By Helen Cunningham
On January 23, DTCC issued its 2007 Development Agenda, which will be updated quarterly throughout the year.

The 29-page agenda gives the industry an overview of DTCC's major technology projects for the year, organized by area of the business.

For a special two-part series that seeks to inform readers about the 2007 Development Agenda and DTCC's technology organization, @dtcc spoke with DTCC President and Chief Executive Officer Donald F. Donahue and Chief Operating Officer William B. Aimetti.

Part I:

In the article that follows Donahue F. Donahue, DTCC president and CEO, talks about this year's Development Agenda. In part two of the series, to be published in March, William B. Aimetti, DTCC's COO, will talk about how DTCC has positioned its technology organization to meet the industry's continually expanding requirements.

The 2007 Technology Development Agenda

Could you talk about why DTCC produces the Development Agenda and how it helps customers?
We publish the agenda to provide transparency about our technology initiatives. We want to keep customers informed about how we're spending the industry's money; the timelines for our major technology projects; and the benefits these projects will deliver. We also want to ensure the timely take-up of new services and enhancements by giving customers ample notice for making internal changes to their systems and operations.

Do you obtain customer feedback on the agenda?
Yes. Our annual Customer Satisfaction Survey includes a series of questions assessing the agenda's value to customers, and the ratings are very positive. And we welcome additional feedback. We are very interested in hearing from customers who have ideas for making the agenda more useful.

What are the major themes in this year's agenda?
It reflects a considerable emphasis on systems reengineering. For instance, we are in the midst of reengineering both the corporate actions and underwriting platforms. The underwriting launch, scheduled for 2007, will require customers to take some preparatory steps, so we want to be sure firms have the information they need. And while the corporate actions rollout will not start until the beginning of 2009, we want firms to be aware that it will require a good deal of preparation on their part and we will be using the agenda and other channels to keep them fully informed as we move forward with that piece of the project. Part of our plan is to release a detailed transition plan in mid-2007, which will permit customers to schedule their work as part of their own development plans in 2008.

We also are redesigning one of the core database applications for our mutual fund business this year, and we are in the early stages of reengineering our settlement system.

The 2007 agenda also illustrates how we are digesting the systems we brought together under the DTCC umbrella over the past several years. This has various implications, especially on the commun-ications side. Right now, we use a multi-tude of communications applications to interact with customers, which is a result of having combined different systems from our various subsidiaries as well as SIAC. Now we are working on a multi-year program, which has several deliverables in 2007, that will standardize a few of these communications methods, discontinuing the outdated applications. This will drastically reduce the support burden - on both DTCC and customers.

Another theme in the agenda is our work with the industry to reduce risk and address the concerns of regulators regarding risk. This drives the continual renovation and enhancement of our risk systems, as well as major new initiatives such as the central counterparty for mortgage-backed securities, Deriv/SERV's Trade Information Warehouse for over-the-counter derivatives, the Managed Accounts Service and our new offering for the alternative investment industry, which is currently in customer testing.

We also support our customers in dealing with specific regulatory mandates. For instance, we have projects that facilitate industry compliance with OFAC [Office of Foreign Assets Control] requirements and a range of initiatives in the mutual funds space that will help customers meet regulatory requirements on issues such as breakpoints and market timing.

On the technology front, how is DTCC preparing for the likelihood of cross-border consolidation in financial services?
We laid some of the groundwork for this opportunity when we redesigned our clearing systems in preparation for T+1 some years ago. Although the industry postponed the T+1 initiative following 9/11, we forged ahead with our projects to advance straight-through processing. And because we knew cross-border consolidation was just matter of time, our redesign included provisions for these platforms to handle cross-border activities.

For example, we built the systems with the flexibility to accommodate practices in other markets by incorporating multiple settlement cutoffs. Our subsidiaries can accept real-time input from exchanges and other marketplaces outside the United States, and can accept trades in multiple currencies. And our depository has the ability to settle and service assets in several currencies other than the U.S. dollar, with the flexibility to add additional currencies as needed.

With regard to cross-border exchange mergers, such as the New York Stock Exchange's proposed merger with Euronext, we are making systems enhancements to meet specific requirements and we are moving to deploy those changes on an accelerated timetable.

Could you talk about how DTCC is adopting global standards?
The Development Agenda reflects our ongoing drive to standardize technologies, which dates back to the beginning of the decade. Over the next several years, our goal is to bring standardization and consistency to all our applications.

Still, it is important to recognize that our customers have divergent views about standardization. Today, firms interact with DTCC using formats that have been standard means of communicating with DTCC's subsidiaries for decades, and many do not want to make major technology investments simply for the sake of adopting global standards. Other customers, however, want DTCC to move faster toward adopting global standards.

Our strategy to address these conflicting demands is to offer options. We continue to implement capabilities that permit some customers to use global standards in communicating with particular services, while allowing other customers to continue using DTCC proprietary formats. This allows our customers to convert to the standards on their own timetables.

At the same time, we always look for opportunities to advance standardization without imposing special burdens on customers. So when we reengineer an existing application or build a new platform whose implementation will require firms to change their own systems, we definitely incorporate the global standards at that time. This facilitates migration to them without imposing incremental development costs on our customers.

The 2007 agenda doesn't include any major business continuity projects. Has DTCC covered the bases here? And what about our customers?
One sure thing about business continuity is that some new curveball will always come at you.

That said, DTCC now has completed all the major projects we planned for strengthening the industry's infrastructure. At this point, we are state of the art in business continuity, and it is baked into business as usual at DTCC. That doesn't mean we have stopped paying attention to this area; on the contrary, we are continually reinforcing and reassessing our continuity capabilities. But in 2007, none of our continuity initiatives are of a magnitude to merit inclusion in the Development Agenda.

We have a clear sense that our customers also have made the appropriate business continuity preparations. We have a robust customer connectivity testing program in place and we have participated in industry-wide testing for the past several years.

Can customers expect to see Omgeo and DTCC collaborating more on new initiatives?
Since Omgeo was created back in 2001, the two companies have collaborated behind the scenes on numerous initiatives. For instance, we recently implemented a real-time link for the transmission of data between our depository and Omgeo. And as of 2006, Omgeo is leveraging DTCC's technology infrastructure for all its services, whereas it used to operate in a split environment. This collaboration will continue going forward.

As this year's agenda indicates, our two organizations are working with the industry to explore ways for improving the institutional trade settlement process. In addition, our services for separately managed accounts and alternative investment products involve coordination between DTCC and Omgeo to ensure we are leveraging synergies and developing the necessary interfaces. @

[Click here to download the 2007 Development Agenda in PDF. To be included on the emailing list to receive the agenda when it is published, send an email to editor@dtcc.com.]