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Robert Epstein, Vice President of Asset ServicesRobert Epstein, Vice President of Asset Services

By Jessica York

As DTCC gears up for its Corporate Actions Transformation Client Workshop on November 4, Robert Epstein, Vice President of Asset Services, sits down with @DTCC to discuss the rationale behind the rebranding of the Corporate Actions Transformation initiative and the changes and benefits clients can expect in 2014.

What is the importance of the Corporate Actions Transformation initiative?

The initiative introduces a major shift in the way The Depository Trust Company (DTC) communicates corporate actions information to our clients. The transformation initiative will help clients improve their straight-through-processing rates and will also provide them with tools to better manage risk. It also enables DTC to drive market practice and standardization for corporate actions processing.

The initiative was originally called Corporate Actions Reengineering. What is the relevance of the rebranding?

Having completed all the necessary systems work to “re-engineer” our platform to support ISO 20022 messaging and a new data model, we’re now “transforming” how corporate actions information is communicated to our customers. So we’ve renamed the initiative to convey that.

What do you hope to achieve by hosting the Corporate Actions Transformation Client Workshop on November 4?

It’s all about keeping our customers well informed. The purpose of the event is to engage, educate and communicate with our clients about the Corporate Actions Transformation initiative and the preparations they need to make on their end. There are several important milestones coming up and we want to ensure that clients are aware of and prepared for this transition. The workshop also provides customers an opportunity to network with their peers, share experiences and best practices, and provide us with valuable feedback.

As the initiative progresses, what are the key milestones that our clients need to be aware of?

A major milestone was achieved in November 2011 when DTCC began producing ISO 20022 corporate actions announcements from its production system. We’re proud that DTCC is the first to adopt ISO 20022 for corporate action messages, positioning us to drive standards within the industry.

In August, the number of ISO 20022 corporate actions announcement messages DTCC distributed to banks, brokerages and other financial institutions surpassed the 100 million mark. More than 30 clients are currently in the process of programming for the announcement messages or are already processing the messages in their production environments.

In November we begin testing in-bound ISO 20022 instruction messages from clients. This will be the first time clients can electronically submit instructions for distribution events to DTCC. In 2013, customers submitted over 500,000 manual instructions, so clearly, this will be a large scale increase in efficiency and risk reduction.

In conjunction with the ISO 20022 implementations, DTCC clients are scheduled to transition to our new browser-based user interface, Corporate Actions Web (CA Web), in June 2014. This browser migration is mandatory for all clients as the legacy functions supporting distribution events will be retired at that time. Looking forward, we’ll be retiring DTC proprietary CCF Announcement files at the end of 2015.

How will the Corporate Actions Transformation initiative benefit DTCC clients?

One benefit is greater straight-through-processing, which has already resulted in an average of 26% more data elements in fixed fields in ISO 20022. This reduces reliance on narrative text, allowing for more efficient processing. It also reduces risk through the reduction of errors due to streamlined, automated processes, resulting in client cost savings.

The migration to CA Web will bring additional benefits to our customers. Clients will be able to manage all corporate action event types on one platform and will be able to manage the entire lifecycle of corporate actions events, with data updated in real-time. Key announcement data will be published and full event details will be available. Users will also have the ability to customize searches. Finally, CA Web will provide users with ease of use and flexibility to manage data. Other benefits include real time messaging, the automation of the DTC election process, and an Instruction Statement Report that automates the tracking process for outstanding election balances.

How will the switch to ISO 20022 impact the way the industry processes corporate actions?

The switch to ISO 20022 will align the U.S. with global standards and market practice. A new event-based data model will replace the existing proprietary structure based on function codes and a Unique Event Identifier (CA ID) will allow for downstream processing and marry announcement, to entitlement, to election, to payment. ISO 20022 offers great gains in timeliness because it supports real-time message delivery. That enables our customers to pass the information on to their clients sooner than before.