DTCC Key Issue Review

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DTCC Key Issue Review

• Rich Lanning
• Director
• Relationship Management

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Direct Registration System (DRS) Update

• A Short Look Back
• Just one year ago..
• DRS Issues
• 1,245 issuers
• 1,087 cert/statement
• 158 Statement Only
• Transactions
• 43,000 Profile requests/month
• 38,400 DOs

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DRS Update

• Today
• DRS Issues
• 2,902 issuers
• 2,614 cert/statement
• 243 statement only
• Transactions
• 60,400 Profile requests/month
• 53,800 DOs

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DRS Update

• Status
• 4 Participants default to statement
• 2 more are programming for it
• 16 Participants at 50/gt for statements,
• 7 with 100 or more DRS WTs per month
• gt 30 of WTs in statement form, and growing

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DRS Update

• DRS Status
• 4,000 issuers to migrate/52 new agents
• All newly listed equity issuers are DRS eligible
• DRS eligible BUT not participating

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DRS Update

• 2007 What weve done
• Monitored migration of issuers to DRS
• Ongoing communications with industry exchanges,
  agents, etc.
• Training new FAST/DRS agents
• - Brought in 16 new FAST agents
• - Working with 37 remaining
• - 16 in the pipeline
• - No agent left behind
• DRS Usage Statistic Reports

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DRS Update

• 2007 What were doing
• DRS Education Fact Sheet with DMD
• Fine tune FAST/DRS SEC rule filing
• Discussions on updating exchange listing
  requirements
• System enhancements

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DRS Update

• Next Steps - 2008
• Exchange listing requirement change all issues
• Participants agree to Default
• DRS enhancements
• Move all shares options
• Profile surety upgrade
• Default WTs to DRS statement only
• Currently 63 of WTs are DRS eligible

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DRS Update

• By 2010
• Immobilization complete
• Dematerialization 75 implemented
• Less physical withdrawals Less deposits
• Few certificates in system
• Listed issues in DRS
• Bearers matured
• Non-Transferables destroyed

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DRS Update

• Industry efforts
• SIFMA Letter challenges broker dealer
  community to default to statements for all DRS
  eligible securities as of January 2008.
• Educational Websites
• http//www.sifma.org/services/techops/stp/html/pap
  erless.shtml
• http//www.dtcc.com/leadership/issues/nomorepaper/
  

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BDUG / SIFMA

• BDUG has a representative on the SIFMA DRS
  industry group for the past two years
• Discussion on challenges to custodian community

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PBS 2.0

• PBS 2.0 is in production with 10 pilot firms
  consisting of a cross section of our Participant
  community.
• Pilot firms have successfully processed PBS 2.0
  transactions in the mainframe environment
• Scheduled to start in November 2007 and
  concluding by 1st Q 2008, DTC will begin a phased
  rollout out of the new version to existing
  version PBS 1.0 users.

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PBS 2.0

• Based on the pilot customer experience, DTC has
  modified PBS 2.0 to be implemented without the
  need for customer networking changes or
  re-registration of existing users.
• Existing PBS 1.0 users will simply login as they
  do today using their current ID and password.

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PBS 2.0 Migration

• Implementation priority will be given to existing
  PBS version 1.0 customers.
• A migration schedule and will be shared with
  individual customers starting Q4 2007.

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PBS 2.0 - JPTS Link

• Throughout the rollout, the JPTS link that
  provides 1.0 users access to PTS functions not
  available in 1.0 will remain accessible on
  version 2.0 for those firms that have not been
  converted.
• Upon migration of a firm, the JPTS link will be
  retired, as all PTS functions are available in
  PBS 2.0.
• Important Notice with specific details will be
  distributed in late October.

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Stock Loan and Repo Tracking Program

• Anticipate requiring Participants to acknowledge
  monthly reconciliation of stock loan / repo memo
  positions by year end 2004
• Banks should review their procedures surrounding
  reconciliation of these positions
• Position information available via file
  transmission and via SMARTSearch

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Stock Loan and Repo Tracking Program

• Additionally, DTC will implement the following
  enhancements
• Systemic blockage of improper reason codes when
  reclaiming an original stock loan / reclaim
  reason code
• Informational and warning messages in the stock
  loan and repo systems
• Open SLRM adjustment request will not purge for
  20 business days as opposed to the current 5
  business days

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2008 Developments

• Syndicate Loans with a working group of
  industry players developing business and
  functional requirements. Plan to launch a
  reconciliation and message hub service in early
  08.
• OFAC Reliance Letters will file with SEC
  shortly and administer in early 08. Periodic
  acknowledgement by participants that their
  organization is properly monitoring customers and
  transactions.
• Blanket Letter of Representation for DTC Eligible
  non-registered securities

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Questions?