or for information regarding intraday cash settlement files, please contact your relationship manager. For inquiries about a specific Reorganizations event, please call Client Support at 1-888-382-2721, Option 4 then Option 3.
Corporate Actions Transformation Essentials
DTC’s Corporate Actions Processing Service is undergoing a multi-year transformation initiative. This initiative:
- Introduced a new “event-based” data model aligned with market practice standards; events are announced under single announcements rather than via multiple “function codes” or “envelopes”, as was the previous process.
- Introduced near real-time systemic communications of corporate actions information.
- Replaces the PTS/PBS client interfaces for corporate actions with an online client browser.
- Replaces the corporate actions CCF files with ISO 20022 messages.
- Allows customers to systemically submit instructions on all corporate actions 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 Learning Center listed below for additional information on the changes and benefits the project brings, instructions on connectivity to the browser and to receive ISO 20022 messages, ISO 20022 analysis and mapping, and browser functionality and training.