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Corporate Actions Transformation

BDUGSeptember 23, 2013

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Agenda

Agenda:

Getting to Know ISO 20022

Timeline

Getting Started

XBRL Update

The new CA Web

Wrap Up, Q & A

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Getting to Know ISO 20022

ISO 20022 is the cutting edge standard for corporate actions messaging

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ISO 20022 – Key Highlights

1. Adoption of Market Practice and Standardization Brings the U.S. in line with global standards and market practice The yearly standards maintenance process requires DTCC to continuously review and analyze the ISO 20022

format to ensure compliance with market practice New event-based data model will replace the existing proprietary structure based on function codes Unique Event Identifier (CA ID / COAF) allows for downstream processing and marries announcement, to

entitlement, to election, to payment

2. Greater Straight Through Processing (STP) – average of 26% more data elements in fixed fields in ISO 20022 Reduces reliance on narrative text, allowing for more efficient processing Reduces risk through the reduction of errors due to streamlined, automated processes, resulting in client

cost savings

3. Real time Messaging Over 50% of events are delivered earlier, cited in recent case study

4. Automating the DTCC Election process Eliminating the manual election / instruction process can lead to cost savings, operational efficiencies, and

risk reduction

5. Instruction Statement Report – CAST ISO 20022 Message Automates the tracking process for outstanding election balances

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MX Identifier

(2013 version)

ISO 20022 Message Names Extension ShortName

Equivalent

ISO 15022

Equivalent DTCC Processes

seev.031.002.04 CA Notification supl.001.001.04 CANO MT 564 Announcements

seev.039.002.04 CA Cancellation Advice supl.006.001.04 CACN MT 564 Announcement Cancellations

seev.031.002.04 CA Notification with Eligible Balance supl.007.001.04 CANO-E MT 564 Record Date Entitlements

seev.035.002.04 CA Movement Preliminary Advice supl.009.001.04 CAPA MT 564 Projected Payments

seev.044.002.04CA Movement Preliminary Advice Cancellation Advice

n/a CAPC MT 567 NEW

seev.036.002.04 CA Movement Confirmation supl.011.001.04 CACO MT 566 Allocations / Payments

seev.037.002.04 CA Movement Reversal Advice n/a CARE MT 566 NEW

seev.032.002.04 CA Event Processing Status Advice supl.010.001.04 CAPS MT 564 Unallocated Positions

seev.033.002.04 CA Instruction supl.008.001.04 CAIN MT 565 Instructions / Elections

seev.040.002.04 CA Instruction Cancellation Request n/a CAIC MT 565 Instruction Withdrawal

seev.034.002.04 CA Instruction Status Advice n/a CAIS MT 567 Instruction Reply

seev.041.002.04CA Instruction Cancellation Request Status Advice

n/a CACS MT 567 Withdrawal Reply

seev.042.002.04Corporate Actions Instruction Statement Report

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ISO 20022 Message Types

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Transforming the Industry

The DTCC Corporate Actions Transformation initiative is a multi-year

effort that offers extensive client benefits

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Phase 1New Data Model

(Internal to DTCC)o Implemented new data

model

o Updated internal systems to support ISO 20022 messages

Corporate Actions Transformation Project Milestones

2010 2011/2012 2012/2014 2014/2015 2015/2016

Project Timeline

Phase 2Announcements

(Browser & ISO 20022) o Conversion not mandated

until end of 2015 when CCF files are retired

o All event types includedo Distributionso Redemptionso Reorgs

Phase 3Distribution Events

(ISO 20022)

o Only distribution event typeso Cash/Stock Dividendo Principal & Interest

o Processing lifecycleo Entitlementso Paymentso Instructionso Adjustment

(Browser)o Mandated conversion to new

browser in June 2014

Phase 4Redemption Events

(ISO 20022)

o Only redemption event typeso Full/Partial Callo Maturity

o Processing lifecycleo Entitlementso Paymentso Electionso Adjustments

(Browser)o Mandated conversion to new

browser in 2015

o Introduce new redemptions browser features

Phase 5Reorg Events

(ISO 20022)

o Only reorg event typeso Tendero Exchange Offer

o Processing lifecycleo Entitlementso Paymentso Electionso Adjustments

(Browser)o Mandated conversion to new

browser in 2016

o Introduce new reorg browser features

Announcements Processing

Ongoing efforts – Clients onboard to ISO 20022 and retire CCF files (DTCC retires announcement files in 2015)

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Corporate Actions Adoption

Legacy

Files(CCF)

Applications

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Retirement Date

• End of 2015

• 2016

• TBD

• TBD

Retirement Date

• June 2014

• June 2014

• 2015

• 2016

Current CCF File

Announcements• CMORT, DIVANN, RDPRPT, REOGN2, MUNANN

Distributions Processing• CSHSET, DIVRDP, REORDP, MMIDC2 • Record Date Position• Cash/Stock Allocation Files

Redemption Processing• MMIRC2• MMI Redemption Files

Reorg Processing• IRT1-5, RPP1-5, RTP1-5• Rights/Put/Tenders Instructions

Current PBS/PTS Function

Announcements• DIVA, DAWN

Distributions Processing• DPAL, SDAR, EDS

Redemption Processing• RIPS

Reorg Processing• PTOP• RTOP• RIPS

ISO 20022 Replacement

• CANO, CACN

• CANO-E, CAPA, CACO, CAIN, CAST

• CANO-E, CAPA, CACO

• CANO-E, CAPA, CACO

Browser Replacement

• Corporate Actions Web

• Distributions processing moved to Corporate Actions Web in June 2014

• Redemptions processing moved to Corporate Actions Web in 2015

• Reorg processing moved to Corporate Actions Web in 2016

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Getting Started

DTCC provides extensive materials to help clients transition to ISO 20022 and onto

CA Web

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o Client verifies that results from processing CCF files = results from processing ISO20022 messages

SMART vs. SWIFT

o If SMART, DTCC does utilization study

o If needed, client initiates circuit upgrade

Step 1 - IT Connectivity

Getting Started – ISO 20022 Messaging – Testing Roadmap

Choose a Communications Protocol

o SMART = MQ, FTP or NDM o SWIFT = Interact Store &

Forward or FileAct

Establish Connectivity to DTCC

o Client completes Router Exchange Form (REF)

o Client chooses subscriptions

o DTCC begins sending ISO20022 messages

Connectivity

Mapping ISO20022 Messages

o Client determines which of its systems are impacted and identifies CCF files to be replaced

o Client maps ISO20022 messages to its applications

o Client gains access to corporate actions browser to assist in testing effort

Step 2 - IT App Programming

Application Programming and Testing

Volume/Data Element Check

o Client verifies that its application is receiving and processing all events and associated data elements from ISO20022 messages

o Client assesses impact of new data model, messages and workflow

Step 3 – CCF vs. ISO – Parallel Testing

Pre-Production System & User Testing

CCF vs. ISO 20022 Comparison

Parallel Testing Complete – Client Deploys ISO 20022 Messaging to Production

o Client has flexibility to deploy based on event groups

Step 4 – Client in Production

Production Cutover

Client Discontinues Receiving CCF Files

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Resources & Contact Information

• Corporate Actions Transformation Learning Center – Includes business and technical documentation– Learning Center URL

– http://dtcclearning.com/learning/assetservices/

– Learning Center Registration Information– http://dtcc.com/downloads/legal/imp_notices/2013/dtc/ope/0188-13.pdf

• Corporate Actions Onboarding Kit– http://dtcc.com/downloads/leadership/issues/reengineering/

Corporate_Actions_Onboarding_Kit.pdf

• Questions regarding adopting ISO 20022 can be sent to the CA Transformation mailbox at catransformation@dtcc.com. ISO 20022 adoption clients can also contact Roxana Argintescu at rargintescu@dtcc.com.

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Corporate Actions Transformation Learning Center

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XBRL Update

XBRL Driving STP

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XBRL Initiative

1. Current State XBRL concept proven with ADR pilot initiated in February 2013 with issuer Citi ADR

Deployed inbound XBRL formatted data for dividend event types (cash, stock, special and sale of rights)

350+ XBRL messages processed to date ADR issuers BNYMellon and JPMChase are actively engaged

XBRL “instances” automatically converted to ISO 20022 messages for clients

2. Governance Charter establishes governance framework Taxonomy releases to coincide with annual ISO 20022 standard releases in November of every year

3. ROI Risk reduction by eliminating possibility of misinterpretation and keystroke error Improved efficiency with greater straight through processing (STP) XBRL expected to eliminate hours of manual processing per day once the 3 major ADR banks are in

production

4. Next Steps Add additional event types Engage SEC and SIFMA to seek regulatory mandate

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Manage and process all CA events in one application (CA Web)

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Introducing CA Web to know ISO 20022

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CA Web – Key Highlights

1. Manage all corporate action event types Distributions (e.g. Dividends and P&I), Redemptions, and Reorganizations all on one platform Manage the entire lifecycle of corporate actions events, from announcements, through instructions, to

allocations, where data is updated in real-time

2. Key announcement data published Manage and process electable corporate action events; user interface displays critical electable events Enhanced management controls

3. Full event details available Entitlements, instructions, allocations (including projections and adjustments) all available on a single event

record

4. Ability to customize searches Save and perform “favorite” searches with a click of a button without re selecting each search criteria‐ Multiple ways to search for event information, using quick search or advanced search criteria

5. Flexibility to manage data and ease of use Ability to see announcement changes, instructions due, allocations and adjustments made, all rolling up to a

dashboard view Information is able to be exported to Excel spreadsheets Ability to view related DTC accounts, based on predetermined entitlements Acronyms and function codes are eliminated; events appear as they are announced in the market and aligned

with the ISO 20022 messages

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