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DTCC Opens Shanghai Office for Global Corporation Actions

GCA Validation Is First Corporate Actions Service of its Kind with a Global Footprint

Shanghai and New York, October 11, 2004 - The Depository Trust & Clearing Corporation (DTCC), the largest financial services post-trade infrastructure organization in the world, announced today it has opened a new office in Shanghai to provide round-the-clock coverage for its fast-growing global corporate actions business.

The new service center will support DTCC's Global Corporate Action (GCA) Validation Service, which provides brokers, banks and other financial institutions an automated, standardized source of global corporate action announcement information for 100+ events, ranging from rights offerings to elective dividends to tender offers and stock splits. The service is provided by Global Asset Solutions LLC, a wholly owned subsidiary of DTCC.

"With the launch of the Shanghai office, our GCA Validation business will be a truly global operation, offering a service that follows the sun," said Jill M. Considine, chairman and chief executive officer of DTCC. "From Monday morning in Asia to Friday evening in the United States, whenever and wherever markets are open, we will have continuous corporate action information for our clients."

"GCA Validation is the first corporate actions service of its kind with a global footprint," said James Femia, DTCC managing director and head of the GCA business. "We expect to have about 30 corporate actions specialists in Shanghai tracking securities from across the Asian markets. This will complement our London and U.S-based service centers."

"Without question, Asian corporate actions are the most complicated because of the differing market standards and practices, as well as language differences," said Femia. "DTCC recognizes the importance of being in the local time zone, speaking the local language and having the local contacts."

"In the Shanghai office, we'll focus specifically on corporate actions from the region, including Australia, China, Japan, Korea, Hong Kong, New Zealand, Singapore, Taiwan and Thailand, among others," said Andrew Barnes, DTCC manager of the Shanghai office.

DTCC selected Shanghai after an exhaustive survey of nine potential sites. Search criteria included availability of a large skilled and educated labor pool, varied language availability, cost-effectiveness and quality-of-life considerations.

The GCA Validation Service was launched last year by DTCC to offer clients accurate and timely market-sensitive information. It also offers custodian verification capabilities in which custodians' announcement notifications are confidentially compared with announcements generated by the GCA Validation Service to enhance the overall quality of information. The service allows customers to offload functions that are largely manual and non-standardized, and thus error-prone, risky and costly.

"Our service eliminates the laborious, time-consuming processes associated with ‘scrubbing' corporate actions data, which helps our customers lower risk and drive down their costs," said Barnes. "The GCA Validation Service supports the growing industry need for access to automated, standardized corporate action announcement information."

Four major global financial institutions, including Swiss financial giant UBS, are already using GCA Validation, and many others - including a number of investment managers and hedge funds - are in various stages of testing.

In opening the service center, DTCC is teaming with Accenture, a global management consulting, technology services and outsourcing company, which is providing both operations staff and facilities in Shanghai. Accenture worked with DTCC to develop its GCA Validation Service, and continues to provide support in marketing the service.

About DTCC
The Depository Trust & Clearing Corporation (DTCC), through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities and over-the-counter derivatives. DTCC's depository also provides custody and asset servicing for more than two million securities issues from the United States and 100 other countries and territories. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC has operating facilities in multiple locations in the United States and overseas. For more information on DTCC, visit www.dtcc.com.

Additional information on DTCC's family of Global Corporate Action services is available at www.dtcc.com/gca.

Note to Editor:

For working journalists, a backgrounder on corporate actions is attached that explains what corporate actions are, and why they represent very significant risk in the global securities market.

Backgrounder on Corporate Actions Risk

Corporate actions are one of the last significant areas of risk associated with largely manual and non-standardized processing in the securities industry.

According to a May 2004 study by Oxera, an independent economics consultancy in Europe, the global securities industry faces risk of multi-billion-euros, and individual securities firms face potential risk that could run into tens of millions of euros from just one complex corporate action event.

The Oxera study, which was the first effort to quantify the risk and loss of corporate action events globally, found that corporate actions are not just a back-office issue, but also impact trading strategies in the front office. Acting on incomplete or incorrect information may lead to sub-optimal trading decisions, with the risk estimated to range from1.6 to 8 billion euros per year globally.

The Oxera study is available at www.oxera.co.uk (or at www.dtcc.com under "Thought Leadership" and "Industry Reports").

Close to one million corporate actions take place every year worldwide. Rights issues, tender offers, conversions, takeovers, mergers, early redemptions and dividend payments are just a few examples. Each corporate action has a multiplier effect.

A single event may involve hundreds of different financial institutions (including custodians, fund managers, broker/dealers and depositories), ultimately cascading down to thousands of investors. Every day, these institutions are flooded with millions of faxes, phone calls, e-mails and letters carrying news of various corporate action events. The information comes from a diverse range of sources, including custodians, broker/dealers, depositories and exchanges as well as news journals, wire services and data vendors. The information may be ambiguous, contradictory, outdated - and sometimes just wrong.

For voluntary events, such as a rights issue, the investor is given a number of options to choose from within a set timeframe. If the investor is not given timely, accurate notification or if the decision is not relayed by the due date, the financial institution processing the event may have to pay a substantial sum to cover the loss.

The Group of Thirty, an international body composed of very senior representatives from the private and public sectors and academia, recommended the automation and standardization of corporate actions in its 2003 report on global clearing and settlement. The report stated, "Corporate actions, across the market, are the major source of financial losses attributable to operational failure." (Please see www.group30.org.)

It's the lack of standardization and uniformity in how events are announced that creates the difficulty. Issuers, offerors and agents announce events in different ways, using various means for describing the terms of an event.