DTCC Enhances and Expands Global Corporate Actions Service
DTCC is expanding its Global Corporate Actions (GCA) service based on feedback from its growing global client base. This year, GCA is adding new data streams, subscription options, tax information and connectivity options.
“We recognize that clients have different information needs and that, in an area as complex as corporate actions, one size cannot fit all,” said Patrick Kirby, DTCC managing director, Asset Services. “As a result, we will continue to enhance our core corporate actions data package, while also creating tools that give firms greater flexibility for managing how they receive and share data.”
The articles that follow summarize how GCA is enhancing its offerings. GCA services are offered by DTCC Solutions LLC, a DTCC subsidiary.
Increased Securities Coverage
I n early 2010, GCA will further expand coverage on U.S. and international DTC-ineligible securities with a three-part extension.
- Fannie and Freddie securities: GCA will source scheduled payment announcements from the Federal Reserve Board for U.S. structured and non-structured securities, specifically Fannie Mae and Freddie Mac securities, which are not DTC-eligible.
The Fed will provide GCA with a weekly security master file that includes interest and principal payment and maturity event information on these securities. (Similar to existing scheduled payment announcements, these will not be validated manually by GCA.) - International securities that are DTC-ineligible: GCA is adding scheduled payment coverage to include international securities that are not DTC-eligible, beginning with a handful of markets and gradually expanding as individual market differences are defined and rules validated. Interest and maturity announcements for these securities will be provided by Six Telekurs (which does not offer principal payment data on these securities).
- Unit Trusts: GCA will provide distribution information on Unit Trusts (UT), a security type concentrated in the U.K., by expanding its use of data provided by Interactive Data and Six Telekurs. UT events covered are Cash Dividend (CD), Special Dividend (SD) or Dividend Reinvestment (DR), as well as Return of Capital (ROC).
Scheduled Payment Volume Management
Scheduled payment information (interest and principal payments along with maturity events) are part of the core content of GCA services, which handled nearly six million scheduled payment events in 2009 (approximately 86% of total volume).
The expanded security coverage will increase the volume of this type of information GCA makes available to customers. To help firms manage the potential surge in volume, and the processing and billing issues associated with it, GCA is giving firms the ability to subscribe to all or part of its data.
The subscription options give firms the flexibility to limit their scheduled payment data to their existing DTC-eligible scheduled payment events, to non-eligible data only, or to receive both. .
Previously, GCA offered a subscription option for DTC-eligible scheduled payments only. Now, a second subscription option is available: DTC-ineligible scheduled payments. The subscription options give firms the flexibility to limit their scheduled payment data to their existing DTC-eligible scheduled payment events, to non-eligible data only, or to receive both.
Clients can select one or both of these data deliveries at no additional charge other than the cost associated with expanding their client Securities of Interest (SOI) file. This decision will affect the volume of data received and thereby have an impact on the ultimate cost of the service. Firms will have to instruct GCA to “turn on” the option they select to avoid an unexpected increase in data volume.
DTCC recommends that GCA customers discuss the potential data volume increase with their technical staffs as it may affect in-house processing times.
New Tax Data
GCA has created a new fee-based subscription option, the Qualified Dividend Tax Indicator, which allows clients to receive qualified dividend tax status information for dividend events on securities that trade in the U.S. and Canada. This information can help firms determine the amount of dividend income that is qualified for the preferential tax treatment of 15% based on the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003.
Snapshot of the GCA Service
T he GCA service has delivered corporate actions information from the world’s largest securities database at The Depository Trust Company (DTC), a subsidiary of DTCC, since 2003. The service offers data on standard corporate action events for equity and fixed income securities ranging from simple dividend announcements to complex merger events, as well as for other domestic and global securities, including instruments that are DTC-ineligible.
The GCA Validation Service, which operates around the clock in three locations (New York, London and Shanghai), scrubs corporate announcement data from more than 200 sources to deliver a single “golden copy” of high-quality, reliable data in a timely manner to intermediary and investment firms all along the announcement chain.
In addition to DTC-eligible securities in the U.S., GCA validates corporate action information from 117 countries and territories.
The JGTRRA sets the maximum individual federal tax rate applicable to dividends paid by most domestic and many foreign corporations at a preferential 15% for dividends paid after December 31, 2002. The GCA Qualified Dividend Tax Indicator provides an indication whether the payments qualify for the preferential rate based on meeting the applicable holding period for the securities.
As of January 2010, GCA VS will publish the qualified/non-qualified indicator values to clients that subscribe to this information with the understanding that firms will perform their own tax calculations on dividend payouts affected by the qualified indicator.
The fees for the new subscription will be based on the volume of securities in a client’s SOI defined as equities that trade in the U.S. and Canada.
New Global Connectivity
GCA customers can connect to the full Validation Service via DTCC’s Securely Managed and Reliable Technology (SMART) network to receive data. An alternative connection option for customers that only wish to view the database rather than access the full service is the standalone Browser Service, which offers wider, low-cost desktop access to the data.
A third connectivity option, available since November 2009, gives firms the opportunity to receive and send corporate actions data over the SWIFT network (SWIFTNet).
“As our multi-year corporate actions reengineering project moves forward to bring all corporate actions information onto a single platform, we are working with organizations such as SWIFT to connect more data users and offer more connectivity choices,” said Brett Lancaster, DTCC vice president, DTCC Solutions LLC. “The SWIFT connectivity option gives GCA clients a cost-effective way to transfer data in different formats while leveraging the security and reliability inherent in the SWIFTNet platform.”
Firms will be able to exchange certain ISO messages individually by using the SWIFT FIN service and transmit data files through the SWIFT FILEACT service over the SWIFT network. To subscribe to these SWIFT services, clients are encouraged to contact their GCA relationship manager. @
[Firms may contact their DTCC relationship managers to learn more about any of the subscription options and other new services offered by GCA.]