DTCC to pilot corporate actions liability service

DTCC to pilot corporate actions liability service

The Depository Trust & Clearing Corporation (DTCC) has launched a pilot programme with 20 broker/dealers and custodian banks for a new Web-based system that automates the creation, delivery and tracking of corporate actions liability notices.

The six-week pilot of the new Smart/Track for Corporate Actions Liability Notification Service will run through 31 January 2005 with the aim of entering full production on 1 February.

Industry estimates suggest that more than 15,000 voluntary corporate actions liability notices are sent out each month, reminding firms of their duties to deliver securities owed during a voluntary corporate action such as a tender offer.

Margaret Koontz, vice president, DTCC product management and development, says: "Corporate actions liability notices have been a paper-intensive, time-consuming, manual process without any standardisation in either the terminology or communication process itself."

Traditionally, a firm will fax a liability notice to a counterparty and then follow up with a phone call to make sure they received the notice, says Koontz. "The new notification system eliminates the manual process and replaces it with a single automated, standardised communication procedure."

Each notice has an audit trail, including the time, date and person taking the action, she says. Participants will have online access to archived notices for seven years.

Among the 20 firms participating in the pilot are Fimat USA, Fortis Securities, Morgan Stanley Dean Witter, National Financial Services, RBC Dain Rauscher, Stephens, and Wells Fargo.

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