Custody Service

The Depository Trust Company’s (DTC’s) Custody Service enables participants to outsource the safekeeping and processing of physical securities that are not or cannot be held through DTC’s core depository services. Custody’s family of products includes the Branch Deposit Service, New York Window physical clearance and settlement services, Custody Reorganization and Restricted Deposit Services.

About

Through the Custody Service, DTC participants can outsource to DTC the handling and servicing of physical securities that are not or cannot be held through its regular depository service. The Custody Service allows participants to engage voluntarily in the Branch Deposit Service, Restricted Deposit Service and New York Window service (see below for more detail) – which enables participants to retain control of these securities without having to handle and secure them themselves.

Specialized deposit functions are also available to users of DTC’s Deposits Service.

Participants can utilize the Custody Service for securities such as customer-registered custodial assets, restricted shares and certain securities not eligible for settlement at DTC, including certificated money market instruments, private placements and limited partnership interests.

Who Can Use the Service

All DTC participants are eligible to use the service.

Benefits

The Custody Service:

  • Reduces the high fixed costs for participants associated with safekeeping and handling of securities, which include vault space, equipment and maintenance expenses.
  • Reduces insurance costs associated with safekeeping and shipping securities.
  • Reduces risk.
  • Provides availability of detailed information on certificates held through the service.
  • Provides enhanced system reliability, including via DTC’s dedicated backup site.
  • Provides choice of interface through File Transfer Protocol (FTP), Mainframe Dual Host (MDH) or Participant Browser System (PBS).
  • Provides availability of images of certificates and documents held in custody via DTC's Imaging Fax/Email (IFE) system or Imaging Drop-Box Solution.
  • Provides for availability of end-of-day positions and activity reports on the same files as other DTC positions and activities.

How the Service Works

Deposits: Participants deposit securities using DTC’s PBS function CUST, via a CCF deposit file transmission, or via MDH. Once the certificates arrive at DTC, Securities Processing staff thoroughly examines them all, performs a negotiability check and verifies data received from the depositing participant firm.

Depositing participants have the option to request an SIC (Securities Information Center) verification, by which DTC provides a file to SIC using the participant's FINS number and access code. On receipt of the return file, DTC can verify “potential hits” with the transfer agent.

Each deposit received at DTC is imaged as a unit of work, which can contain multiple certificates and documents. During the lifespan of a certificate or document, the participant may retrieve the image via PBS or an electronic “drop-box” to be picked up by the participant's processing system or service bureau.

Withdrawals: To withdraw certificates, participants in the New York City area can arrange for pick-up from DTC; for those outside of New York City, DTC ships certificates via overnight air courier.

For domestic issues, DTC generally sends securities to the transfer agent on the same day after receiving the participant's instructions. Aging transfer follow-up is also performed.

Custody Reorganization Service: This service supports securities on deposit in the Custody Service that are subject to reorganization events, including redemptions, mandatory and voluntary activities.

New York Window (NYW): NYW provides clearance and settlement service for physical securities and related paperwork. The service allows firms to clear and settle trades outside DTC’s regular book-entry settlement services. Trades that can clear through the NYW include securities that are not DTC-eligible, restricted securities and mutual fund re-registration letters.

Restricted Deposit Service (RDS): RDS allows participants to deposit and affect a transfer (including working with the transfer agent for the removal of restrictive legends) on previously restricted securities. The RDS unit processes full sales, partial sales, gifts, legend removals and breakdowns.

CUST function on PBS: This function provides update capabilities for the various services offered through the Custody Service, as well as:

  • Certificate detail for deposited securities, including denomination, quantity, certificate number (including prefix), registration, negotiability indicator, transfer agent information.
  • An inquiry screen with complete historical details of Custody activities.
  • The ability to retrieve certificate and document images.
  • Updates to customer account numbers singly and globally.

For more information

Please contact Client Support at 1-888-382-2721, Option 4 then Option 4.

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