The Depository Trust & Clearing Corporation (DTCC) is to launch a pilot programme testing new ISO 20022 corporate actions announcement messages and its new browser-based user interface with five leading corporate action users on April 25.
The pilot is part of DTCC’s multi-year reengineering initiative that is changing the way corporate actions are processed in the United States.
The firms in the pilot are the BNY Mellon, Brown Brothers Harriman, Investment Technology Group (ITG), J.P. Morgan Chase and National Financial Services LLC. The pilot will test all event types for corporate actions announcements, including dividends, principal and interest, redemptions, and reorganisation events such as tender offers, stock splits and warrants, using the new ISO 20022 announcement messages and user interface.
“We’re strong believers in implementing best practice in the market place and that’s why we wanted to participate in this test pilot,” said Steve Sloan, asset servicing product manager, J.P. Morgan Worldwide Securities Services. “This pilot will help DTCC implement best practice for the corporate actions market, which will ultimately benefit all market participants by boosting efficiencies and reducing risk.”
DTCC developed the new messaging documentation in collaboration with SWIFT. ISO 20022 provides the financial services industry with a common platform for the development of messages in a standardised syntax and defines a number of key elements used in messaging. Supplementary data that does not fit into the current standard message format, or is specific to a particular country or market, can be added by extending the messages with an additional component. DTCC determined the supplemental information needed in these extensions for corporate actions processing in the US.
“The shift from proprietary files to ISO 20022 standard messages is significant,” said Sloan. “The ability to utilise market standard event types and follow the industry standard event interpretation grid concerning dates, rates, periods and prices will provide our clients greater ability to electronically process corporate action announcements.”
The new browser-based interface that will be used by the pilot firms ultimately will provide a unified corporate actions platform.
The browser will handle announcement messages for the test pilot firms covering all event types – including distributions, redemptions and reorganisations. The entire corporate actions lifecycle, from announcements through instructions to allocations will be implemented in phases – announcements beginning in November 2011, followed by distributions and redemptions in 2012 and reorganizations in 2013 – with a dashboard for each event type grouping.
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