Business Terms

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

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1200 account	Sponsored participant account for a DTCC internal account that is used for wire transfer between it and other banks. Its primary purpose is to record unidentified or misdirected incoming funds transfers (intercepts) from the FLU System.
888 account	DTC account for CNS transactions.

A

ABA	American Bankers Association. The ABA number is used to identify almost all settling bank accounts within the FFS System.
ABS	Asset-Backed Security. Bonds or notes backed by loan paper or accounts receivable originated by banks, credit card companies, or other providers of credit and often "enhanced" by a bank letter of credit or by insurance coverage provided by an institution other than the issuer. (Dictionary of Finance and Investment Terms)
access coordinator	An individual employee or agent of a participant organization, responsible for establishing and maintaining the identities and entitlements (such as function eligibility) of the organizations operators.
accreted CMO factor	A factor that assigns a plus (+) or minus (-) value to a security for cash adjustments on collateralized mortgage obligation bonds.
accrual period	The period of time that asset-backed security trades settle with distribution.
activity code	A code that identifies an activity.
activity research tools	A group of tools to research transaction activity. You can research by participant, collateral group, pledged activity, short positions, payment orders, and rejected and dropped activity.
activity type	Terminology for pre cutoff, post cutoff, or adjustment activity type.
actor	A role that a user plays in relation to the system. Typical actors are DTCC participants, settling banks, and DTCC internal settlement staff.
Actual Expiration Date	The date that a UIT rollover or in-kind redemption expires as stated in the terms of the affected issues, or the date on which a voluntary offer or provisions expires as stated in the offering documents or the terms of the affected issues.
adjustments	Adjustment transactions that happen before cutoff.
ADR	American Depositary Receipt. Receipt for the shares of a foreign-based corporation held in the vault of a U.S. bank and entitling the shareholder to all dividends and capital gains. (Dictionary of Finance and Investment Terms)
Amortized	A loan in the process of liquidation via installment payments.
assumed subscription price	A price determined by the agent to follow for payment pending notification of the final or actual price.
ATP	Account Transaction Processor. ATP processes settlement automatically. The ATP system accepts transactions that represent changes in the quantity or status of a participant's positions, updates DTCs master files, and creates files for use as input to other applications. For example, if a participant made a funds transfer ATP would record the funds transfer, update the participant's positions, and also update the participant's collateral monitor.

B

basic subscription	The exercise of rights entitling the holder to receive new underlying securities upon the surrendering of rights and payment of the subscription cost.
book transfer	When the value of securities is transferred from one account to another but no securities change hands.
book value	Value at which an asset is carried on a balance sheet.

C

call with/without interest	Securities redeemed with/without accrued interest before maturity.
canceled	Status indicating that a request has been canceled by a participant.
cash and stock merger	The exchange of one company's security/CUSIP for another company's security/CUSIP and cash at a preset rate.
cash merger	The exchange of one company's security/CUSIP for cash at a preset rate.
chill	A systemic way DTC can prohibit you from processing certain activities. For example, a valued delivery chill will prevent you from making valued deliveries from your account.
CIL	Cash-In-Lieu.
closing date	The date on which the Underwriting Department will distribute an issue to the underwriters DTC participant account for book-entry delivery and settlement upon notification by both the underwriter and the issuer that an issue has closed. Also referred to as the distribution date.
CMO	Collateralized Mortgage Obligation. A mortgage-backed security bond that separates mortgage pools into different maturity classes, called tranches. This is accomplished by applying income (payments and prepayments of principal and interest) from mortgages in the pool in the order that the CMOS pay out. Tranches pay different rates of interest and typically mature in 2, 5, 10, or 20 years. Issued by the Federal Home Loan Mortgage Corporation (Freddie Mac) and private issuers, CMOs are usually backed by government-guaranteed or other top-grade mortgages and have AAA ratings.
CNS	Continuous Net Settlement. The system used by the National Securities Clearing Corporation (NSCC) to settle NYSE, AMEX and NASDAQ trades.
CNS long exemptions (levels 4)	Represents the position that the participant is expected to receive from CNS (the 888 account).
CNS short exemptions (levels 1+2)	Represents exempted positions that the participant is expected to deliver to CNS. The participant can lift a level 1 exemption by processing a delivery to the 888 account (CNS). A level 2 exemption can be lifted by a broker-to-broker Deliver Order, a designated deposit, or a designated pledge.
COD	Certificate On Demand.
collateral	Any cash or securities in your account designated as Net Addition (NA).
collateral group	A related group of participant accounts. Collateral groups are bound together by internal DTCC rules for settlement and collateral processing.
collateral monitor	DTC tracks collateral in participant accounts using a control position called the Collateral Monitor (CM). At the opening of each business day, each CM is credited with the participants Fund deposit. At all times, the CM reflects the amount by which the collateral exceeds the net debit in the settlement account. DTC maintains sufficient collateral in your account to liquidate in the event you fail to pay your settlement obligation or become insolvent.
collateral value	The market value of a security less the applicable DTC haircut.
component securities	Two or more securities that comprise a unit.

conditional tender	A holder placing conditions on the acceptance of its tender by instructing that a minimum number of shares be accepted in the event of a proration.
contra	The other side of a participant transaction. Whenever a security is moved, one side gets a credit and the other a debit.
contra-CUSIP	The CUSIP used to indicate your tendered position (representing instructions submitted by Participants to surrender securities). For example, a contra-CUSIP is set up to complete a reorganization function.
corporate action	Any mandatory action not categorized as one of the above (e.g., bankruptcy).
cross endorsement	Settlement that takes place between DTC and its National Securities Clearing Corporation (NSCC) counterpart.
current net balance	A participant collateral group's net amount payable to DTC (if a negative balance appears) or the net amount payable to the participant (if a positive amount appears).
CUSIP	Committee on Uniform Security Identification Procedures. The identification number created by the American Banking Associations Committee on Uniform Security Identification Procedures (CUSIP) to uniquely identify issuers and issues of securities and financial instruments. The CUSIP number consists of nine digits; the first six digits identify the issuer and have been assigned to issuers in alphabetic sequence, and the next two characters (alphabetic or numeric) identify the issue. The ninth digit is the check digit.
cutoff	The end of trading activity for that business day.

D

DD	Data Distribution Box. A receptacle located in the central delivery area of DTC used for distributing hard-copy reports and notices to participants.
declaration date	The date on which the issuer declares the income distribution, the record date, and the payable date.
deliverer	The party that delivers the security (also known as the seller).
DO	Deliver Order. The term used to define a book-entry movement of shares of a particular security between two DTC participants.
DPAL	Dividend Position And Allocation History.
drops	Transactions that do not complete and are dropped due to insufficient position, risk management controls, etc.
DRP	Dividend Reinvestment Program. Automatic reinvestment of shareholder dividends in more shares of the company's stock. (Dictionary of Finance and Investment Terms)
DRS	Direct Registration Service.
DTC	The Depository Trust Company. With the National Securities Clearing Corporation (NSCC), DTC provides trade settlement. DTC and NSCC are part of The Depository Trust & Clearing Corporation.
DTC Cover Protect Expiration Date	The last day you can cover your protects and surrender rights through DTC pursuant to Notices of Guaranteed Delivery. This date may be earlier than the date established for this purpose by the offeror.
DTCC	The Depository Trust & Clearing Corporation. The holding company of The Depository Trust Company (DTC) and The National Securities Clearing Corporation (NSCC).
DTCC desktop	Home page for the DTCC portal. All available PTS web functions can be accessed from this page.
DTCC user	DTCC Settlement and Systems staff. An internal user in the DTCC wire room.
dual member	Terminology for shared participant accounts at DTC and NSCC.
due bill	A check equivalent to the distribution amount or an IOU entitling the receiver to the distribution.

E

estimated factor	A value substituted for the true factor when the true factor is not yet public. This is usually the last known factor, and is needed to determine the dollar value of a trade that takes place during the delay period.
ex-date	The first date on which a security trades without the income distribution. Normally, the ex-date is two business days prior to record date.
ex-distribution	The first date on which a security trades without the income distribution. Also known as the ex-dividend or the ex-date.
ex-dividend	A trade that is settling without the distribution.
exchange offer	An offer to surrendered securities in exchange for securities, or a combination of securities and cash.
expiration date	The date that rights expire (become worthless).
exposure	The difference between the value of the securities being surrendered and the value of the entitlement to be received.

F

FAST	Fast Automated Securities Transfer. An arrangement between DTC and transfer agents to eliminate the movement of securities certificates. By signing the Balance Certificate Agreement with DTC, agents agree to maintain DTC-eligible inventory in the form of jumbo certificates registered in the name of DTCs nominee name, Cede &Co. DTC and FAST agents electronically reconcile the results of participant's daily deposit and withdrawal activities.
FFBI	PTS function code for the Bulletin Board Inquiry sub-function.
FFFI	PTS function code for the Funds Transfer function.
FFPS	PTS function code for the participant Statement function.
FFPS1	PTS function code for the participant account Statement Activity Balances sub-function.
FFPS2	PTS function code for the participant account Statement Activity Totals sub-function.
FFRR	PTS function code for the Reversal Return Request function.
FFS	Federal Funds System.
FFXA	PTS function code for the Cross Endorsement Adjustment Inquiry sub-function.
FLU	DTCCs Fedwire Link System. FLU transfers payments between DTCC and the FRBNYs Fedwire system.
FPWR	PTS function code for the P/I Withdrawal Request function.
FRBNY	Federal Reserve Bank of New York.
free account	General DTC participant account.
FTWS	Foreign Tax Withholding Service.

G

group user

A signon ID assigned to a service bureau that enables an external user to view information about multiple participant accounts.

H

haircut

A formula for the reduction in the collateral value of a security based on its relative price volatility. The haircut varies according to the class of a security, its market risk, and it's time to maturity.

I

information agent	An agent retained by the offeror to distribute the offering material and answer shareholder questions. Also referred to as Proxy/Soliciting Agent.
initial distribution	The delivery of shares of a new issue from the Lead Manager and Syndicate Members to their customers. Shares are considered Initial Distribution shares until they are sold on the secondary market.
interim period	DTCs term for the Due Bill Period.
IPO	Initial Public Offering. A corporation's first offering of stock to the public. In an IPO, a corporation must comply with registration requirements of the Securities and Exchange Commission (SEC).
IVORS	Involuntary Redemptions and Sales. DTC product that allows a Unit Investment Trust (UIT) holder to surrender whole and fractional units for value via book-entry.

J

K

L

lead manager	The institution that organizes and leads a syndicate of underwriters in purchasing and distributing shares of an offering to investors. Also known as lead underwriter.
legal entity	A legal primary account used for settling purposes.
Letter of Transmittal	The document signed by the security holder in which it agrees to tender its securities pursuant to the terms of the offer. It contains information about the certificates and quantity being tendered, as well as where and to whom the payment should be made.
liquidation	The dismantling of a company with the distribution of securities and/or cash to creditors first (bondholders).
LOC	Letter Of Credit. Instrument or document issued by a bank guaranteeing the payment of a customer's drafts up to a stated amount for a specified period. (Dictionary of Finance and Investment Terms)
long allocations	Deliveries from NSCCs Omnibus account #888 as a result of NSCCs Continuous Net Settlement (CNS) system.

M

MA	Minimum Amount. Securities in your account that are not considered collateral.
MAD900	All-inclusive eligibility check on the mainframe (API on the mainframe).
made	Status indicating that a request has been completed in ATP.
mandatory tender with retainment	The exchange of bonds for cash; however, holders can elect to keep, or retain, their bonds.
manual ID	The identification number of the user that made a transaction.
market value	The prior day's closing price of a security for security valuation purposes.
memo segregation	Free account memo segregation is an inventory control mechanism that allows you to protect fully-paid-for customer securities in your general free account. Memo segregation also allows you to protect anticipated fully-paid-for positions. Positions that have been designated as memo segregated positions have a memo seg counter on them.
miscellaneous holdings	Holdings such as stock loans and repurchase agreements.
mortgage-backed/monthly put	An early redemption feature that allows the holder to elect to sell the bonds back to the issuer on a monthly basis according to specified priorities.
MMI	Money Market Instrument. Debt securities such as commercial paper or medium-term notes.

N

NA	Net Additions. DTCs classification for securities in your account that are considered collateral. Securities that are received vs. payment are automatically designated as NA because the receiver has not yet paid for these securities.
name change	The changing of a company name. The CUSIP for the security may or may not change as well.
NDFS	Next Day Funds.
NDO	Night Deliver Order. A DO input on the day prior to settlement. A reduced rate is charged for NDO transactions.
net debit cap	The maximum debit amount a participant's collateral group may incur.
net pending balance	The amount of debit and credit if all pending transactions complete.
net potential balance	The collateral groups current net balances plus net pending and unapproved totals.
net unapproved balance	The total of your unapproved balances.
non-IPO (other position)	Amounts in your other position accounts that are IPOs.
NSCC	National Securities Clearing Corporation. DTC and NSCC are part of The Depository Trust & Clearing Corporation.

O

odd lot preference	A feature that allows the offeror to accept odd lot tenders in full, without proration.
offeror	The party making the offer.
omnibus account 888	DTC account for CNS transactions.
optional dividend	A dividend for which the shareholder has several options regarding how it will receive distribution (e.g., cash, additional shares, or a combination).
optional repayment	A feature of a bond that entitles the holder to elect to surrender the bond for cash during a predetermined time period with a predetermined payable date.
oversubscription	A provision in a rights offer that allows a holder who fully exercises the basic subscription to subscribe to one of more additional shares, subject to the availability of additional shares.

P

P/I	Principal and Interest.
participant	The external owners of DTCC that use the depository's services. Participants are the only corporate entities that can maintain position and settlement balances at the depository.
payable date	The date on which the income is paid to security holders.
payment	Cash and/or securities in return for tendered securities.
PDA	Pending Delivery Account. An account reserved to satisfy pending deliveries. At a certain time the pending delivery account is released and pending transactions have access to these shares. You can release positions reserved in your pending delivery account for transactions that are recycling for risk management controls.
PEND	Pending Activity code. PEND allows you to view a list of all your pending transactions. A pending transaction is one that was submitted to DTC for processing but was not processed because of a position deficiency, a collateral deficiency, or a debit cap deficiency. You can also use PEND to cancel a transaction or place it on hold.
pended	A transaction that cannot be completed so it is recycled. A transaction that has become a pending transaction.
pending for collateral	The debit and credit amounts of transactions currently pending for collateral.
pending for debit cap	The debit and credit amounts of transactions currently pending for debit cap.
pending for position	The debit and credit amounts of transactions currently pending for position.
pending transaction	A transaction that was submitted to DTC for processing but was not processed because of a position deficiency, a collateral deficiency, or a debit cap deficiency.
pledged	Pledged securities are used as collateral for a loan or for some other purpose. They are moved from the pledgor's general free account to the pledgor's pledged account, which prevents them from being used to complete other transactions.
PO	Payment Order. A transaction in which a participant charges another participant for changes in value for outstanding stock loans or option contract premiums.
post activities	Activity that happened after cutoff.
post-cutoff activity	Original or adjustment transactions that take place after cutoff.
pre-cutoff activity	Original or adjustment transactions that take place before cutoff.
Proration	The percentage used to allocate oversubscription of rights. Also, the percentage of exchanged or tendered securities accepted based on the terms of the offer.
protect period	The period after the expiration of an offer during which securities may still be tendered (pursuant to a Notice of Guaranteed Delivery or other required documents submitted to the Tender Agent prior to the expiration of the offer).
PTA	Pending Transactions Account. The account containing pending transactions. Transactions that recycle as a result of risk management controls cause position to be reserved in your pending transactions account.
PTS	Participant Terminal System.

Q

R

RAD	Receiver Authorized Delivery. A control mechanism that allows you to review transactions prior to processing. It limits the exposure of misdirected or erroneously entered DOs, POs and Pledges.
reason	The reason for Pend or Status on Cancel requests.
recap	In the Settlement Services application, both P/I and Funds Transfer provide Recap pages that display how many transactions were requested, how many were sent, how many were canceled, and the dollar amounts.
receiver	The party that receives the security (also known as the buyer).
reclaim	The return of a deliver order or payment order received by a participant.
reclamation	The return of a deliver order or payment order received by a participant.
record date	The date on which the holder of a security must be registered on the books of the issuer in order to receive the income distribution on the payable date.
redemption	Transaction in which a UIT holder surrenders units to the Transfer Agent for value. See also Cash Redemption and In-Kind Redemption.
registered holder	The party that is on the books of the issuer as owning the security.
relinquishment	A feature of a bond that allows you to elect to give up your optional repayment right. This provision is often available for securities on which you pay a fee for the repayment provision. You receive a new non- option bond bearing the fixed rate interest payment from which the put fee would otherwise be deducted.
reorganization	Reorganization refers to corporate actions related to securities issued by either a corporation or government agency.
repurchase agreements	An agreement between two parties that allows the seller of securities to later repurchase them at an agreed-upon price.
requested	Status indicating that a request has been entered via the P/I Withdrawal Request function.
reverse split	The exchange of a company's security/CUSIP for the same company's new security/new CUSIP at a preset rate. This reduces the number of shares outstanding.
RMC	Risk Management Controls. The controls, primarily net debit cap and collateral that are used to provide protection to all DTC participants against the inability of one or more participants to settle their net settlement obligation.
round-up	A provision that permits a record date owner of the underlying security to roundup the quantity of rights the owner would otherwise receive in the rights distribution, to an amount that allows the owner to purchase one additional share in lieu of a fractional share. This is exercised between the record date and the distribution date of the rights distribution. In lieu of a round-up privilege, the terms of the rights offer may provide a step- up privilege.
RVP NA	Receive Versus Payment. A sub-counter of your NA position that indicates how much of your NA position was received versus payment during the current day.

S

SDFS	Same Day Funds Settlement System. A service of DTC for the book-entry settlement of securities delivered against payment in Fed Funds.
sealed bid tender offer	An offer allowing securities owners to choose the price at which they are willing to tender their securities. This is submitted in a sealed bid and sometimes must be within limits prescribed by the offeror. The offeror normally reserves the right to accept or reject any or all tenders.
segregation	A control mechanism that allows you to protect securities on deposit at DTC that have been fully paid for by the participant's customer. When you segregate securities they are moved from your free account to your segregation account and will remain there until released back to your free account.
sent	Status indicating that a withdrawal request has been sent to FRBNY via FLU.
separation date	The date the components of a unit can be traded separately.
SET	Settling Banks payments sent to DTCC to meet their net debit obligation.
settlement activity code	Settlement code that represents a type of money/security activity. For example, 26 is a Deliver Order, 78 is a Payment Order.
settlement date	The date on which the trade settles, usually three business days after the trade date.
settlement sub activity code	Sub-activity codes break down activity codes into additional detail. For example, when the activity code for a Deliver Order (26) is combined with the sub-activity code for an MMI (01), you have an MMI Deliver Order (2601).
settling bank	In order for DTCC to settle participant transactions under the SDFS system, it is necessary to settle with a "control" account called a Settling Bank. The Settling Bank account contains " net-net" value for the participant accounts responsible for settling. DTCC settles directly with this account instead of with the individual participant accounts. It is also a bank participant that settles for itself and may settle for other participants, including other bank participants.
SPP	Settlement Progress Payment. An incoming wire sent by a legal entity to post against one of its participant accounts. SPP is used for pre-funding participant accounts. When a Legal Entity wants to return an incoming wire, it initiates a procedure called Reversal / Return request. The reversal request is treated like an outgoing fund transfer from the FFS application to the FRBNY.
short @130% position value	The short position value of the securities in a transaction that is 130% of its value. The value is calculated by multiplying the number of short shares by its current market value, plus a 30% penalty.
short covers	Deliveries to NSCCs Omnibus account #888 as a result of NSCCs Continuous Net Settlement (CNS) system.
source	The originating source of a transaction.
step-up	A provision in an offer that permits you, when you exercise your basic subscription, to subscribe to one additional share of the underlying security in lieu of a fractional share.
stock loan	A loan from one participant to another based on securities pledged as collateral.
stock merger	The exchange of one company's security/CUSIP for another company's security/CUSIP or securities at a preset rate.
stock split	A stock distribution usually of 25% or more of what the shareholder owns. It usually has an ex-date of the first business day after the payable date.
subscription price	The cost to subscribe to one share of the underlying security.
subscription rate	The number of rights that must be exercised to subscribe to one share of the underlying security.
suspense	Participant balances that remain unsettled on the settlement date.
syndicate	A group of investment banks assembled by a lead manager to underwrite a new issue.

T

TA	Transfer Agent. Usually a commercial bank that acts as a "trustee" for the sponsor. The TA creates an IVORS database record for UIT CUSIPs. It can also enter and modify settlement information for the transactions originated by participants, and cancel participants transactions.
target security	The security that is the subject of a Voluntary Offering.
tender agent	The agent authorized by the offeror to act on its behalf to receive acceptance documents and securities that are the subject of the offer, and make distributions of payments.
total net balance	Comprised of the total balance of settlement activity codes 084, 087, and 088.
trade coupon	For variable rate issues, the coupon rate used to consummate the trade.
trade date	The date the trade was executed.
trade factor	The factor applicable to a trades black out period.
tranch	A risk maturity class, or other class, into which a multi-class security such as a Collateralized Mortgage Obligation (CMO) is split. For example, the typical CMO has A, B, and C tranches representing fast pay, medium pay, and slow pay bonds.
transaction date	The date a transaction is entered into the system.
transaction ID	The number that identifies a transaction.
true factor	The actual amount of principal remaining on the mortgages underlying the CMO/ABS. This is also known as the principal factor, and is used to compute the amortized value.
turnaround counter	Represents the position that the participant can deliver regardless of the Memo Seg counter (turnaround position ignores Memo Seg).

U

UIT	Unit Investment Trust. An investment vehicle representing a portfolio of securities such as corporate, municipal, or government bonds, mortgage-backed securities, preferred or common stock. Unit holders receive both principal and income payments in proportion to the number of units they own.
unapproved in IRAD	Debit and credit amounts of unapproved transactions with CUSIPs classified as indexed principal.
unapproved in RAD	Debit and credit amounts of transactions currently unapproved for Receiver Authorized Delivery (RAD).
unapproved value pledge release request	Debit and credit amounts of unapproved value pledge release request transactions.
unvalued transaction	Unvalued security additions that do not carry related payment obligation with the receipt of securities. They include: Deposits Free release of pledged securities Receipt of a free DO Releases of segregated securities Free pledges
unwinding	The process of reversing transactions back to the original deliverers.

V

VRDO

Variable Rate Demand Obligation. Note representing borrowings (usually from a commercial bank) that is payable on demand and that bears interest tied to a money market rate, usually the bank prime rate. (Dictionary of Finance and Investment Terms)

W

wire room	DTCC Settlement department.
WT	Withdrawal By Transfer. Positions in physical certificates withdrawn from DTC for re-registration in the participants or customers name.