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by Edward C. Kelleher

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  • DTCC's Reengineering Project

  • Asset Services

  • With the new municipal bond and equities underwriting systems up and running, The Depository Trust Company (DTC) has turned to the final phase of the multi-year underwriting reengineering, which will cover corporate debt issues. Customer testing will begin in the third quarter of 2010, followed by a fourth-quarter transition into production, with the system becoming mandatory January 1, 2011.

    “Once implemented, this project will complete the upgrade of DTC’s underwriting platform, eliminating the multiple legacy systems that currently support it,” said Patrick Kirby, DTCC managing director, Asset Services. “This phase of the project will eliminate paper documents and faxes in the underwriting of corporate debt, bringing greater automation, efficiency and cost-savings to the process.”

    Phased implementation

    DTC has implemented the new platform, called UW SOURCE, in phases over the past several years, starting with the municipal underwriting system in September 2008, followed by the corporate equities system in October 2009. The rollout of the corporate debt phase in October 2010 will complete the circle for this initiative.

    “We will work with firms in the coming months to help them test and implement the new system, and we encourage them to begin testing earlier rather than later,” said Ann Marie Bria, DTCC director, Asset Services. She said testing is expected to begin in early August and run through October, with optional usage beginning in mid-October.

    Incentives and disincentives

    Underwriters that choose to use the new system during the optional period and submit additional information, such as put and call feature information, principal amortization and interest calculation information, will receive a user discount. This discount will continue into 2011.

    Beginning January 1, 2011, DTC will levy a penalty of $2,000 per CUSIP on firms that continue to submit information via paper.

    Corporate debt that will be accepted by the platform includes:

    • Certificates of deposit
    • Corporate bonds
    • Asset-backed securities
    • Government securities
    • Collateralized mortgage obligations
    • Debt derivatives
    • Corporate variable-rate demand obligations

    Direct electronic communication

    “The reengineering of the corporate debt systems will give users the same benefits that our municipal and equities systems deliver,” said Bria. “It will provide for direct electronic communication with DTC, helping to eliminate paper and the errors that come with manual processing.” @

    [For more information on the UW SOURCE for municipals, equities or debt issues, contact Ann Marie Bria at or 212.855.4024.]