A More Efficient DRS
With more than 7,300 issues now eligible for The Depository Trust Company’s (DTC) Direct Registration System (DRS), the number of book-entry transactions that move positions electronically between DRS and DTC participant accounts will grow dramatically. This means DRS will experience higher volumes and greater processing challenges than ever before.
Currently, DRS handles more than 63,000 transactions a month, but a number of these transactions continue to be rejected. The reason? Data elements in the DRS account and DTC participant account – including the number of shares to be transferred and the social security or taxpayer information number – don’t always match.
Working with industry groups, DTC has developed two enhancements to help address this processing problem, including a “move-all” functionality to the DRS system and providing two Social Security or tax information numbers for each transaction submission. Implementation of both enhancements, scheduled for November 3, 2008, is subject to regulatory approval.
Move it
The “move-all” functionality eliminates the need to match the number of shares being transferred and gives DTC participants three options to use in processing transactions:
- Move all the investor’s full shares to the requesting participant’s account;
- Move all the investor’s full shares to the requesting participant’s account and liquidate any fractions in the account, with the cash proceeds sent directly to the investor; or
- Move all the investor’s full shares to the requesting participant’s account, liquidate any fractions in the account, with the cash proceeds sent directly to the investor, and close the DRS/DRiP account.
The second enhancement will enable transfer agents to accept two Social Security or tax information numbers for each DRS transfer submitted by a participant. This will cover joint investor accounts where there are two numbers on an agent’s record and allow the transfer agent to match either one of the numbers, helping to decrease the number of rejects. @