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Corporate Action Reengineering BDUG Conference October 18th 2006

. . Security Master Files. Shared Interfaces. Corporate Actions. Underwriting* NIIDS. SOURCE: Securities Origination Underwriting Reliable Corporate action Environment . A unified end-to-end platform from issuance through the entire asset servicing life cycle: Underwriting Corporate Actions integrated with Master files and other Core Depository functions.

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Corporate Action Reengineering BDUG Conference October 18th 2006

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    1. Corporate Action Reengineering BDUG Conference October 18th 2006

    2.

    3. Provide more accurate and timely servicing information Replace legacy sub-systems with newly architected platform Automate and streamline redundant processes and data storage Increase flexibility with rules-based system Enhance functionality: ISO15022, multi-currency Reduce ongoing technology support costs Consistency of processing – Common field definitions and business rules Revamp New Issue Information Dissemination

    4. New Issue Information Dissemination Syndicate Desk – Communicate to members of the underwriting syndicate – Automated/Manual Syndicate Desk – Communicate to the street (Vendors/non syndicate members) – Manual Trading of New Issue Middle Office (Trade support) – Procurement/Receipt and Set up of New Security Master Data - Manual at firm or vendor DTC Eligibility, Closing and Distribution Syndicate Operations – Communication to DTC and other industry utilities - Manual

    6. Avoids re-keying – STP from bookbuilding/running systems Automated regulatory compliance of MSRB rule G34 and NASD rule 6260 Automated dissemination to vendors in real time – Bloomberg, Interactive, S&P, ect Facilitates faster processing of secondary market trades - Automated receipt of security data in real time Facilitates compliance of new SEC access = delivery rules for prospectus delivery

    8. Corporate Action Processing and Announcements

    9. Complete analysis and functional design Q2 2006 Release file layouts to industry Q4 2006 Complete development Q3 2007 Initiate UAT Q4 2007 Commence transition Q3 2008

    10. Aggressive outreach program includes Participants Vendor/service bureaus Agents Guidance Council Communications approach Focus sessions Website (host webcams, FAQs, and presentations) eLetter News releases

    11. Current focus on data migration Parallel testing Execute migration procedures User access Testing of all functionality Phased approach MMI Distributions and Redemptions Mandatory events Voluntary events and Mandatory with Option events

    12. Risk mitigation is key decision driver Process Architectural proof of concept Test concepts Test code compliance with industry standards Use of best practices Security analysis (code vulnerability) Iterative

    13. System Implementation (Transition and Migration) Testing Game Plan Final UAT - 9 months Scripted - 4 months Parallel - 5 months Execute “talkback” process between production and parallel e.g. instructions Transition to begin post successful parallel

    14. DTCC has partnered with a vendor for Underwriting as test case Learning Approach Context sensitive help E Learning Instructor lead training Job aids User manual Service guide

    15. Corporate Action Announcements - @Source 2007 Strategic Plans Service Offering Fees based on existing fee schedule No additional charge for the universe Implementation of more comprehensive service standards on DTC-eligible announcements Remove dependency on selected vendors by strengthening DTCC’s ‘manufacturing’ capability Introduce future rationalized events, fields and statuses as part of the re-engineering of the existing announcement files

    16. @Source Impact on Service Bureaus Service Bureaus will receive universe file from DTCC Service Bureau will be required to submit to DTCC a list of all non-Participants they represent and respective SOI’s Service Bureau will be charged on behalf of all non-Participant clients Service Bureau must execute a legal contract defining use of the data

    17. Guiding Principles for the New DTCC Corporate Action Announcement: Event Content (A reminder) Single event ID for the life of the announcement Currently, announcement IDs are based upon CUSIP/Activity Code Elimination of DTC function codes Simplify the Event Types and remove ‘processing’ references Provide more information on Options and Payouts Remove Contra CUSIPs Option tracking done by RRG Account

    18. Guiding Principles for the New DTCC Corporate Action Announcement: File Concepts Publish Information in 2 formats ISO15022 XML *Currently DTC publishes in propriety formats Publish ALL Events in a single file * Currently DTC announces within 3 main files: REORG, REDEM and DIVANN

    19. Guiding Principles for the New DTCC Corporate Action Announcement: File Concepts Publish Event Details in a single message General event information Option details Payout details * Currently DTC provides separate messages per event option Intra-day delivery option for all announcements * Currently end of day batch processing

    20. The ISO15022 MT564 (notification) will be primary format and supplemented, as needed, with the MT568

    21. ISO15022 Format: Data mapped where possible, otherwise information will be published within the ‘Text’ Blocks The additional data will be provided in the Text blocks within MT564 Sequences D, E and F; mapped to the most appropriate Sequence For example: ‘Chill’ On/Off Days will be found in Sequence D under the qualifier INCO (information Conditions) Tax information will be found in Sequence D under the qualifier TAXE (Taxation Conditions) Fractional Share Information on payouts will be found in Sequence E under the qualifier TXNR (Narrative Version) Additional information will flow onto the MT568 when the MT564 10k byte limit is reached

    22. ISO15022 Format: Data mapped where possible, otherwise information will be published within the ‘Text’ Blocks. ISO15022 ‘text’ blocks accommodate 10 lines of 35 bytes (10*35x) but can be expanded by using tag 70e qualifiers, of which certain qualifiers are repeatable Additional data presented with the same name as XML version, for example: ‘Hearing Date’ will be shown as <HearingDt> or ‘Chill Release Day for Deposit’ will be shown as <ChillReleaseDayForDeposit> A single line will consist of only 1 data element name/value, for example: :70E::ADTX//<HearingDt>20060831</> Where the data name and the value exceed 35 characters the data will flow into the second line, for example: (Line 1) :70E::INCO//<ChillReleaseDayForDepo (Line 2) sit>20060831</>

    23. A side by side example of a Cash Dividend in XML and ISO15022

    24. Unsupported Files in ISO Format published in XML

    25. Questions?

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