Transforming the Securities Landscape

Transforming the Securities Landscape

Malene McMahon, SWIFT Patrick Barthel, DTCC

12 May 2016 New York

ISO 20022 Global Adoption – Context

200 initiatives

Market Infrastructures Financial Institutions FI Customers/Corporates

2

Europe Asia Pacific Americas

Middle East & Africa

> 100 Payments MIs > 85 Securities MIs > 20 FX/trade/cards

700 Corporates

10% in 2015

Regulations in Europe 4

ISO 20022 Global Adoption – REMINDER !!


3

SWIFT is not

mandating migration

SWIFT will continue

to support MTs

DTCC, US

JASDEC, JP [Post-trade]

Galgo, BR

T2S, EU

CSD, LI

EVK, EE

CSD, LT

ASX, AU

CLS

Treasury MI Securities MI

SGX, SG [Corp Act, Post-trade)

JASDEC & TSE, JP

[Corp.Act]

Live

CN

Live

Live

NSD, RU

VP Lux

VP Sec DK

KDPW CCP, PL

Live

Live

SADC ID

LCH.Clearnet, UK

Euroclear, FI

Euroclear, ESES

NBB-SSS, BE

Live

BN

ABMF

CSIF

VN

MY

ISO 20022 Global Adoption – Securities and Treasury Market Infrastructures

ISO 20022 Global Adoption – Americas


5

Galgo (BR) - Investment funds - Automation

Live since 2011

CPA - All payments - New services to customers

Date TBD

DTCC - Securities transformation - Corporate actions Live since 2011

U.S. - New HVP system (Fedwire and CHIPS)

Specs in 2017

New services Automation Transformation

AU-NPP - Real-time payments - New services to customers

2017

ISO 20022 Global Adoption – Asia Pacific


ASX - Corporates actions - New announcement service

Live since 2014

JASDEC - Settlement and reconciliation - Additional plans for post-trade Live since 2014

Brunei - New RTGS System - Part of ASEAN integration

Live since 2014

India - New Generation RTGS System

Live since 2013

New services Regional integration Internationalization

Nordic CSD communities - 6 banks, 4 CSDs - Funds, CA, Account Management

As of 2016

ISO 20022 Global Adoption – Europe


TARGET2 EURO1/STEP1 - HVP systems - Close to 1,000 member banks

Under Discussion

T2S - Settlement and reconciliation - CSDs and NCBs with T2S As of 2015

Payment systems in CH - All payment systems and instruments

As of 2016

Regional integration Regulation Real-time payments

Jordan - Payments

Live since Feb 2015

ISO 20022 Global Adoption – Middle East & Africa


SARB - All payment systems - New services to customers

Under discussion

SADC - Low-value payments - 13 African countries

2015

New services Regional integration Renewal of legacy systems

Corporate Actions Transformation

May 12, 2016

SWIFT Standards Forum Patrick Barthel

Matching, Settlement & Asset Services

DTCC CA Transformation – Project Timeline

DTCC Controlled: Non-Confidential

Phase 2 (2011 – 2012) – ALL ANNOUNCEMENTS CA Web browser displays announcements for all event types – Distributions, Redemptions and Reorganizations

ISO 20022 • Only Distributions event types

• Cash/Stock Dividend • Principal & Interest

• Processing lifecycle for entitlements, instructions (first time ever), allocations & adjustments

CA Web – New Browser • Users migrated to new browser in June

2014 for parallel testing • Retired PTS / PBS Functions BOOK,

DUEB, TAXI in Oct 2014; SDAR (D), DIVA, DAWN, DPAL, EDS, PIAR, ADJI in Q1 2015

• Clients use CA Web for Distributions

Phase 3 (2012 – 2015) Distributions Lifecycle

ISO 20022 • Adding Redemptions event types

• Full/Partial Call • Maturity

• Processing lifecycle for entitlements, allocations, adjustments + lottery events

CA Web – New Browser • Introduce new browser features for

redemption events – Q4 2016 • Clients begin testing CA Web in

parallel in 2016 (compare against RIPS, SDAR Dept. “R” and ADJI)

Phase 4 (2014 – 2017) Redemptions Lifecycle

ISO 20022 • Adding Reorganizations event types

• Voluntary (Tender, etc.) • Mandatory (Merger / Exchange)

• Processing lifecycle for entitlements, instructions, allocations & adjustments

CA Web – New Browser • Introduce new browser features for

reorganization events • Mandated conversion to CA Web • Retire reorg PTS / PBS functions –

RIPS, SDAR (C), ADJI, etc.

Phase 5 (2017 – 2018) Reorganization Lifecycle

Phase 1 (2010) – Introduce New Data Model (DTCC internal system update)

CA Transformation ISO 20022 and CA Web

Ongoing effort – Onboard to ISO 20022 and retire CCF files

10

Corporate Actions Processing at DTC

ISO 20022 – Basic Message Flow

DTCC Controlled – Non-Confidential 11

DTCC ISO 20022 Message Inventory (SR 2016)

12

MX Identifier ISO 20022 Message Names Extension (SD)

Short Equivalent Equivalent DTCC Processes

(2016 version) Name ISO 15022

seev.031.002.06 CA Notification supl.001.001.08 CANO MT 564 Announcements

seev.039.002.05 CA Cancellation Advice supl.006.001.05 CACN MT 564 Announcement Cancellations

seev.031.002.06 CA Notification with Eligible Balance supl.007.001.05 CANO-E MT 564 Record Date Entitlements

seev.035.002.07 CA Movement Preliminary Advice supl.009.001.04 CAPA MT 564 Projected Payments

seev.044.002.06 CA Movement Preliminary Advice Cancellation Advice n/a CAPC MT 564 NEW

seev.036.002.07 CA Movement Confirmation supl.011.001.04 CACO MT 566 Allocations / Payments

seev.037.002.07 CA Movement Reversal Advice n/a CARE MT 566 NEW

seev.032.002.04 CA Event Processing Status Advice supl.010.001.04 CAPS MT 567 Unallocated Positions

seev.033.002.06 CA Instruction supl.008.001.02 CAIN MT 565 Instructions / Elections

seev.034.002.07 CA Instruction Status Advice n/a CAIS MT 567 Instruction Reply

seev.040.002.06 CA Instruction Cancellation Request n/a CAIC MT 565 Instruction Withdrawal

seev.041.002.06 CA Instruction Cancellation Request Status Advice n/a CACS MT 567 Withdrawal Reply

seev.042.002.05 Corporate Actions Instruction Statement Report n/a CAST n/a NEW

seev.001.001.05 Meeting Notification n/a MTNO MT 564* Announcements (AC 80)

seev.002.001.05 Meeting Cancellation n/a MTCN MT 564* Announcements (AC 80) Cancellations

*Limited. Not backwards compatible


ISO 20022 Message Group Distributions Redemptions Reorganization

Announcements* In Production (Nov 2011)

In Production (Nov 2011)

In Production (Nov 2011)

Entitlements & Allocations In Production (Feb 2013) August 2015 2017-18

Instructions In Production (March 2015) N/A TBD

ISO 20022 Message Availability


13

Risk reduction • Less manual touches / elimination of manual touches

▼ Straight through elections from Beneficial Holder –> Custodian --> DTC Efficiencies • Real-time messaging

• Events are easily linked using unique identifier (COAF / CA ID)

• Allows clients to fully maximize efficiency of ISO 20022 message flow

Support / Ease of Implementation: • Test cases and scripts available from DTCC to ease testing

• Robust User Guide aids clients in creating business and system requirements

• Messages are not large or complex – minimal data elements

• Can be deployed by EDS Service (Tax Relief, FCP, DRIPS, Optional Dividend etc.)

• Tested and true – fully live in production over both SMART and SWIFT networks

• Indicator on CANO announcement signifies electable events

ISO 20022 Messaging – Elective Dividend Service (EDS)

14 DTCC Controlled: Non-Confidential

All clients must make coding changes to ensure that their systems can support the new SR2016 version of ISO 20022 messages. • Impacts all messages types – Announcements, Entitlements & Allocations, Instructions • Client’s UAT period will take place from September to early November

• Clients live with EDS ISO 20022 Messaging must test with DTCC at some point between September - November

• Business Impact Analysis document – available now • Outlines all SR 2016 changes • Clients urged to review and submit questions to DTCC prior to April 1st

• Details of these requirements were provided for clarification on DTCC’s ISO 20022 Working Group call ▪ Clients should attend this call if they are looking for these details

• Schemas, Message Usage Guidelines and Data Dictionaries available at MyStandards • Will be posted to www.dtcc.com/catransformation in early March

Deployment Date – November 20, 2016

ISO 20022 - SR 2016


http://www.dtcc.com/catransformation

ISO 20022 ANNUAL STANDARD RELEASE TIMELINE Note: This is meant as a general guide. Dates outlined below may vary slightly, depending upon the volume and complexity of changes in a particular year.

Month DTCC's Internal Milestone DTCC's Client Deliverable Resources Available to Clients

Client Action Step

December DTCC's prepares for the following year's release by gathering requirements

January DTCC/SWIFT create and modify changes for November Standards Release using My Standards editor tools for both CORE and extensions

February SWIFT delivers documentation to DTCC for review

March - DTCC reviews SWIFT documentation - SWIFT finalizes documentation - DTCC provides documentation to clients

April DTCC's technology team begins internal analysis and mapping of changes

- DTCC makes documentation available to clients on My Standards, DTCC Learning site and www.dtcc.com - DTCC communicates the availability of documentation to clients via e-mail blast and Important Notice

- Message Usage Guideline (MUG) - Schemas - Business Impact Analysis document and Business Impact Review Meeting - Deltas (My Standards only)

- Clients review changes with appropriate internal personnel prior to meeting - DTCC supports any client inquiries about changes - Last date for feedback to DTCC

May Internal build begins

June Internal build / testing Clients must inform DTCC if they would like a Test (PSE) connection to receive SR test messages systemically, if they do not already have one

July Internal build / testing - Clients that have a PSE connection must advise DTCC whether they would like their test messages to be sent via e-mail or systemically

August Internal testing - Sample messages available for select changes and message types - DTCC communicates test t imeline / schedule for September / October

Sample messages via e-mail for select changes and message types

Clients review sample messages and reconcile to the new SR formats

September Internal testing External client User Acceptance Testing (UAT) begins out of DTCC's PSE test environment in mid-September

- Test messages via e-mail - Test connection via DTCC's PSE environment, if requested by client

- Clients review messages that are sent systemically and / or via e-mail (based on the client's choice) - Clients provide feedback to DTCC

October - External client User Acceptance Testing (UAT) out of DTCC's PSE test environment ends in late October - Code is frozen in late October in preparation for SR production deployment in November

- Test messages via e-mail - Test connection via DTCC's PSE environment, if requested by client

- Last day of client feedback occurs one week prior to the last day of client testing - Last day of client testing in late October, at a date TBD

November Deployment of SR code into production takes place in mid November, on a date TBD by SWIFT

Production messages are available after the Sunday deployment, on a date TBD by SWIFT

Note: Learning materials and ISO 20022 User Guides are available at the DTCC CA Transformation Learning Center.

Glossary of Documents

Message Usage Guideline (MUG) - DTCC defines MUG documents for Core and Extension ISO 20022 messages. Each MUG details the restricted set of data elements which DTCC will be publishing. Each MUG is defined within a collection of Usage Guidelines (e.g., Instructions, Lifecycle Processing and Announcements). MUG contains data definitions, DTCC usage rules and linkages to legacy CCF files (where applicable). Audience - Business analysts and technical staff.

Schema - XML document defining the message structure of the ISO 20022 message. DTCC will have both Core and Extension Schemas. Audience - Technical staff.

Business Impact Analysis document - DTCC document detailing the in-scope ISO 20022 message changes being implemented within the Annual SWIFT Release. Each change is uniquely numbered stating the affected message type (schema number), the SWIFT Change Request ID and the change justification. DTCC maintenance changes (non SWIFT release oriented) will also be outlined in this document. Audience - Business/Technical management, to be used for planning purposes.

Delta Documentation (My Standards only) - Highlights the field-level changes from one year to the next. Audience - Technical staff.

Sample Messages - DTCC-generated samples that all users can use to assess the changes in an actual XML instance. Audience - Technical staff/ Business analysts.

CA Transformation Key Milestones – ISO 20022 Migration

18

CCF Files: Distributions Announcement files

are no longer available as of

December 31, 2016

CCF Files: Redemptions Announcements files

are no longer available as of July 1, 2017

ISO 20022: Reorganizations Entitlements & Allocations

ISO 20022 messages for certain Reorganization event types available for parallel testing – Q2 2017

CCF Files: Distributions Entitlements & Allocations files

are no longer available as of December 31, 2018

CCF Files: Redemptions Entitlements & Allocations files


CCF Files: Reorganizations • Announcements files are no

longer available as of July 1, 2018 • Entitlements & Allocations files


2016 2017 2018


Questions?

Questions


Transforming the Securities Landscape

Economy & Finance