The New Issue Eligibility program allows newly issued securities as well as secondary offerings that meet DTC’s eligibility criteria to become eligible for the depository and book-entry services of The Depository Trust Company (DTC).
An “eligible security” is one that is freely tradable and fungible and is otherwise qualified to be held at DTC and traded and serviced through DTC’s electronic book-entry system. The eligibility criteria are more fully described in DTC’s Operational Arrangements. Depository services over the lifecycle of the security may include deposits, withdrawals, and a wide range of corporate action events such as dividend and interest payments, tender and rights offers, and corporate reorganizations.
The New Issue Eligibility program allows underwriters and other DTC Participants to submit eligibility requests for new and secondary security offerings. Once DTC makes an eligibility determination and accepts the securities for depository and book-entry services, the securities can be distributed quickly and efficiently. These securities are then available for the full range of DTC depositor and book-entry services.
Who Can Use the Service
Lead managers, underwriters, placement agents and other market players that are DTC participants can use the service. In addition, firms that are not direct participants but maintain a clearing relationship with a DTC participant can use the service as a correspondent; however, the Participant through which the securities are introduced to DTC remains responsible for all activities within its account.
The eligibility process enhances capital market efficiencies and reduces costs to the industry by enabling eligible securities to be distributed, settled and serviced through DTC’s automated processes.
DTC’s straight-through processing mitigates risk for the industry through automation and standardization.
How the Service Works
To request eligibility for a new or secondary equity, corporate or municipal debt, or retail certificate of deposit issue, a user of this service must submit securities offering data and offering documentation (e.g., prospectus, official statement, the offering memorandum) via Underwriting’s online platform Securities Origination, Underwriting and Reliable Corporate action Environment (UW SOURCE). The DTC Underwriting group then reviews the information to determine eligibility and, more generally, compliance with DTC’s Operational Arrangements.
Once DTC designates the issue as eligible, participants can use DTC’s Participant Terminal System (PTS) to:
- View the details of a DTC-eligible issue.
- View DTC Important Notices for corporate and municipal underwritings and money market instrument (MMI) issues.
- Monitor the market “flipping” activity of an initial public offering (IPO) and get itemized reports.
- Send electronically to DTC issuance and delivery instructions (as an Issuing/Paying Agent), and receive instructions (as sales agent or custodian) for MMI.
UW SOURCE allows a user to transmit key data elements electronically via three submission options:
- Access the templates onscreen and populate the required data manually.
- Access the system and upload an Excel spreadsheet template.
- Use a computer to compute autofeed transmission.
Through UW SOURCE users can then monitor an issue's progress throughout the underwriting process and track the approval, processing, packaging and closing status. There is no cost to register for UW SOURCE but users must be DTC participants or correspondents.
For More Information
Please contact Client Support at 866-724-4402.