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DTCC Launches Pilot to Automate Corporate Actions Liability Notices

The Depository Trust & Clearing Corporation (DTCC) launched a pilot program with 20 customer firms, including broker-dealers and custodian banks, that automates the creation, delivery and tracking of corporate actions liability notices, DTCC announced on Tuesday.

The new Web-based service, offered through the Depository Trust Company (DTC), a subsidiary of DTCC, is called SMART/Track for Corporate Actions Liability Notification Service. The pilot will run through Jan. 31, 2005 and go into full production on Feb.1.

According to an industry survey, DTCC says more than 1,500 voluntary corporate actions liability notices are sent each month.

Corporate actions liability notices are sent when a firm owes securities to another firm or counterparty during a voluntary corporate action such as a tender offer. The notification alerts the delivering broker-dealer or bank of its failure to deliver the securities and notifies it of its liability in a voluntary corporate action.

DTCC officials quoted in the release say this represents a straight-through processing initiative to streamline and standardize the communication process between senders and receivers of liability notifications. Today, this is a paper-intensive, manual process without any standardization, says DTCC.

Among the firms participating in the pilot are Fimat USA, Fortis Securities, Morgan Stanley Dena Witter, National Financial Services LLC, RBC Dain Rauscher, Stephens, Inc., and Wells Fargo.

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