acsda general assembly panel 2 – asset services dan thieke brett lancaster friday 25 march, 2011...
TRANSCRIPT
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ACSDA General AssemblyPanel 2 – Asset Services
Dan Thieke
Brett Lancaster
Friday 25 March, 2011
v03
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Brett LancasterManaging Director – Americas Securities
Dan ThiekeVice President – Asset [email protected]
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Corporate actions remain one of the most risky areas within financial services
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Issuers fulfill their obligation by sending out a document, written in free text, causing issues
Agreeon eventtypes?
Agreeon data
elements?
Agree on source
dissemination?
Agree on a unique ID?
Prospectus’Press
releasesLetters oftransmittal
Regulatoryfilings
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Along the chain, from issuer to the investor, data is keyed and re-keyed manually, causing errors
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With the recent financial crisis, clients tell us that the operational risks need to be managed
InterpretationRisk
Issuer messages are written in “free text, e.g. news release and regulatory filing, that must be translated and rekeyed by the financial services industry
TimingRisk
Need for manual intervention results in delays in communicating information to the end investor
AccuracyRisk
Multiple players disseminating the same information results in uncertainty as to the accuracy of the result. Translation and manual rekeying increases the potential for errors
SignificantCosts
The lack of straight-through processing throughout the corporate actions chain results in additional cost and liability being absorbed by the financial services industry
http://xbrl.us/i2i/Pages/default.aspx
Risks
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However, the planets have aligned to allow us to finally sort out the problem … at least for the U.S.
What’s it all mean? Savings …Financial Crisis
DTCC CA Re-engineering
ISO 20022
XBRL Maturity
Maybe, just maybe …
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DTCC is working with SWIFT to implement ISO standards for Corporate Actions
• DTCC is the world’s largest central depository– Within Asset Services, it represents ~4,000 Participant accounts– DTCC publishes ~20M unique Corporate Actions to its
Participants, per year– In 2009, DTCC collected and paid ~$3T in Corporate Actions
• SWIFT is the Registration Authority for ISO standards– Used by 9,500 firms across 209 countries– Has 88% penetration for Americas Buy-Side, by AUM– Has 96% penetration for Americas Sell-Side, by market cap
• DTCC is working with SWIFT to implement its new Corporate Actions platform using ISO 20022
– Supports the entire lifecycle - all event types, all asset classes– Mandatory cutover from proprietary formats by 2015
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DTCC Corporate Actions Re-engineering features were defined by the industry, for the industry
SingleEvent
Record
Unique CA Identifier
Delivery Over
SMART orSWIFT
Near Real-Time
Events
AutomatedElections & Payments
SupportsU.S. andGlobal Events
GUIIntegrated Across CALifecycle
CA Re-engineering Features
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XBRL allows the issuers to disseminate electronic data from the source
• XBRL revolution– XBRL is an international, non-profit, consortium dedicated to
driving transparency– XBRL enables issuers to tag data from within MS Word when
preparing the source document– Some tools allow the tagged data to be ‘embedded’ within the
saved pdf or doc file– Aside from tagging, the issuer, as they write the press release
or prospectus, follows the same process as they do today• A range of XBRL tools are commercially available
• XBRL alignment with standards– DTCC, SWIFT and XBRL-US have worked to seamlessly align
the XBRL taxonomy used in the tools with ISO 20022
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300 page S-4 SEC Paper Filing Tagged and Structured Data
XBRL enables free text to be structured to the ISO standard and enables electronic dissemination
Highlight the text then ‘drag & tag’ the data element
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Our roadmap is phased with milestones to reduce implementation risk. We have already started
Phase I All DTC-specific data elements for payments incorporated into new platform
Phase IIa Corporate actions announcements Pilot with ISO 20022 & new customer interface
Phase IIb XBRL Interface into DTCC for dividend announcements
Phase III End-to-end lifecycle for distributions events covering announcements and processing, including unique ID
Phase IV End-to-end lifecycle for redemption events covering announcements and processing, including unique ID
Phase V End-to-end lifecycle for reorg events covering announcements and processing, including unique ID
Phase VI All DTC and GCA proprietary files and ISO 15022 files will be retired
Oct ‘09
Apr ‘11
Q4 11
2012
2012
2013
2015 or sooner
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The initial ‘announcements’ pilot starts Apr 23 with BBH. Separately, Citi are already piloting XBRL
Pilot Clients
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The industry is aligned to deliver significant benefits for all intermediaries along the chain
Issuers
• Intent and content of the originating offer are clear to the investor, without fear of misinterpretation due to manual manipulation
• Details are conveyed in a timely fashion
• Issuers will incur marginal additional effort in tagging the data
Sell-Side Intermediaries
• Lowers risk exposure to an investor decision based on incorrect information
• Interpretation, re-keying and manual exceptions are significantly reduced, and STP rate increased
Buy-Side Investors
• Make decisions based on guaranteed accurate information from ‘source’ document
• Longer response time as Custodians and IMs no longer need to artificially compress deadlines to compensate for manual processing of election information
Qualitative Benefits
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The industry has quantified the expected gains in operational efficiency - the benefits are tangible
What’s it all mean? Savings …Overall savings
Sell-Side savings
Buy-Side savings
Improvement in STP rate
$230M
$400M
$170M
50%
80%
Other Asian XBRL projects report actual error rates falling by x100 fold
Quantitative Benefits
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Toronto19-23 Sep 2011