The Depository Trust & Clearing Corporation (DTCC) announced a plan for a centralized and automated service that would change the way new securities issues are processed after they’re prepared for pricing.
“Our new service will eliminate re-keying of data and help create an ‘electronic pipeline’ that can take and make delivery all across the industry,” said Peter Inguanta, DTCC director for product management. “We’ll be able to get the data much sooner than we do now, and we’ll be able to speed up the task of making an issue eligible at the depository,” he explained.
The new service would automate the capture and dissemination of information required for underwriting new issues, but will also help underwriters and other market participants, such as inter-dealer brokers and securities traders, meet new regulatory reporting requirements to ensure transparency in the trading of newly issued municipal bonds.
First proposed only for municipal bonds, the new service will eventually be expanded into the securities industry to cover all new issues including corporate debt, equities and other securities.
“Our goal is to make the underwriting process far more efficient and to reduce information-gathering costs across the industry,” Balbo said.
According to DTCC, critical information on new municipal bond issues is often not available in time to meet a 15-minute deadline for reporting trades because “current notification practices are decentralized and involve a variety of formats, manual processes, numerous intermediaries and redundant steps.”
The service, which will be available not only to DTCC’ depository participants but also to other industry parties such as correspondent underwriters, is expected to undergo testing and, subject to regulatory approval, be implemented next year.