Investment Operations

DTCC AUTOMATES VOLUNTARY CORPORATE ACTIONS LIFECYCLE

Treasury Clearing

Infrastructure giant Depository Trust & Clearing Corporation (DTCC) confirmed recently that it had successfully processed the U.S. market’s first-ever, fully-automated voluntary reorganization ISO 20022 instruction as part of its newly automated Voluntary Reorganization service. With the launch of this new automation, DTCC said it moves towards completion of the journey to fully automate the corporate actions lifecycle from end-to-end, helping clients reduce the rising costs and risks associated with the corporate action process.

According to analysts, in recent years, the corporate events process has become increasingly complicated due to the rise in popularity of financial instruments including securitized derivatives and structured equities – both of which are typically backed by other securities or triggered by market conditions. In response to this growth and complexity, firms across the industry have turned to large teams of personnel to specifically oversee and monitor the voluntary instruction process, in part to reduce the risk of costly errors.

Following what the depository called a “robust testing period” with fintech Broadridge, DTCC launched the newly-automated Voluntary Reorganization service, which it says provides clients with the enhanced ability to manage and execute corporate action instructions around time-sensitive events in a more streamlined and efficient manner. DTCC processes over 600,000 reorganization instructions each year, according to the firm’s literature.

“This is a major milestone made possible by the partnership and support of Broadridge, our clients, and key stakeholders across the industry,” said Ann Marie Bria, Executive Director, Asset Services Business Management at DTCC. “Having end-to-end automation throughout the corporate actions lifecycle will allow the industry to utilize fixed data formats and a standardized set of rules, creating new efficiencies while reducing risks and costs,” she added.

Partnering with DTCC on the new service “gives Broadridge the ability to automate the full end-to-end corporate actions lifecycle for users of its global, cloud-hosted, next generation corporate actions solution by incorporating fully automated and integrated election instructions to DTC in ISO 20022 format,” said Michael Wood, Head of Asset Servicing, Broadridge. “This enhanced service will increase STP rates on voluntary corporate actions, reduce risk associated with manual errors and provide significant scalability and cost savings for the industry,” Wood added.