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DTCC Launches Enhanced Service to Help Financial Firms Comply with New Federal Cost Basis Reporting Mandate

Service Mitigates Risk & Offers Cost-Effective Solution to Help Financial Firms Meet New Regulatory Requirements

New York, December 20, 2010 - The Depository Trust & Clearing Corporation (DTCC) announced today that it has launched an enhanced service that will help financial firms and other market participants comply with a new January 2011 regulatory mandate requiring the reporting of cost basis information to investors and the federal government.

DTCC's enhanced Cost Basis Reporting Service (CBRS) solves the technology and reporting challenges faced by the industry in meeting a key element of The Emergency Economic Stabilization Act of 2008, which requires financial intermediaries to pass cost basis information among one another when assets move among firms.

The service acts as a central communications hub that transmits cost basis information among broker/dealers, transfer agents, issuers, mutual funds and custodian banks in a secure electronic environment. It eliminates the need for market participants to undertake the expensive and time-consuming task of establishing potentially hundreds of new connections to transmit this information.

"The CBRS platform promotes standardization and centralization while also mitigating operational risk for our customers, reducing the cost of compliance and improving overall processing efficiencies," said Susan Cosgrove, DTCC managing director, Clearance and Settlement/Equities. "As financial firms face heightened regulatory reporting requirements, we're continuing to work closely with our customers to identify and develop solutions that will allow them to meet these new responsibilities in the most efficient and cost-effective manner possible."

DTCC Solutions LLC, a wholly-owned subsidiary of DTCC, leveraged the existing CBRS technology to build the enhanced service in less time - and at a lower cost - than it would have taken if the service had to be developed from scratch. The service also offers enhanced web access to give firms the flexibility to log on via the Internet.

DTCC began development of the service in 2009 after the industry approached the company to seek its help in complying with the new reporting requirement called for in the law. DTCC participated in the Cost Basis Steering Committee, which included a broad coalition of market participants, to begin scoping out a solution and establish best practices for basis reporting. The Committee included broker/dealers, transfer agents, mutual fund companies and industry organizations such as the Investment Company Institute, the Securities Transfer Association, and the Shareholder Services Association. 

"Financial intermediaries recognized early on that they would need to overcome significant operational challenges in a relatively short timeframe to be in compliance with the law by January 2011," Cosgrove said. "We worked closely with industry representatives for more than a year to ensure the service would achieve that goal while still meeting the unique needs of financial intermediaries. We've already begun work on enhancements to the service to allow firms to comply with future regulatory mandates."

The law includes requirements for financial intermediaries to transfer cost basis information on mutual funds by January 1, 2012, and debt, options and other securities by January 1, 2013. 

About DTCC

DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC's depository provides custody and asset servicing for more than 3.6 million securities issues from the United States and 121 other countries and territories, valued at US$33.9 trillion. In 2009, DTCC settled nearly US$1.48 quadrillion in securities transactions. DTCC has operating facilities and data centers in multiple locations in the United States and overseas.