Customer testing of The Depository Trust Company’s (DTC) newly reengineered underwriting platform begins in February for a small group of municipal underwriters, with all municipal underwriters scheduled to start testing in March. The system will go live April 1 and become mandatory for municipal issues June 1.
“We originally planned to roll out the new system earlier, but based on customer feedback last fall, we decided to rework its web application to make it more efficient and user-friendly,” said Denise Russo, DTCC director, Asset Services.
The new platform is called the Underwriting SOURCE, short for Securities Origination Underwriting & Reliable Corporate Actions Environment. Implementation is subject to approval by the Securities and Exchange Commission (SEC), which is expected in the near future.
SOURCE will streamline the process by which underwriters submit new-issue eligibility requests to DTC, a DTCC subsidiary. Initially, it will handle municipal bond issues. Corporate issues, including equities, corporate debt, retail CDs and structured debt, will transition in the fourth quarter of 2008.
The new system also will introduce the New Issue Information Dissemination Service (NIIDS), which will distribute real-time information on new issues to the industry. The Municipal Securities Rulemaking Board (MSRB) has submitted a filing with the SEC that would mandate municipal underwriters to adopt NIIDS by June 30. The SEC is expected to approve this rule shortly.
Based on customer input, DTC redesigned SOURCE’s web application and will begin testing the redesign shortly with customers. “The new screens represent a significant improvement according to feedback from customers who have seen them,” said Russo.
DTC has posted a simulation of the new system on its website so that municipal underwriters can start to prepare for testing in the coming months. The company also is offering underwriters an e-learning training program that will enable their employees to learn how to use SOURCE easily and at their own pace.
When SOURCE goes live on April 1, firms will have the option to begin using the new system at that time. Alternatively, they can continue to use the existing system through the end of May. These firms will be able to submit new-issue eligibility requests via the Participant Terminal System’s PUND application, the Web’s WUN application or hard-copy underwriting questionnaires.
Then, on June 1, all municipal underwriters will be required to use SOURCE to submit new issue information to DTC. On June 30, it is expected that NIIDs will likewise become mandatory.
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