DTCC’s recent Asset Services Forum 2021, held virtually in November, brought together over 150 clients and DTCC executives to discuss key topics in the asset services business, as well as developments in DTCC’s products and services.
Related: Industry Roadmap to Achieving T+1 in 2024
“DTCC has taken a leadership position on solving many industry pain-points in Corporate Actions processing, and this annual forum is intended to provide a platform to engage in an open, transparent discussion on our progress,” said Ann Marie Bria, DTCC Executive Director, Asset Services Business Management, in her opening remarks. “We appreciate this opportunity to share updates with our clients. Although we never anticipated we’d still be hosting this virtually this year, we look forward to hopefully meeting in person at the next event.”
To learn more about any of the services, capabilities or developments discussed in the forum, please reach out to your Relationship Manager.
“We are taking a phased-in and measured approach, to be sure the solution offered drives efficiencies for all stakeholders to ensure that any issues or questions that arise from the new process can be addressed timely and efficiently.” – Sara Genovese, DTCC Corporate Actions Business Manager
Shortening the Settlement Cycle: The T+1 Initiative
In response to market volatility, the T+1 initiative promises reduced settlement times from the current T+2 to T+1 which are expected to reduce systemic risk and significantly lower costs. Some of the challenges specifically identified for Corporate Actions under a T+1 scenario include securities lending, Ex-dates changes by the Exchanges, claims integration of Security Payment Orders (SPOs), replacement of collateral and shortened windows for general processing. On this topic, Matthew Schill, DTCC Director, Product Management, provided an update on the progress and challenges faced within the T+1 initiative.
“The settlement cycle involves complex, interconnected processes – and shortening it will require due diligence around identifying operational and business impacts,” said Schill. “For the Corporate Actions business, it means we should take this opportunity to rethink not only the underlying technology, but especially the various legacy processes that no longer make sense in today’s market.”
Schill noted the T+1 Industry Working Groups have been meeting for several months to identify and analyze the key products, markets, and processes that will need to be modified in a move to T+1. Their findings will be presented in an executive summary document within the coming weeks.
Related: Modernizing Securities & Corporate Actions Processing
Automation Developments for ClaimConnect
In a panel moderated by Schill, DTCC’s Christopher Scotto, Director Product Management, and Kingfield Corporation’s John Rodenfeld, CPO and Co-Founder, discussed the progress that has been made with automating claims processing – from “cradle to grave” – and how a tool like DTCC’s ClaimConnect can ease the pain points and risks that affect claim management.
“This used to be a four or five-way back-and-forth game of table tennis just to resolve a claim,” said Scotto. “Automation has enabled advancements in our ClaimConnect service, which saves considerable labor and costs by reducing the amount of manual work and the number of claims submitted all while ensuring clients maintain Debit Cap health.”
Schill also noted that although the claims community has made strides working together to improve the exception processing ecosystem, progress can still continue with future service integrations and other use cases.
Puerto Rico Bond Restructuring
DTCC’s Andrea Mendoza-Felix, Associate Director, led the next update for clients on Puerto Rico bond restructuring, with an overview of the work DTC did in collaboration with Prime Clerk, the agent, to support the event for the industry.
“Puerto Rico Bond Restructuring could be considered one of the major corporate action events launched this year. It’s complexity and high volumes caused great impact to the industry, and DTC played a big role in supporting this event in its entirety, including supporting voting for the plan.” – Andrea Mendoza-Felix, DTCC Associate Director
As a result of the Puerto Rico Bond restructuring, certain investors were given the options to vote on the plan. DTC efficiently handled and processed 2,500+ events on more than 660+ CUSIPs and 2,500+ Contra CUSIPs to support the multiple options.
“The solutions stemming from this event have continued to improve partnerships with external agents and clients when working through processing voluntary reorg events, ensuring understanding and collaboration,” said Mendoza-Felix.
Voluntary Reorg Instructions Automation initiative
Voluntary Reorganization events are increasingly complex, risky, costly and impact all points in the processing chain. DTCC has undertaken a sweeping initiative to address how to automate and streamline the instruction process, which will reduce client costs, errors and risks that are characteristic of the process. Given that over 600,000 reorganization instructions are processed by DTCC each year, there is considerable opportunity for efficiency improvements
Progress on this multi-year project was discussed in this client panel moderated by Steve Sloan, DTCC Director, Product Management, and included Cristina Paredes, DTCC Associate Director, Product Management; Thomas Amendola, Broadridge, Product Manager; John O’Day, Bank of America Merrill Lynch, Director of Process Development and Transformation; and Cynthia Parrillo, Citi, US Asset Servicing Product Development Manager.
“The modernization of our client-facing platforms has enabled DTCC to embrace new technologies,” said Sloan. “In addition to ISO 20022 real time messaging, new client-facing APIs [Application Programming Interfaces] can offer the industry another way to communicate with DTCC and downstream counterparties.”
“DTCC has automated the processing of voluntary events and provided clear and concise instructions as part of their support throughout implementation for external agents,” said Paredes. “These partnerships remain beneficial to all parties and will continue to progress for the future as feedback is gathered for improvement.”