DTCC Plays a Key Role in Enhancing Global Standards for Corporate Actions Announcements
DTCC is actively working with U.S. associations and firms to change the international standards for corporate actions to accommodate the requirements of its depository subsidiary, The Depository Trust Company (DTC), and the U.S. market, which currently generates about 65% of all corporate actions globally.
“As DTCC expands globally, we need to be able to support internationally accepted communications formats,” said Patrick Kirby, DTCC managing director, Asset Services. “In our Global Corporate Action business, those standards are critical for gaining wider market share,” he said. “At the same time, we need to ensure the international formats we adopt support all the unique requirements of the U.S. market, so we can use them for U.S. corporate actions announcements and processing.”
Standards for reengineering
As part of its corporate actions re-engineering project, DTCC made the decision to provide corporate actions announcements in an internationally accepted ISO 15022-compliant form, in add-ition to DTCC’s proprietary XML (Extensible Markup Language) format. ISO 15022 supports international communications for various securities messaging, including those involving corporate actions.
Now DTCC is working with SWIFT Standards and other U.S. market participants to enhance ISO 15022 to fully accommodate the needs of the U.S. markets. SWIFT Standards is the business group of SWIFT that serves as the registration authority for international securities message formats. Each year, it reviews proposed enhancements and determines which ones will be included in the subsequent year’s update.
“The current ISO 15022 standard does not fully support the data elements that DTC requires for processing corporate actions,” said David Hands, DTCC director, Product Management, DTCC Solutions LLC, who is DTCC’s representative to SWIFT Standards. As an example, Hands cited “chill dates,” the dates on which DTCC’s Depository Trust Company imposes restrictions on some or all processing generally allowed on securities held in custody. “Our goal is to have the standards expanded to accommodate the unique needs of the U.S. market.”
Such a change would mark a significant milestone in the adoption of international standards for corporate actions messaging by DTC.
A busy year
In January and March, DTCC and SWIFT Standards hosted working sessions with U.S. market representatives to validate the requirements DTCC has proposed to the ISO 15022 standards. Representatives came from firms such as JPMorgan Chase, Citi, Bank of New York Mellon, Bank of America, Goldman Sachs, Pershing, Merrill Lynch and Morgan Stanley.
“The attendees represented their firms, as well as the Securities Industry and Financial Markets Association [SIFMA] Corporate Action Division and the International Securities Association for Institutional Trade Communications [ISITC] Corporate Actions Working Group, which sets U.S. National Market Practice and the Global Securities Market Practice,” Hands said.
The group worked throughout May to refine the formal Change Requests in coordination with the ISITC Corporate Actions Working Group and, on May 29, submitted 10 change requests involving about 35 data elements to SWIFT Standards.
In August, the ISO 15022 Maintenance Group, which comprises global experts on communications standards, will review all change requests submitted globally. The changes that are accepted will be announced in September and implemented in November 2009 as part of Standards Release 2009 (SR2009).
New standard in the wings
While updating the ISO 15022 standard is a priority, Hands said DTCC is simultaneously working with SWIFT on the creation of a new standard for corporate actions that use the next- generation standard, ISO 20022. Still in its early development stages, this new standard will be based on ISO 15022 but support XML messaging.
DTCC is a member of the SWIFT Corporate Actions Industry Consultation Group, which will guide the ISO 20022 devel-opment for corporate actions. By participating in the development of this new standard, Hands hopes that, ultimately, all required DTCC and U.S. data elements will be available in both ISO 15022 and 20022 standards. @