The Depository Trust & Clearing Corporation (DTCC) announced today a new strategic initiative with Tata Consultancy Services Limited (TCS) to collaborate in the reengineering of DTCC’s core systems for securities underwriting and corporate actions processing for the U.S. financial services industry.
The initiative will create a single new platform, replacing more than 60 separate underwriting and corporate actions legacy systems that have evolved over the past three decades. The integrated platform will streamline processing, generate further efficiencies, reduce costs and provide greater flexibility — dramatically transforming how these systems manage and process information.
DTCC plays an integral role in the underwriting of virtually every U.S. security and processes corporate actions on the $30 trillion worth of securities held at its depository, handling dividends, principal, interest and reorganizations. International securities from more than 100 countries and territories represent roughly 12% of the overall value held on deposit, with issues including global bonds and American and Global Depositary Receipts. In 2004, DTCC’s depository subsidiary processed a record $3.1 trillion in underwriting distributions, and a record $2.3 trillion worth of corporate actions.
“This is a major overhaul of our core underwriting and corporate action processing systems,” said William Aimetti, DTCC’s chief information officer. “The new platform will be capable of handling increasingly sophisticated types of securities — both U.S. and global — supporting an array of new asset servicing requirements and complex corporate actions, processing increasing volumes and allowing us to support international messaging standards.”
“We welcome this partnering arrangement with TCS,” continued Aimetti. “DTCC will license TCS’ NCS Corporate Actions solution and will collaborate with TCS to tailor and create additional capabilities for the financial sector.”
“Our goal is to build a robust, integrated platform that embeds straight-through processing (STP) procedures for U.S. and global securities from origination through maturity, known as ‘cradle to grave,’” said Janet Wynn, DTCC managing director and head of the company’s Asset Services business. “The new platform will allow comprehensive corporate action information to be captured during the underwriting process, so that the information can later be used to support automated corporate action announcements, helping to eliminate the need for manual input and processing.”
DTCC has conducted extensive customer outreach in the development of this initiative to better understand changes in the market environment and new technology requirements, and to anticipate continued growth in transaction volumes. This outreach involves industry forums and advisory committees whose participants have specialized knowledge and expertise in these areas.
“Since changes in the industry’s infrastructure impact all the firms we support, our plan is to conduct an extensive communications program to ensure customers — throughout the process — understand the implications of the system features, how the new technology will interact with their systems, and how they can manage costs associated with the new capabilities,” said Wynn. “Our customers have an expectation for 100% reliability, and we are best served in achieving this goal by ensuring effective communications and collaboration throughout the design and development stages of the project, as well as implementation.”
TCS is a leading global technology services provider and software systems developer with Capability Maturity Model Integration (CMMI®) Level 5 capabilities, the highest rating for software development. TCS has a broad financial services clientele, and has demonstrated corporate actions capabilities in global and domestic securities processing.
“TCS is proud to be joining with DTCC to develop this new platform,” said N. G. Subramaniam, global head of banking and financial services, TCS. “DTCC is an industry leader in the clearing and settlement arena, and the world’s largest post-trade infrastructure organization, and our collaboration with DTCC to reengineer its asset services systems is significant and is in line with our Products Leveraged Solutions strategy.”
“TCS is excited about partnering with DTCC. NCS offers best-in-class corporate actions functionality and we are confident that its robust architecture, functional breadth and flexible design will provide sustainable benefits to DTCC and its participants by achieving greater STP and increased efficiencies,” said Rajiv Agarwal, vice president, TCS.
DTCC indicated that the new platform would be a multi-year effort, with features introduced in major phases as they are ready for industry testing. Preliminary testing of the underwriting component is planned in late 2006, with launch in 2007. The corporate action component is planned for launch in 2009, with testing in the prior year. The new platform will offer multi-currency processing, ISO 15022 messaging formats and international identification numbers, such as ISIN. The new system will also give customers the ability to check the status of a security or a corporate action involving a security at any time via the Internet.