DTCC’s Global Corporate Actions Validation Service Adds Equity Derivatives Coverage

NEW YORK--(BUSINESS WIRE)-- The Depository Trust & Clearing Corporation (DTCC) today announced that it has expanded its Global Corporate Actions Validation Service (GCA VS) coverage to include listed equity derivatives, effective immediately.

Historically, financial services firms had to use manual processes to locate and adjust derivatives contracts to account for the effects of corporate actions (such as stock splits, mergers, special dividends, etc.) on the underlying security. Every time a corporate action occurs on an underlying equity, each exchange with a listed derivative on that equity issue publishes a notice to members detailing the required adjustment method, adjustment factor, lot size change, strike price change, etc. for the derivatives contract. Now, GCA VS will aggregate this information and deliver it to any interested customer firm through an electronic central information hub in a standardized format, saving firms time and effort and reducing exposure risk.

GCA VS will initially publish information from five main global exchanges and infrastructure organizations for equity derivatives – the Options Clearing Corporation, NYSE Euronext, Eurex, Borsa Italiana and the Tokyo Exchange – and will continue to add other exchanges as the service develops.

“As trading in equity derivatives has grown, customer firms reached out to DTCC last year to see if we could publish through GCA VS details on the impact of corporate actions on listed derivatives,” said Patrick Kirby, managing director, DTCC Asset Services. “We are delighted to be able to respond to our clients with this new addition to our validation service, so our client firms no longer have to trawl through various exchanges’ website to find these updates and re-key them into their systems themselves.”

Corporate actions involve almost any event that significantly impacts a security, including such events as name changes, stock splits, dividend and interest payments, mergers or tender offers, etc. GCA VS provides the largest central source globally of validated or “scrubbed” corporate action announcements on more than 2.5 million securities from more than 173 countries globally. The data is used by brokerage firms, banks, hedge funds, investment managers and others in both their front offices for trading decisions, and in back offices to ensure accuracy of their processing of corporate actions. In 2009, GCA VS handled more than 990,000 corporate actions announcements and issued more than 5.9 million announcements on scheduled payments for fixed income securities.

Nicholas Potter, DTCC product manager for GCA VS, noted that DTCC had built an infrastructure “that can support similar instruments that contain a structured component and an underlying asset.” He noted that it could be used in the future to provide comparable information for other asset types, including such instruments as OTC equity derivatives and indices.

GCA VS is continuing to add new securities and asset classes to its global coverage of corporate actions. Earlier this year, DTCC added coverage of structured securities handled by the US Federal Reserve Bank (mostly securities created by Fannie Mae and Freddie Mac) to GCA VS, along with scheduled payments for global fixed income securities.

DTCC has also been spearheading an effort along with XBRL US and SWIFT to promote straight through processing in corporate actions by electronically capturing data directly from the issuers in a standardized form when a corporate action is first announced.

GCA VS is a service of DTCC Solutions, LLC, a subsidiary of DTCC.

About DTCC

The Depository Trust & Clearing Corporation (DTCC), through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with financial firms and third parties that market these products. DTCC's depository provides custody and asset servicing for more than 3.5 million securities issues from the United States and 121 other countries and territories, valued at US$33.9 trillion. In 2009, DTCC settled more than US$1.48 quadrillion in securities transactions. DTCC has operating facilities and data centers in multiple locations in the United States and overseas. For more information, please go to www.dtcc.com.

Depository Trust & Clearing CorporationSteve Letzler, 212-855-5469
[email protected]

Source: Depository Trust & Clearing Corporation