SunGard Securities Finance has been quick to respond to the Securities Industry Association’s recommendation for new standards in automating the recall process in the securities lending industry. The SIA has called for software vendors to establish electronic recall management services, known as ARMs (Automated Recalls Management Systems), with the Depository Trust Clearing Co. (DTCC) serving as the intermediary messaging hub. DTCC will provide this service to DTCC participants initially, allowing non-DTCC participants access to the service at a later date.
SSF has been working closely with the SIA’s Securities Lending Subcommittee which issued a revised white paper on 1/17/03, which describes the minimum requirements for an ARMS service. After a brief comment period, the white paper will be finalized barring any significant issues raised by the industry. The requirements for the recall process includes the issuance and acceptance of electronic recall notices, monitoring and tracking of outstanding recalls, the ability to update recalls for buy in activities or corporate actions, and provide a complete audit trail of all activities including the return of securities or buy in executions. In addition, the ARMs service is required to uniquely identify each recall with a specific lenders reference number; to insure both parties reference the specific recall on all subsequent activities and provide timestamps on the issuance of all recalls. The white paper also recommends that this service should be available to non-U.S. market participants, and should also accommodate, in the future, recalls of non-U.S. securities.
SSF is adopting a phased approach in order to fulfil these requirements in a timely manner, offering maximum STP benefit with minimal disruption to day-to-day activities.
The first phase, incorporating amendments to bring the existing Loanet Full Service Recalls Processing in line with the SIA recommendations, is already available.
The second phase, targeted for the 2nd quarter 2003, will include expansion of the service to Loanet Select Service participants, and will include links to clients utilizing SSF’s other market leading products: Global One, WorldLend and OmniLend. It will also incorporate the SIA Securities Lending Committee recommendation that the ARMs be interoperable, so that industry participants can communicate with one another regardless of which ARM is utilized. It is estimated that DTCC’s connecting messaging hub will be launched in May 2003.