Reorganization Processing

After the announcement of Reorganization events, DTC is responsible for collecting cash, stock, or a combination thereof, and allocating those entitlements to Participants in an accurate and timely manner.

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The Reorganization Processing sigma levels are predicated on defects as defined below.

• Accuracy Defect (Internal & External) - Measures the percentage of post-allocation cash and/or stock adjustments relative to total number of Reorganization allocations. Such defects result in DTC processing either debit or credit adjustments against the cash or securities accounts of Participants to correct the original allocation of entitlements made at the wrong payment rate. Defects caused by DTC are measured as internal accuracy defects (e.g. Activity Indicator Dates, such as Delivery Order (DO’s) were not populated); defects caused by paying agents or other service providers are measured as external accuracy defects (e.g. Agent provided incorrect entitlement for new CUSIP).
• Timeliness Defect (Internal) – Measures the percentage of Reorganization events allocated late relative to the total number of allocations. Late Reorganization allocations are cash payments received but not allocated until the next day or the allocation of new securities after the first trading date (T+1) of the new security. Such internal defects result in allocation delays and can potentially impede the timely settlement of trades in new securities.

 Sigma Trend Charts (pdf)