Sidebar: A Primer on SMART/Track For Stock Loan Recalls

SMART/Track, rolled out in May 2003, represented something of a departure from The Depository Trust Company's traditional processing role in financial services, yet it was a natural fit.

"DTCC is uniquely positioned within the industry," said Margaret Koontz, DTCC director, Clearance and Settlement Product Management. "We have communications links with all the principal players in financial markets. SMART/Track leverages these connections to automate and streamline trans-mission of the messages that facilitate business among our customers."

No spaghetti, thanks
SMART/Track is an automated communications facility that centralizes communications among multiple parties, facilitating the notification, acknowledgement and maintenance of securities messages. These include notifications for stock loan recalls, as well as other transactions such as corporate action liability notices and buy-ins.

SMART/Track for Stock Loan Recalls automates the communications and notification process among parties, replacing faxes. This enables customers to create an audit trail indicating the information has been sent or received, which facilitates regulatory compliance and reduces market risk.

By providing a single point of entry for all customers, SMART/Track replaces the "spaghetti" environment of multiple connections to multiple parties. It also gives customers easy interoperability. In other words, a firm that has its own automated stock loan recall notification capability can communicate a recall with a counterparty that uses a third-party vendor or has its own recall notification capability via SMART/Track, and does not need to establish a direct link with each counterparty.

SMART/Track also establishes standards for communicating stock loan recall information so that all parties are speaking the same language through the use of ISO 15022 messaging formats.