DTCC Connection

May 13, 2013 • DTCC Connection

DTCC Begins Processing First-Ever XBRL-Formatted Dividend Announcements

by Edward C. Kelleher

DTCC, through its subsidiary The Depository Trust Company, has begun processing the first-ever XBRL-formatted dividend announcements in its production system after a successful pilot program kicked off last year. The announcements, received from Citi, concern dividend announcements for American Depositary Receipt (ADR) programs for which Citi is the depositary bank. The pilot participants include depositary banks BNY Mellon and JPMorgan Chase with the support of XBRL US, the national consortium for business reporting standards. This initiative demonstrates the benefits XBRL offers in the processing of corporate actions and beyond.

XBRL technology allows issuers and agents to electronically tag key information on corporate actions and other financial transactions in a standard format that enables DTC to take the information directly into its systems without manual intervention. This streamlines the process, creates efficiencies and helps reduce costs, risk and errors.

The ADR announcements are used to update the DTCC corporate actions database, consolidate corresponding information and ultimately distribute dividend information to DTCC users. The program currently covers cash dividends, stock dividends, special dividends and sale of rights. DTCC hopes to expand these capabilities to handle additional corporate action event types in the future.

Image - xbrlGains all around

Corporate actions – events that occur in the life of a public company – range from dividend announcements to complex mergers to stock splits, and typically require action on the part of an investor. Industry-wide, many segments of today’s process are manual and redundant, resulting in a lack of timeliness while introducing the possibility of errors and increased cost. The use of XBRL for dividend announcements helps eliminate the need for manual entry.

“The XBRL initiative is a milestone in corporate actions processing and shows how technology and standards can strengthen the way we process financial transactions” said Daniel Thieke, DTCC Managing Director, Asset Services. “DTCC receives announcements from issuers and intermediaries every day, and XBRL enables us to take that information directly into our systems without manual intervention, thereby reducing risk and cost – and boosting efficiency and accuracy.”

Straight-through processing

ADR issuers have also begun making their XBRL-formatted announcements available to service providers, thereby promoting straight-through processing throughout the entire distribution chain.

The XBRL project is part of DTCC’s multi-year corporate actions reengineering initiative, which will replace proprietary formats with the ISO 20022 messaging standard and a state-of-the-art browser, unifying multiple corporate actions functions in one platform. The initiative will be completed by December 2015.

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