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|SunGard's XSP Promotes DTCC's Adoption of ISO 20022|
|April 24, 2013|
Corporate actions software specialist XSP says it has found a way to help members of Depository Trust & Clearing Corp. adapt to the US market infrastructure's mandatory use in 2015 of ISO-20022 compliant messages for corporate action notifications and instructions.|
The timetable gives financial firms -- broker-dealers and banks -- little time to adapt their datafeed handlers and internal applications to switch from DTCC's proprietary protocols to the XML-based message types. Many mid-sized firms acknowledge that they lack the resources to handle the ISO 20022 messages, once DTCC pulls the plug on its legacy protocols and multiple systems.
XSP's v5 enterprise application and its Prisa cloud-based application do provide data cleansing and normalization for corporate action information, but include the DTCC's datafeed as one of over twenty sources. Although it can link to XSP's v5 and Prisa, the new XSP DTCC Re-engineering utility is focused entirely on DTCC's datafeed and workflow related to corporate action events, says Dan Retzer, director of technology for SunGard's XSP. SunGard, which recently acquired XSP, does not disclose the number of its customers.
The DTCC's shift to ISO 20022 message types, part of the market infrastructure's broader multi-year reengineering initiative, is critical to the US market's acceptance of ISO 20022-compliant message formats to reduce the errors and financial liability buy and sell-side firms face when using legacy ISO 15022 messages or paper-based communications. Some financial firms are using both ISO 15022 and ISO 20022 messages to accommodate counterparties reliant on one or the other -- a process of coexistence which can become costly to maintain.
The new ISO 20022-compliant formats are promoted by popular network provider SWIFT, which transports the messages through its network. Developed with SWIFT, the DTCC's ISO 20022 messages are variations of the SWIFT-promoted global ISO 20022 messages, adapted solely for the US market, where different data fields are required.
So far, as DTCC acknowledges, only a handful of financial firms are accepting notifications on corporate action events -- dividends, income and reorganizations -- in the new ISO 20022 formats through a pilot initiative DTCC started in 2011, which will also incorporate instructions from member firms. The DTCC has cited BNY Mellon, Brown Brothers Harriman, JP Morgan Chase and National Financial Services as participating in the pilot.
"Many of DTCC's participants that will be affected by its 2015 deadline do not require a full end-to-end solution for corporate actions automation," explains Retzer. "Rather, they require the ability to view their corporate action notifications from DTCC in a lightweight low-cost environment and to input elections on those corporate actions, so they can be submitted to the DTCC."
The new intermediary cloud-based XSP DTCC Re-engineering utility, says Retzer, would allow financial firms to take in the datafeed in the ISO 20022 format, reformat it to XSP's schemas they already use and send instructions to DTCC in the IS0 20022 format -- all in real-time. The utility will also automate the flow of information from internal accounting and back-office systems through XSP to the party responsible for submitting an instruction on a corporate action, before shipping it off to DTCC.
"Effectively, this integrated solution knits together many of the major systems at play in the corporate actions lifecycle with the DTCC," says Retzer, noting that other established message transformation providers such as Volante and C24 do not cater to such a specialized workflow. "These systems would otherwise require DTCC participants identify, test, and implement various and disparate point solutions before the 2015 cutoff."
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