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Dan Thieke, DTCC Managing Director, General Manager, Settlement and Asset Services - SIFMA Ops 2015
Dan Thieke, DTCC Managing Director, General Manager, Settlement and Asset Services

Dan Thieke, DTCC Managing Director, General Manager, Settlement and Asset Services, participated on the panel “Corporate Actions in a T+2 Era and Other Topical Issues” at SIFMA Ops 2015. Thieke and fellow panelists explored a variety of topics influencing the corporate actions landscape.

Steven P. Dapcic, Director, Corporate Actions Group, Pershing LLC, a BNY Mellon Company, served as the panel moderator. Joining Thieke on the panel were Paul Conn, President, Computershare Global Capital Markets Group, Computershare; Lawrence Conover, Vice President, National Financial Services, a Fidelity Investments Company; Silvio Conte, Head of Corporate Actions, New York Stock Exchange; Brendan P. Farrell, Jr., Executive Vice-President and General Manager, SunGard XSP; and James Monahan, Executive Director, Regional Head North America Position Services & Corporate Actions, Morgan Stanley.

DC: Where is the industry in terms of adopting automation and standardization of the Corporate Actions lifecycle?

DT: There continues to be a great deal of discussion around automating and standardizing the entire corporate actions (CA) lifecycle. If you think about the CA lifecycle, DTCC sits squarely in the middle of the process. Historically, there has been a higher level of automation on the downstream side of the process with the custodian banks and broker dealers.

However, the inbound side of the CA lifecycle (i.e., agents and issuers) has not achieved the same level of automation and standardization. There are still a large number of agents and issuers that announce CA events in paper form and/or PDFs which requires manual re-keying of information, introducing the chance of human error, increasing risk to the process and preventing straight through processing (STP).

DC: What has DTCC done to help support automation and standardization?

DT: Over the past few years, DTCC has worked with organizations such as SWIFT and XBRL U.S. to help raise awareness with issuers and their agents. Despite these efforts, adoption of automation and standardization has been slow. The challenge is that issuers have little incentive to invest in automation given potentially low volumes of events.

One area in which DTCC has been able to make tremendous progress is on the downstream side. Through our CA Transformation initiative, we have successfully implemented new messaging standards and automation to help our clients achieve greater levels of STP.

The panel was very complimentary of the work DTCC has completed so far with this initiative and is interested in where we are going with the last two phases of the Corporate Transformation initiative.

DC: Can you provide us a status update on that effort and the plans for the remainder of this year?

DT: DTCC has been working iteratively throughout this multi year initiative in an effort to improve efficiencies and reduce risk for clients. In each phase, we have leveraged the technology framework DTCC developed to support ISO 20022 messaging, and the browser based interface called CA Web, which we launched in 2014. On March 30, we reached another important milestone with the migration of the full client base of more than 7,000+ users to the new CA Web for the lifecycle of distribution event types. For example, this includes announcements through entitlements, instructions, payments and adjustments for events such as principal and interest, cash and stock dividends, as well as others. As a result, we retired 10 Participant Terminal System/Participant Browser Services (PTS/PBS) functions from our legacy platform and have introduced our first front-to-back process in the new environment.

In addition, we also expanded our suite of ISO 20022 messages to include inbound instructions for distribution events, thereby giving clients the opportunity to submit instructions to the DTC platform electronically. This development is a big step toward STP and offers clients a way to increase efficiencies and eliminate risks associated with a manual process. I’m very pleased to report we already have one client live with instructions messaging and another completing its testing.

These messages join our announcements, entitlement and payment messages, which are now live with a number of our clients. We’re seeing many clients begin to gear up for the eventual transition of our CCF files to ISO 20022 messaging starting at the end of this year.

We’re already at work on the next phase of the initiative which focuses on developing ISO 20022 messages for lifecycle processing of redemption events, and new CA Web browser features to support redemptions processing. The ISO 20022 lifecycle messages for redemptions will be available for testing in Q3 of this year and the browser enhancements will be introduced in 2016.

The final phase of the transformation will focus on the lifecycle of reorganization events, such as tenders and exchange offers, and will include updates to the CA Web and ISO 20022 messaging for that event group. DTCC will continue to work with clients and industry groups to standardize and streamline corporate actions processing.

Further reading:
DTCC Reaches Another Milestone in its Corporate Actions Transformation Initiative
DTCC Corporate Actions Processing