DTCC Develops New Report for Asset-Backed Compliance Regs
To help customers meet new reporting requirements for asset-backed securities (ABS), DTCC’s depository has developed an offering called the Security Holder Report.
An abbreviated version of the Security Position Report, the Holder Report will help customers comply with the Securities and Exchange Commission’s (SEC) Regulation AB, which took effect January 1, 2006. The regulation requires that agent banks that serve as trustees for holders of ABS must count and report on holders of record in annual SEC filings.
The new report will also help agent bank customers contain overall compliance costs.
Multiple objectives
"The regulation requires that these banks report holders of record for each CUSIP they process," said Virginia Holton, DTCC director, Asset Services. "Prior to the new reports, many of our customers obtained this information by purchasing Security Position Reports [SPR] and extracting the information they needed."
SPRs give companies a breakdown of the number of their shares held by each DTCC participant and contain information needed to contact shareholders about corporate-related events such as annual meetings.
However, SPRs contain much more information than the ABS filing requires. "Some customers have thousands of CUSIPs, which makes it costly to buy all those SPRs," said Holton.
To address both the compliance and cost issues, DTCC began working earlier this year with a subcommittee of the American Banking Association’s (ABA) Corporate Trust Committee, which included representatives from the ABA, Wells Fargo Bank, Bank of New York, Deutsche Bank, LaSalle Bank, US Bank and JPMorgan Chase. The goal was to leverage SPR information to meet the requirements of Regulation AB. At the same time, customers would benefit from lower fees for the new reports due to DTC’s reduced production costs.
A tailored solution
The Security Holder Report was developed during the course of several months and DTCC filed a rule change with the SEC in November, making the new service effective upon filing.
The new reports, designed specifically for the needs of agent banks, will provide significant cost efficiencies and also save clients time during the critical year-end processing period.
Lisa Brewster, vice president, Wells Fargo Bank, said, "We really appreciate DTCC’s willingness to come to the table with the industry on this issue. DTCC understood our needs and worked with us to create this solution. It’s been a wonderful working partnership and shows how we can develop a tailored product for the industry."