DTCC’s Asset Services Forum 2022, held virtually in May, brought together more than 500 clients and DTCC executives to discuss key topics and developments in the asset services space.
Related: Impact of Accelerating to T+1 on Corporate Actions Processing
Below is a summary of the key topics and developments covered during the event:
Asset Services Modernization Program
DTCC’s Asset Services team discussed the developmental phases currently underway to carry out the Securities Processing Modernization goal.
“DTCC is working on a multi-year, multi-phased modernization program of Depository Services, aimed at elevating the client experience, leveraging new technologies and common components across the complex,” said Jon Ciciola, DTCC Senior Product Management Director.
The first modernization phase for Securities Processing begins with the inventory management system, followed by the modernization of electronic transactions, scaling the inventory system for physicals and transfers, and eventually all services included within the fee collection and reporting realm.
“The first phase of the Underwriting Modernization was completed last year with the release of electronic certificates of deposit (e-CDs), eliminating approximately 30,000 paper certificates per year,” said Giselle Borrego, DTCC Product Management Director.
What used to be a multi-day process of creating and emailing a certificate back and forth is now completed in minutes. DTCC is now implementing the next phase of the project with the development of an electronic vault, the design and architecture of a master reference data model and an intelligent document repository.
The Intelligent Document Processor (IDP), which allows Underwriters to receive unstructured documents from an array of sources, converts and extracts data into meaningful structured information, driving greater insights and efficiencies for the team.
“The ongoing effort will allow DTCC to handle a variety of new, evolving asset types while still supporting existing physical securities,” said Patrick Barthel, DTCC Senior Product Management Director.
ClaimConnect™: One-Stop Shopping for Exception Processing
Given the complex and multilayered corporate action process, the industry is already anticipating an increase in claims following the move to a T+1 settlement cycle. With DTCC’s ClaimConnect service, the industry can get in front of this challenge. Ahead of T+1 migration, Matt Schill, DTCC Senior Product Management Director, reviewed a recommendation of best practices to help expedite the claims process for the future.
DTCC’s ClaimConnect service enables clients to bilaterally manage and settle claims seamlessly through a flexible, single point of entry. A few of the recommendations mentioned involve:
- Inputting claims simultaneously on both sides to allow the system to match them in near real-time
- Checking which settlement output (e.g., PARTPO, etc.) you are using to map the ClaimConnect SPO-type directly into your system
- Opting in for email alerts and recommending your counterparty to do the same
- Setting up Client profiles on ClaimConnect
- Automate processes through the ClaimConnect APIs
ClaimConnect is expected to go live this summer with a third-party service provider on behalf of two mutual clients to automate the claim process using the family of APIs. Additionally, ClaimConnect can also be used to support quick, cost-effective ways to move monies between counterparties, including certain types of ACATS transactions, high volume compensation claims and large-scale, single issuer rate changes.
Voluntary Reorg Instructions (VRI) Automation
Another way DTCC is modernizing the corporate actions platform is by automating voluntary reorg instructions. A key driver is to improve operational efficiency and automation. Through VRI clients can:
- Improve efficiency, streamline and provide straight-through-processes
- Mitigate the risk of manual processes
- Provide future growth opportunities by ensuring scalable and efficient processes
- Enable quick implementation for corporate action flow
- Create good quality messages
- Catch errors at the start of the process
Preemptive testing prior to the rollout has helped create an ease in the transitions process. “Catching errors at the start helped resolve issues and assisted in testing and resolving kinks prior to implementation,” said Bidhu Rusia, S&P Global Market Intelligence Director.
LIBOR Transition to SOFR
DTCC’s continued modernization journey includes partnering to help with industry challenges related to the LIBOR cessation (London Interbank Offered Rate). On December 31, 2021, the Federal Reserve Board, Federal Deposit Insurance Corp, and the office of the Comptroller of Currency issued guidance encouraging banks to cease entering into new contracts using LIBOR as a benchmark rate reference as soon as practicable. LIBOR is no longer being used as part of new contacts, and the industry is transitioning away from LIBOR as a rate reference for existing paper by June 2023.
DTCC’s subsidiary, The Depository Trust Company (DTC), has been actively working with the AARC (Adjustable-Rate Reference Committee), SIFMA, Corp Trust Agencies, ABA and various agent groups over the past year to identify a means of communicating the changes in rate reference at the security level to all stakeholders. One of the key enablers for DTC to disseminate this information would be receiving it from the Trustees and Agent community.
As the year progresses, DTCC will continue working to develop an efficient, modernized model for the future of Asset Services processes, supporting the ongoing initiative to shift to T+1 settlement.