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by Edward C. Kelleher

Following a lengthy pilot program testing new ISO 20022 corporate action announcement messages, DTCC said that the ISO 20022 messages will be ready for implementation in November.

The pilot, which began April 25, involves four leading corporate action users: BNY Mellon, Brown Brothers Harriman, JPMorgan Chase and National Financial Services, LLC. The pilot tested all event types for corporate action announcements including dividends, principal and interest, redemption and reorganization events such as tender offers, stock splits and warrants.

Ultimately, all Depository Trust Company (DTC) customers will have to transition to the ISO 20022. DTC is a subsidiary of DTCC.

Best practices

"Overall the pilot has proceeded very well. DTC is processing large volumes now and the pilot firms have had very good interaction with each other and with DTC," said Steve Sloan, asset servicing product manager, J.P. Morgan Worldwide Securities Services. "This is a very big endeavor. We're glad to be in the pilot and helping develop best practices for the industry."

The pilot is part of DTCC's multi-year reengineering initiative that will upgrade and replace many of the 60 legacy systems currently supporting corporate actions with a single new platform capable of handling increasingly sophisticated types of securities.

Industry milestone

"The November deployment of the ISO 20022 corporate action announcement messages is a milestone in DTCC's multi-year reengineering initiative," said Daniel Thieke, DTCC vice president, Asset Services. "We've gotten lots of feedback on the new messages from the test firms and other industry members interested in the pilot. A number of companies and vendors have expressed interest in the ISO 20022 format, and we will help them transition to the new messages starting in 2012."

Thieke pointed out some of the other milestones DTCC and its customers will see in 2012, including:

  • Onboarding of new firms to test and adopt ISO 20022 announcements beginning in Q1 2012;
  • Introduction of new message protocols in Q2, providing greater flexibility in the handling of large volumes;
  • Launch of ISO pilot 20022 testing in Q3 for distribution events covering the entire lifecycle, including settlements, entitlements and election processing for Elective Dividend Events;
  • Introduction of the new browser-based user interface for distributions with webinars and training sessions in Q4 for DTC participant clients. The new browser will be replacing corporate actions functionality that currently resides within DTC’s PTS and PBS applications.

DTCC’s new browser-based user interface, currently being used by the pilot firms, will provide a unified corporate actions platform covering all event types, according to Robert Epstein, DTCC vice president, Asset Services.

The entire corporate actions lifecycle, from announcements through instruction to allocations, will be implemented in phases – with announcements beginning in November 2011.

Taxonomy update

In another corporate actions development, DTCC, along with SWIFT and XBRL US, has successfully developed and mapped XBRL taxonomy to the ISO 20022 message formats.

XBRL is a technology that allows issuers of corporate actions to electronically tag key financial information on corporate actions in a standard format, which then permits recipients to easily understand and analyze it. Tagging corporate action information at the source reduces the chances of misinterpretation and the associated risks while supporting the goal of straight-through processing.@