Corporate Action Processing Innovations Corporate Action Processing Innovations

Corporate Action Processing Innovations

Corporate Action Processing Innovations • Standardize Corporate Actions Liability Notices • Improving Complex Security Income • Agency Lending Disclosure 2 • Global Corporate Actions Validation Service

Corporate Action Processing Innovations 3 Standardize Corporate Actions Liability Notices

SMART/Track: Corporate Actions Liability What is it? SMART/Track for Corporate Actions Liability Notification Service is a web-based application for the communication and tracking of voluntary corporate action liability notices 4 Allows participants to create, send, process and track liability notices and links the various parties involved with corporate action processing

Corporate Actions Liability Notification Service DTCC Corporate Action Initiatives 1. Announc ement Collecti on • Collect corporat e action announc ement informati on • Consolid ate data and prepare for comparis on 2. Corporate Actions Liability Notification Service 5 6. Reconcili ation • Allocate entitleme nts to investors • Notify investors of final transacti ons 3. 4. 5. Announc ement Validati on • Normaliz e, reconcile Identificat ion and Notificat enrich ion data • Validate • Determin Election e for investors accuracy Process ing (for impacted and by event complete Volunta ries) and ness • calculate • Produce Reconcil entitleme scrubbed e nts announc elections • Commun • Notify ement icate investors record elections of Event from Settlem announc investors ement thru informati • Deliver various securitie on financial s, if intermed necessar iaries y • Submit • Receive instructio securitie ns s and/or before money deadline

SMART/Track: Corporate Actions Bank B Liability Broker B Bank A Broker C Broker A Bank C SMART/Tracking Database 6 RIPS

SMART/Track: Corporate Actions Liability Functions: • Create and transmit liability for a voluntary corporate action to a single or multiple counterparties • Accept/reject a liability notice • Reduce liability quantity • Cancel a notice 7 • Track status of notices sent/received

SMART/Track: Corporate Actions Liability Features: • Web-based • Automated tracking including numbers of notices sent/received and status of each • Link to DTC’s RIPs system for corporate offer information • Automated Alerts for date changes in RIPs that affect a liability notice • E-mail notices at start of day and intra-day for notices requiring action that day 8 • Automatic archiving and retrieval of archived notices with 7 -year data retention

SMART/Track: Corporate Actions Liability Benefits 9 · Eliminates the manual paper-based fax and phone notification process · Standardizes market practice for communicating liability notifications · Provides a single point of entry for all participants · Manages message delivery risk through tracking

SMART/Track: Corporate Actions Liability Pilot Program • Pilot launched in November 2004 with 19 participants • 64 pilot participants representing 123 users 10 • 822 notices transmitted

SMART/Track: Corporate Action Liability What’s next? • Expect that use of the automated Service will be the standard way of sending liability notices 11 • Working with the NYSE on changing NYSE Rule 180 to mandate use of SMART/Track for sending voluntary corporate actions liability notices

Corporate Action Processing Innovations 12 Improving Complex Security Income

Improving Complex Security Income • Elimination of contra-CUSIPs for Variable Rate Demand Obligation (VRDO) partial calls • Implement a unified end-to-end platform for the asset servicing life cycle 13 • Establish best practices and performance metrics for the handling of complex securities

Improving Complex Security Income Elimination of Contra-CUSIPs VRDO partial calls • Effective with the November 1, 2005 redemption date • Called positions will be segregated into the Called Account under the regularly assigned CUSIP number 14 • Lotteries for late call notices or revisions to previously paid out items received after November 1, 2005, will also be processed without contra-CUSIPs

Improving Complex Security Income Implement a unified end-to-end platform from issuance through the entire asset servicing life cycle • Underwriting • Corporate Actions 15 • Masterfiles

Improving Complex Security Income Establish best practices and performance metrics for the handling of complex securities • Post-payable adjustments for complex securities decreased by 6% from Q 1 to Q 2 • Work continues with the major paying agents to identify root causes of errors and implementing process improvements where feasible 16 • DTCC is also planning on broadening its working relationship with other industry associations and participants to collaboratively progress the streamlining of Asset Backed Securities processing

Corporate Action Processing Innovations 17 SMART/Track for Agency Lending Disclosure

SMART/Track: Agency Lending Disclosure What is Agency Lending Disclosure? • Industry initiative to provide greater transparency in securities lending transactions 18 • Agent lenders will be required to disclose principal lender information on open loans to borrowers on a daily basis for credit monitoring and capital requirement purposes in 2006

SMART/Track: Agency Lending Disclosure What is DTCC’s Role? 19 Approached by the Task Force for Agency Lending Disclosure in 2003 to develop a communications facility for the transmission of periodic and daily loan files between agent lenders and borrowers

SMART/Track: Agency Lending Disclosure SMART/Track has two functions: • Communications facility for transmitting data files 20 • Web application for viewing file transmission status and searching/requesting unique identifiers

SMART/Track: Agency Lending Disclosure Transmission of loan files • Agent lender and borrowers can send loan files directly to SMART/Track or through a vendor (Sun. Gard or Equi. Lend) using: o FTP o NDM – CONNECT: Direct, or 21 o FTP over the internet

SMART/Track: Agency Lending Disclosure Agent Borrower Lender Borrower Agent Lender Loanet Equilend 22 SMART/Track For Agency Lending Disclosure

SMART/Track: Agency Lending Disclosure Web Application allows users to: • Search for or create unique identifiers for those principal lenders that do not have U. S. tax identification numbers (required in the data files) 23 • View the transmission status of files sent directly through SMART/Track to a counterparty

SMART/Track: Agency Lending Disclosure To sign up: • Contact your DTCC Account Executive, or • Call DTCC Relationship Services at 24 800 -422 -0582

SMART/Track: Agency Lending Disclosure For more information about the Agency Lending Disclosure initiative, visit the Task Force’s website at: 25 www. agencylending. capco. com

Corporate Action Processing Innovations 26 Global Corporate Action Validation Service

Global Corporate Action Validation Service 27 The Global Corporate Action (GCA) Validation Service provides a centralized source of scrubbed information about corporate actions for nearly 100 event types for instruments traded in Europe, Asia-Pacific and the Americas

Global Corporate Action Validation Service DTCC Corporate Action Initiatives 1. Announc ement Collecti on • Collect corporat e action announc ement informati on • Consolid ate data and prepare for comparis on 2. 3. GCA VS 4. 28 6. Reconcili ation • Allocate entitleme nts to investors • Notify investors of final transacti ons 5. Announc ement Validati on • Normaliz e, reconcile Identificat ion and Notificat enrich ion data • Validate • Determin Election e for investors accuracy Process ing (for impacted and by event complete Volunta ries) and ness • calculate • Produce Reconcil entitleme scrubbed e nts announc elections • Commun • Notify ement icate investors record elections of Event from Settlem announc investors ement thru informati • Deliver various securitie on financial s, if intermed necessar iaries y • Submit • Receive instructio securitie ns s and/or before money deadline

Global Corporate Action Validation Service The GCA Validation Service delivers standardized, comprehensive and timely information to financial institutions of all types and sizes. Broker/Dealers Banks Investment Managers Hedge Funds 29 Any firm that tracks corporate action information and its impact on securities positions

Global Corporate Action Validation Service How does it Work? • The service validates data through an intricate process of mapping, normalizing and consolidating announcement information • Skilled professionals enrich the data through followup research relying on a wide array of sources 30 • Customers submit a “securities of interest” file and have the GCA VS monitor and report on these specific securities throughout the day

Global Corporate Action Validation Service How does it Work? (continued) • Customers receive a common composite record for each announcement • A file of these records is available six times a day and includes event data for each composite record created or updated since the last publication • Real-time, around-the-clock access to information through a secure, Web-based inquiry tool provides the most current version of the composite record 31 • A custodian verification feature compares and validates customer’s corporate action announcement information from other sources (e. g. Custodians, Prime Brokers)

Global Corporate Action Validation Service Benefits • Reduce operational losses • Optimizes front-office trading • Simplifies operations globally • Streamlines data sources 32 • Provides a smooth access to information

Global Corporate Action Validation Service London Service Center • Service Delivery • Help Desk Support Shanghai Service Center • Service Delivery • Help Desk Support Hours of Operation • Monday through Friday • 8 am - 6 pm (local time) New York Service Center • Service Delivery • Help Desk Support • IT Infrastructure • Vendor Management • Client and Service Language Coverage • English • Spanish • Portuguese • German • Italian • French • Chinese • Japanese • Arabic • Turkish • Bengali Management • Governance 33 Hours of Operation • Monday through Friday • 8 am - 6 pm (local time) Help Desk Support Phone Logistics • Domestic: 866 -DTCC-GCA • International: +1 212 -855 -2366 E-mail Support Logistics • gcabusiness. support@dtcc. com • gcatechnical. support@dtcc. com Online Inquiry URL Logistics • https: //gca. dtcc. com GCA Web Page • www. dtcc. com/GCA

34 Global Corporate Action Validation Service

35 Global Corporate Action Validation Service

Global Corporate Action Validation Service Find out how we can help you drive efficiency for corporate actions Contact us at: 36 1 -866 -382 -2422 or gcainfo@dtcc. com