DTC's Custody Service enables participants to outsource the safekeeping and processing of physical securities, which are not or cannot be held through the regular depository services.

Overview

DTC's Custody Service enables participants to outsource the safekeeping and processing of physical securities, which are not or cannot be held through the regular depository services, such as customer-registered custodial assets, restricted shares, and certain non-DTC-eligible securities, including certificated Money Market instruments, Private Placements and Limited Partnerships. Its family of products includes the Branch Deposit Service, New York Window physical clearance and settlement services, Custody Reorganization and the Restricted Deposit Services.

As a world class provider of choice, DTC's Custody product is anchored by its state-of-the-art vault and processing systems, which provide controls and procedures for the safekeeping of physical assets, both securities as well as documents.

Who Can Use the Service

All DTC participants are eligible to use the service.

Benefits

DTC's Custody Services:

• Eliminates high fixed costs associated with safekeeping and handling of securities, which include vault space, equipment and maintenance expenses.
• Reduces insurance costs associated with safekeeping and shipping securities.
• Reduces risk.
• Ensures the availability of detailed information on every certificate.
• Allows for continuous random audit checks by internal auditors. The participants' auditors or a custodial customer may occasionally require access to their inventory. Given 24 hours' notice, DTC will provide a secure space under camera surveillance where securities can be examined.
• Provides enhanced system reliability, including DTC's dedicated backup site.
• Provides choice of interface with DTC's Custody Service through CCF, MDH, or PBS.
• Ensures availability of images of all certificates and documents held in custody via DTC's Imaging Fax/Email (IFE) system, or the Imaging Drop-Box Solution.
• Provides for availability of end-of-day positions and activity reports on the same files as all other DTC positions and activities (APIBAL and DTFPART).

How the Service Works

Deposits of securities are made using the Participant Browser System (PBS) function CUST, via a CCF deposit file transmission, or via MDH (Mainframe Dual Host). Once the certificates arrive at DTC, a full examination of all certificates is performed, including a negotiability check and verification of data received from the depositing participant firm.

Depositing participants can request a SIC (Securities Information Center) verification (optional service). DTC will provide a file to SIC using the participant's FINS number and access code. On receipt of the return file, DTC can verify "potential hits" with the transfer agent.

Each deposit received at DTC is imaged as a unit of work, which can contain multiple certificates and documents. At any time during the lifespan of a certificate or document, the participant can easily retrieve the image via PBS or an electronic "drop-box" to be picked up by the participant's processing system or service bureau.

In compliance with the regulatory requirements set forth in the applicable provisions of the Bank Secrecy Act, USA PATRIOT Act and OFAC regulations, DTCC has implemented a Bank Secrecy Act, Anti-Money Laundering and Office of Foreign Assets Compliance Program (OFAC). At the close of each business day, the registration portion of the custody inventory file is scanned and compared to the OFAC database. For guidance on responding to OFAC items via the "OFAC" PBS function, please refer to DTC's Important Notice B # 8712.

For withdrawals, DTC can make certificates available for pickup in the New York area within an hour, or will ship via overnight air courier outside of New York City.

For all domestic issues, DTC sends securities to the transfer agent on the same day after receiving the participant's instructions. Aging transfer follow-up is also performed.

The Custody Reorganization Service supports securities on deposit in the Custody Service that are subject to current or past-due reorganization events, including redemptions, mandatory and voluntary activities.

The New York Window (NYW) provides clearance and settlement service for physical securities and related paperwork. The service allows firms to clear and settle trades outside DTC's regular book-entry settlement services. Some of the trades that might clear through the NYW are securities that are not DTC-eligible, restricted securities and mutual fund re-registration letters.

The Restricted Deposit Service (RDS) allows participants to deposit and affect a transfer on certain restricted securities. The RDS unit processes full sales, partial sales, gifts, legend removals and breakdowns.

The CUST function on PBS not only provides update capabilities for the various services offered through the Custody Service, it also provides the following:

• Full certificate detail for all deposited securities: denomination, quantity, certificate number (including prefix), customer account number, registration, negotiability indicator, transfer agent information, a document database, etc.
  • An inquiry screen with full historical details of all Custody activities
  • The ability to retrieve certificate and document images
  • Updates to customer account numbers singly and globally

  For More Information

  Please contact Relationship Management at 800-422-0582.