Underwriting

Eligibility

How do I make an issue eligible?

Only Participants can request that DTC make a security DTC eligible. It is therefore incumbent on an Issuer to have a relationship with an underwriter or other financial institution that is a Participant or is directly associated with a Participant that is willing to sponsor the eligibility process for the Issuer’s securities. Participants are required to provide an eligibility request for specified securities to Underwriting by the submission of all required Issuer and securities data and all related offering documents, at a minimum , through the online Securities Origination, Underwriting and Reliable Corporate Action Environment (“UW SOURCE”) system to be considered for full service eligibility. It is the responsibility of the Participant requesting eligibility for the securities to provide evidence that the securities satisfy the criteria set forth in DTC’s OA.  Please refer to DTC’s Operational Arrangement (OA) for complete details at http://www.dtcc.com/~/media/Files/Downloads/Settlement-Asset-Services/Underwriting/operational-arrangements.pdf.

Also please see New Issue Eligibility on DTCC’s website at: http://www.dtcc.com/settlement-and-asset-services/underwriting/new-issue-eligibility.

For more information about UW SOURCE and how to register for the system, please see DTCC’s website at: http://www.dtcc.com/settlement-and-asset-services/underwriting/uw-source-registration-information .

 

How do I make a new security eligible that will be the resulting entitlement of a corporate action (e.g., exchange, tender, reverse split, spin-off) on a DTC eligible security? 

For corporate action (CA) events on DTC eligible securities, DTCC’s Reorganization or Stock Dividend Department depending on the type of CA will initiate the eligibility process as part of their corporate action processing workflow. The first step is to ensure DTCC’s Reorganization, or if it pertains to a stock dividend or spin-off, DTC Stock Dividend Department has the announcement of the CA by emailing the pertinent department within the timeframes outlined in DTC’s Operational Arrangements (“OA”).  Email addresses are as follows:

Please note that although Reorganization or Stock Dividend Departments will initiate the eligibility process for a new security entitlement to a corporate action, it is the responsibility of the Issuer of the security (or securities) undertaking a corporate action to provide evidence that the new security (or securities) resulting from that action satisfy DTC’s eligibility criteria set forth in DTC’s Operational Arrangements (“OA”).

(Please refer to DTC’s OA at http://www.dtcc.com/~/media/Files/Downloads/Settlement-Asset-Services/Underwriting/operational-arrangements.pdf)

What is a “limited eligibility” security? 

DTCC established a relationship with the Canadian Depository for Securities Ltd. (CDS) to support the clearance and settlement of Canadian dollar securities transactions.  The Canadian Dollar Settlement Link (CDL) System interfaces with CDS to process Canadian dollar securities transactions (i.e. delivery orders (DOs) and payment orders (POs) sent by DTC participants to CDS customers (“northbound”) and by CDS customers to DTC participants (“southbound”), as well as Canadian dollar transactions between DTC participants. 

In order to facilitate these services, DTC has established a “limited eligibility” status, which accommodates securities eligible at CDS by giving them eligibility at DTC for CDL transactions.  Typically CDS-eligible securities will not be permitted to be DTC “full service” eligible as  they do not meet DTC’s Operational Arrangements (OA) requirements such as registered with the SEC or reliant upon an acceptable registration exemption (e.g., 144A , REG S). 

Limited Eligibility issues are added to DTC’s masterfile and are chilled for most DTC activities. Only security movements across the DTC/CDS interface and segregation activities are permitted and  DOs movements and pledges on a limited basis in that the delivering party and receiving party must have both executed the DTC Participant Foreign Securities Blanket Letter of Representations with DTC Membership and have had their participant accounts coded accordingly.  To execute this letter and to have your DTC participant account coded accordingly, please contact DTC Membership at 1.888.382.2721.

 

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