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by Steve Letzler

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  • DTCC's Reengineering Project

  • Global Corporate Actions

  • Representatives of key financial firms gathered at a recent workshop to discuss how DTCC plans to implement the internationally accepted ISO 20022 standard for corporate actions announcements. The new ISO 20022 messages, which are scheduled for implementation in 2011 as part of the reengineering of DTCC's corporate actions processing platform, mark the first major client-facing deliverable of the major multi-year project.

    DTCC is moving to provide all corporate action announcements and other processing messages in the ISO 20022 format instead of its current proprietary format in order to converge towards best practices in the capturing and processing of corporate action events. The changeover will require all participant firms of The Depository Trust Company (DTC) to make programming changes to their systems to accept and process the new messages no later than 2015.

    "The reengineering project for corporate actions directly impacts how DTCC communicates with its participants and clients," said Patrick Kirby, DTCC managing director, Asset Services. "Given the magnitude of this project, coupled with the industry consultation process that governs ISO standards, it is vitally important that we have discussions with and get input from financial firms involved with this standard."

    Give-and-take discussions

    DTCC and SWIFT held the two-day workshop, attended by 35 people representing 10 major custodian and broker/dealer firms, at the SWIFT offices in New York in late August.

    Representatives from both organizations gave attendees an overview of the business content of the messages and extensions for ISO 20022, reviewed how firms could go about implementing subsets and extensions, and provided an extensive review of DTCC's recently published extension documentation. The event also included an overview of some of the available tools and artifacts available to assist in implementation.

    "The workshop was designed to present how DTCC plans to implement ISO 20022 for corporate actions and to obtain feedback from the people at our participant firms who are familiar with ISO standards and will be principally responsible for implementing changes at their organizations to handle this format," said David Hands, DTCC director, GCA Product Management. "We also want to begin moving forward to get some commitments from firms to participate in a pilot of the ISO 20022 standards that DTCC will be starting in early 2011."

    Although DTCC plans to implement ISO 20022 formats for corporate actions announcements next year, firms do not have to transition to the ISO 20022 standard until 2015, when the proprietary format will be phased out. The extended timeframe will give customers time to budget for and make the changeover, which will require a substantial reprogramming effort, according to Hands.

    "While this was billed as the first workshop, it really is a continuation of work that is ongoing between DTCC, SWIFT and many of the major DTCC participants," said Steven Gale, vice president, Operations and Technology, for Northern Trust. "This 'partnership' has been very effective in identifying, addressing and communicating to the rest of the financial services community messaging issues. By getting in front of the issues, we will minimize risk and maximize our corporate action messaging abilities. All involved should be commended for their efforts."

    More to come

    Another workshop is scheduled for the end of September to further focus on key topics raised during the August workshop. Hands noted that an additional workshop was likely to be held at the International Securities Association for Institutional Trade Communication (ISITC) conference in December. ISITC is the U.S. national markets practice group for International Standards Organization (ISO) standards, and any changes desired by U.S. market participants to ISO standards must flow through it. @