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IPO Tracking Information

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1. REAS Reason Code 540 Int Acct Agent Bank s Internal Account Bkr Acct Executing Broker s Internal Account optional Market Code Market Code 52 Agent Internal Account Prime Broker s Internal Account Broker Internal Account Executing Broker s Internal Account optional Recv Pt Prime Broker s Part REAS Reason Code 540 Int Acct Prime Broker s Internal Account Bkr Acct Executing Broker s Internal Account optional Activity Code 26 Reason Code 540 Activity Code 49 Reason Code 549 Activity Code 49 Reason Code 540 Oversubscription Directed Concessions To Agent Banks via ID Agent Banks via DO NDOM Market Code Market Code 53 Agent Internal Account Agent Bank s Internal Account Broker Internal Account Executing Broker s Internal Account optional Recv Pt Agent Bank s Part REAS Reason Code 550 Int Acct Agent Bank s Activity Code 26 Reason Code 559 Activity Code 26 Reason Code 550 TASK FIELD INFORMATION DTC REQUI RED OUTPUT Internal Account Bkr Acct Executing Broker s Internal Account optional Market Code Market Code 53 Prime Brokers via ID Activity Code 49 Agent I nternal Account Reason Prime Broker s Internal Code Account 559 Broker Internal Account Executing Broker s Internal Account optional Prime Br
2. TASK FIELD INFORMATION DTC REQUI RED OUTPUT Settlement Amount Settlement amount optional Prime Broker Select IPO Control Account Release Method and Notify DTC The Prime Broker Indicator allows you to choose between two methods of releasing shares from their IPO Control Accounts e Activate the indicator to elect to have the IPO Tracking system automatically release shares from the IPO Control Account to settle Secondary Market sell transactions when customer level information matches e Do not activate the indicator if you do not want the IPO Tracking system to automatically release shares from the IPO Control Account to satisfy Secondary Market sell transactions In this case you must manually release the shares by providing matching Internal Account number information Refer to Release Shares from IPO Control Account for Secondary Market Sales and Deliver Shares for Secondary Market Sales Secondary Market shares are not tracked by the IPO Tracking system for Prime Brokers at this time Where necessary complete an IPO Release Indicator Form indicating your preference and send it to your Participant representative The representative will forward it to DTC s Compliance Department Your account will be updated for the start of business the following day Intra day updates are not possible Receive Initial Distribution Shares from Lead Manager Syndicate Members On closing day the Lead Manager and Syndicate Memb
3. Note Syndicate Member customer level information is not provided in the Lead Manager s reports Refer to Reports for additional information and sample reports Co Manager Tasks Required Field Information amp DTC Output TASK FIELD INFORMATION DTC RED Syndicate Takedown To Takedown To Syndicate Members via DO NDOM Recv Pt penn a Member Part Code 47 REAS Reason Code Reason 570 Code 570 Corr Acct Syndicate Member Part Clearing Bank of Correspondent Recv Pt Clearing Activity Syndicate Members via DO NDOM Bank s Part Code 48 REAS Reason Code 570 Reason Code 570 Corr Acct Correspondent Syndicate Member s FINS Clearing Broker of Correspondent Recv Pt Clearing Activity Syndicate Members via DO NDOM Broker s Part Code 47 REAS Reason Code 570 Reason Code 570 Corr Acct Correspondent Syndicate Member s FINS Initial Distribution To Agent Banks via ID Market Code Market Activity Code 11 Code 48 Agent Internal Reason Account Agent Bank s Code 49 Internal Account Broker I nternal Account Executing Broker s Internal Account optional Agent Banks via DO NDOM Recv Pt Agent Bank s Activity Part Code 48 REAS Reason Code 50 Reason Code 50 Int Acct Agent Bank s Internal Account Bkr Acct Executing Broker s Internal Account optional Prime Brokers via ID Prime Brokers via DO NDOM Market Code Market Code 11 Ag
4. Stock Loan Reclaim Wrong Money Receiver reclaims a Stock Loan delivery the money charged is incorrect oO Stock Loan Reclaim Account Information Missing Receiver reclaims a Stock Loan delivery additional account information is needed to identify the original delivery N Stock Loan Reclaim Due Bill Missing Receiver reclaims a Stock Loan delivery the due bill is missing Stock Loan Return N 0 Stock Loan Return Reclaim DK Receiver reclaims a Stock Loan Return delivery the Receiver doesn t know the trade N Stock Loan Return Reclaim Wrong Quantity Receiver reclaims a Stock Loan Return delivery the wrong quantity of shares was delivered N Ww Stock Loan Return Reclaim Wrong Security Receiver reclaims a Stock Loan Return delivery the wrong security was delivered N A RRR Stock Loan Return Reclaim Wrong Money Receiver reclaims a Stock Loan Return delivery the money charged is incorrect 26 Stock Loan Return Reclaim Account Information Missing Receiver reclaims a Stock Loan Return delivery additional account information is needed to identify the original delivery 27 Stock Loan Return Reclaim Due Bill Missing Receiver reclaims a Stock Loan Return delivery the due bill is missing Delivery versus Payment 3 e Transfer of Customer Account Initial Distribution via ID Initial Distribution Lead Manager and Syndicate Members Deliver to Agent Banks or Prime Broker
5. Result The transaction is canceled 7 Refer to Appendix D for additional information Secondary Market Deliveries Secondary Market deliveries are performed using the same procedures currently used for deliveries of non tracked issues Note The ID Agent number is required for Secondary Market DO deliveries to Prime Brokers and Agent Banks For deliveries to Banks the ID Agent number will default to the receiving Bank s Participant number Resolve Internal Account Number Discrepancies in ID Deliveries on Sell Transactions When the Internal Account number on a sale transaction does not match the Internal Account number in the IPO Tracking database the system generates a warning message Error 91 Error 91 flags an unmatched Internal Account number three times e ID Confirmation e ID Affirmation e Authorization and Exception ANE Error 91 also appears on machine readable output If the Internal Account number is still unmatched when validation occurs at Authorization and Exception ANE time ANE will not reject the transaction because the system assumes the delivery will use Secondary Market shares However an automated release will not be generated and the delivery will pend Unmatched Internal Account numbers can be corrected in the IPO database prior to the settlement date cutoffs of 10 00 a m EST for Global processing and 2 30 p m for Trade for Trade processing This allows the ID trade to be authorized and settle that d
6. Sale of Secondary Internal Account number Activity Code Market shares via ID or 26 DO NDOM Correspondent Syndicate Member s ID Broker Dealer number BIA number ID Agent ID number Withdrawals by Corresp Account Transfer via NWT1 Correspondent Syndicate RWT1 Member s ID Broker Dealer Field Information Required DTC Output number Int Cust Internal Account number Agt ID ID Agent number optional Stock Loan via REAS Reason Code 10 Activity Code DO NDOM 26 Stock Loan Return via REAS Reason Code 20 Activity Code DO NDOM 26 Account Transfer to Corresp Account Activity Code Broker via IPOU option Correspondent Syndicate IPO shares 49 4 Free shares 26 Member s ID Broker Dealer number Reason Code 40 95 or 98 From Internal Customer Current Internal Account number To Participant Receiving Broker s Part number To Internal Customer New Internal Account number IPO Share Quantity Number of whole IPO shares being transferred Free Share Quantity Number of whole Free shares being transferred Settlement Amount Settlement amount optional Reason Code Appropriate Reason Code for delivery Account Transfer to Corresp Account Activity Code Bank via IPOU option Correspondent Syndicate 26 4 Member s ID Broker Dealer number Reason Code 40 95 or 98 From Internal Customer Current Internal Account number To Participant Receiving Bank s Part nu
7. A summary of Custodian Bank customer level secondary share position obtained from free Market trades For additional information on the IPO Tracking System Inquiry function refer to the Overview and Appendix E Custodian Bank Tasks Required Field Information amp DTC Output Task Field Information DTC Output Required Secondary Market Activity Sale of Secondary Market Int Acct Activity Code shares via DO NDOM Agent Internal Account 26 AIA number Trade Date Trade Date Net Amt Price Withdrawals by Transfer via NWT1 RWT1 Stock Loan via DO NDOM Stock Loan Return via DO NDOM Account Transfer to Broker via IPOU Option 4 Account Transfer to Bank via IPOU Option 4 Int Cust AIA number REAS Activity Code Reason Code 10 26 REAS Activity Code Reason Code 20 26 From Internal Customer Activity Code Current AIA number IPO shares 49 To Participant Free shares 26 Reason Code 40 95 or 98 Receiving Broker s Part number To Internal Customer New AIA number ID Agent ID Agent number optional IPO Share Quantity Number of whole IPO shares being transferred Free Share Quantity Number of whole Free shares being transferred Settlement Amount Settlement amount optional Reason Code Appropriate Reason Code for delivery From Internal Customer Activity Code 26 Current AIA number Reason Code 40 95 or 98 To Participant Receiving
8. Broker Internal Account Executing Broker s Internal Account optional Prime Brokers via DO Recv Pt Prime Broker s Part NDOM Activity Code 47 REAS Reason Code 50 Reason Code 50 Int Acct Prime Broker s Internal Account Bkr Acct Executing Broker s Internal Account optional Customer Level Updates Add Customer Level Detail Corresp Account the via IPOU Option 2 Correspondent Syndicate Member s ID Broker Dealer Internal Customer Internal Account Share Quantity Whole number quantity Sign or to increase or decrease shares Update Customer Level Corresp Account the Detail via IPOU Option 5 Correspondent Syndicate Member s ID Broker Dealer From Internal Customer Old Internal Account To Internal Customer New Internal Account optional Reallocated Share Quantity New whole number quantity optional Secondary Market Activity Release of IPO shares to Corresp Account the Activity Free Account via POU Correspondent Syndicate Code 46 Option 3 Member s ID Broker Dealer Internal Customer Internal Account Trade Date Trade date Contract Price Contract price Sale of Free shares Same as for non tracked issues Activity Code 26 Cancel Pending Releases CUSIP The issue s CUSI P via IPOU Option 7 Date Date range from and to in YYMMDD format Withdrawals by Transfer
9. Eastern Standard Time EST trade date through the settlement of the trade Note Releases from the IPO Control Account cannot be reversed and will be recorded as potential flips regardless of whether or not delivery is made 1 On the IPO Tracking System Main Menu Screen select Option 3 Release IPO Shares To The Free Account 2 Enter information in the following required fields of the IPO Release IPO Shares To The Free Account Screen e Internal Customer enter the AIA number of the customer if already identified in the IPO database 1 The Internal Customer field AIA number is required for all customer transactions if customer level detail has been added for any of your customers 2 If an incorrect AIA number is entered the shares will not be released and the subsequent Deliver Order may pend e Trade Date enter a valid business date in MMDDYY format Note DTC edits to ensure that the trade date entered is no earlier than four days prior to the issue s closing in DTC and no later than the current date Dates entered on a release instruction that fall outside these parameters result in DTC rejecting the release instruction Contract Price enter a price greater than zero in 9999999 99 format Share Quantity enter the number of whole shares up to 13 positions 3 Refer to Appendix D for additional field and processing information If you and your customer have position in the IPO database an immediate release is processe
10. If this work is received in any electronic medium authorized users of this work are permitted the limited right to make reproductions and transmissions necessary for downloading and storage of this work on the users computers Such users are also permitted to print one or more paper copies from the electronic version for their own use Other than to this limited extent no part of this work including any paper copies thereof or print versions thereof may be altered reproduced or distributed including by transmission in any form or by any means or stored in any information storage and retrieval system without DTC s prior written permission REDISTRIBUTION BY PARTICIPANTS OF INFORMATION PROVIDED BY DTC IS STRICTLY PROHIBITED Participants may use the Information only for its internal purposes and in the ordinary course of its business provided however that the Information may not be distributed transmitted or otherwise made available by Participants with or without charge to any other Persons including clients of a Participant who to a Participant s knowledge use the Information as the basis for a data product or service or who to a Participant s knowledge provide Information directly or indirectly to an entity that does so The contents of the Service Guides are updated in different formats on a periodic basis Participants and other authorized users of the Service Guides will find the most current version of the Service Guides
11. e Recv Pt enter the receiving Agent Bank or Prime Broker s Participant number Reas enter reason code 50 Int Acct enter the Agent Bank or Prime Broker s Internal Account AIA number for the customer e ID Agent enter the ID Agent number required on all deliveries from Clearing Banks e Bkr Acct enter the Executing Broker s Internal Account BIA number for the customer The system captures the AIA number the BIA number and the associated Syndicate Member and populates the IPO database 2 Refer to DO or NDOM for additional DO field and processing information Update Customer Level Information via IPOU Customer level detail in the IPO database can be added and or updated via the PTS function POU The following sections describe some of the activities a Clearing Bank can perform via IPOU on behalf of its Correspondent Syndicate Members Note If customer level detail has been added for any of a Correspondent Syndicate Member s customers it must be added for all its customers or the Clearing Bank will not be able to perform some transactions such as withdrawals by transfer WTs customer account transfers for those customers Refer to Appendix D for additional information regarding POU Allocate Shares to Retail Customers Add Customer Level Detail After delivering Initial Distribution shares to the Agent Banks Prime Brokers of its Correspondent Syndicate Members Institutional customers Clearing Banks can allocate the
12. Agent Bank or Prime Broker s Internal Account number for the customer e Broker Internal Account enter the Executing Broker s Internal BIA Account number for the customer Note The Internal Account numbers must be entered correctly in order to ensure accurate processing of the transaction If either is missing or entered incorrectly an error code of 91 will appear on the Confirmation and Affirmation tickets Refer to Resolve Internal Account Number Discrepancies for information on how to correct the Agent Internal Account number 2 Refer to IDTI for additional ID field and processing information Result Shares move from the Lead Manager s Free Account to the Agent Bank s Free Account and are marked as IPO shares in the database or to the Prime Broker s IPO Control Account Distribute Oversubscribed Shares to Agent Banks and Prime Brokers via DO or NDOM 1 Enter the information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Agent Bank or Prime Broker s Participant number REAS enter Reason Code 540 Int Acct enter the Agent Bank or Prime Broker s Internal Account number for the customer e Bkr Acct enter the Executing Broker s Internal Account BIA number for the customer Result The system captures the AIA number along with the BIA number and the associated Syndicate Member and populates the IPO database with this information Note The Internal Account numbers must be entere
13. BIA number and associated Syndicate Member are extracted from ID trades upon authorization On closing date the IPO database is populated 2 Refer to IDTI for additional ID field and processing information Distribute Unaffirmed ID Trade Shares to Agent Banks and Prime Brokers via DO or NDOM When a trade is unaffirmed excepted or rejected from the ID system you can settle that trade via the PTS functions DO Option 4 or NDOM Option 6 1 Enter the information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Agent Bank or Prime Broker s Participant number REAS enter Reason Code 50 Int Acct enter the Agent Bank or Prime Broker s Internal Account number for the customer Note The Internal Account numbers must be entered correctly to ensure accurate processing of the transaction DTC rejects Initial Distribution deliveries in which either number is missing e Bkr Acct enter the Executing Broker s Internal Account BIA number for the customer Result The system captures the Agent Bank Prime Broker Internal Account number along with the BIA number and the associated Syndicate Member and populates the IPO database 2 Refer to DO or NDOM for additional Deliver Order field and processing information Distribute Shares for Broker Custody Trades For trades where the Executing Broker and Custodian are the same entity Broker Custody you deliver shares to its own account via D
14. Format Chapters Each chapter addresses the tasks that a user in a particular role may perform Lead Manager Syndicate Member Clearing Broker etc The chapters are comprehensive providing the user with step by step instructions on how to perform all PO related tasks Users playing multiple roles in one or many IPO offerings simultaneously should refer to multiple chapters Each chapter includes the following e References to all related PTS documentation PTS instructions that appear within this text indicate PO specific requirements only e References to CCF CCFII and MDH appear in the sidebars on the left margin Contact the Participant Interface Planning Department for field specifications and other requirements e Instructions on how to perform all tasks within that role A separate chapter Reports describes the reports that the Lead Manager Co Manager Co Reporter Syndicate Members and Clearing Agents receive The reports are produced daily and are cumulative Appendices Codes Identifies Activity Codes DO Reason Codes and ID Market Codes used in IPO Tracking Glossary Defines DTC s vocabulary particular to IPO Tracking Product Topics Clearing Bank Procedures Receive Shares from the Lead Manager on Behalf of Correspondent Syndicate Members Prior to the closing date the Lead Manager sets up deliveries of an IPO tracked issue to its Syndicate Members using the appropriate deliver order DO reason code
15. However DTC continues to display the customer s original BIA number For Institutional customers that transferred the report indicates the receiving party s Participant number The original BIA number is still displayed Once an Institutional customer transfers the customer s new Custodian Bank Prime Broker Internal Account number is proprietary information Note If an account transfer is performed using the PTS function DO or NDOM Reason Code 40 it must be released manually from the IPO Account to the Free Account and those releases will mark the shares as potential flips in DTC s tracking reports e Customer Type indicates whether the customer is Institutional or Retail Institutional Customers Large investors such as insurance companies retirement systems etc whose trades are executed by an Executing Broker via the ID system and whose positions are held in a Custodian Bank s Free Account or in a Prime Broker s IPO Control Account Retail Customers Individual investors who purchase IPO shares through the Lead Manager or a Syndicate Member and whose positions are held in a Broker Dealer s IPO Control Account Note In order to receive a complete description of potential flipping activity Lead Managers and Syndicate Members must populate the IPO database with customer level detail for their Retail clients If the IPO database is not populated the Syndicate Member s report will display the message Customer Level Information is
16. IPO Control Account to its Free Account via POU 47 40 Broker transfers a customer s IPO shares to another Broker 47 49 Syndicate Member delivers Initial Distribution shares to a Prime Broker via ID Syndicate Member delivers Initial Distribution shares to a Prime Broker via aS a e m Broker Stock Loan of IPO shares e Stock Loan of IPO shares Broker transfers a customer s IPO shares to a Bank Syndicate Member delivers Initial Distribution shares to an Agent Bank via ID Syndicate Member delivers Initial Distribution shares to an EAT T Bank via DO NDOM Stock Loan Return of IPO shares to a Broker Loan Return of IPO shares to a Broker 49 Beo Bank transfers IPO shares to a Broker
17. IPO shares are noted as separate line items in Lead Underwriter and Syndicate Member Flipping Activity Reports and are categorized according to Participant type of lender and borrower The quantity of loaned IPO shares is prorated across all Syndicate Members that deliver initial distribution shares to the Bank e Enter Reason Code 10 in the REAS field of the Initial Public Offering Deliver Orders screen e Refer to DO or NDOM for additional Deliver Order field and processing information Stock Loan Receipts All shares of stock loans delivered to a Bank are credited to the receiving Bank s general free account and are considered free Secondary Market shares DTC updates the Bank s IPO database by using the receiving Bank s own Participant number as the default AIA number for borrowed shares The receiving Bank can adjust the IPO database to attach a valid customer number to the borrowed shares or can maintain the shares with the default AIA number populated by DTC Regardless as with all other deliveries when delivering borrowed shares the AlA number entered by the Bank in its delivery instruction must match the IPO database in order for DTC to process the delivery Stock Loan Returns Clearing Banks can process Stock Loan Returns on behalf of their Correspondent Syndicate Members by using the appropriate DO NDOM Reason Codes All stock loans are returned from the borrower s general free account e Enter Reason Code 20 in the REAS field of
18. Internal Account Reason Code number Broker Internal Account Executing Broker s Internal Account number Agent Banks via Recv Pt Agent Bank s Part Activity Code DO NDOM number 26 REAS Reason Code 50 Reason Code Int Acct Agent Bank s Internal Account number Bkr Acct Executing Broker s Internal Account number Prime Brokers via ID Market Code Market Code 11 Activity Code 49 Agent Internal Account Prime Broker s Internal Account Reason Code number Broker Internal Account Executing Broker s Internal Account number Field Information Required DTC Output Prime Brokers via Recv Pt Prime Broker s Part Activity Code DO NDOM 49 REAS Reason Code 50 Reason Code 50 Int Acct Prime Broker s Internal Account number Bkr Acct Executing Broker s Internal Account number Customer Level Updates Add Customer Level Corresp Account Detail via IPOU option Correspondent Syndicate 2 Member s ID Broker Dealer number Internal Customer Internal Account number Share Quantity Whole number quantity Sign or to increase or decrease shares Update Customer Level Corresp Account Detail via IPOU option Correspondent Syndicate 5 Member s ID Broker Dealer From Internal Customer Old Internal Account number To Internal Customer New Internal Account number Share Quantity New whole number quantity Secondary Market Activity
19. Level Detail 2 Enter Information in the following required fields Internal Customer enter the Internal Account number of the customer Share Quantity enter the number of whole shares up to 13 positions you wish to increase decrease the account by e Sign enter to indicate the shares should be increased or to indicate the shares should be decreased Result The system adds subtracts the share quantities for the account and updates them accordingly If the share quantity for an Account number is reduced to zero the system deletes that number from the IPO database 3 Refer to Appendix D for additional information Transfer Customer s Position Between Participants You can transfer your customers positions to another Participant without that transfer being reported as a potential flip For reporting purposes the IPO database moves the original Syndicate Member s Participant number and BIA number with each transfer of a customer s position Memo Segregation and Sub Account Segregated positions do not need to be released prior to attempting any customer account transfers IPO account transfer transactions can bypass Memo Segregation Customer level detail is required for account transfers Transfer Customer s Position via IPOU e For those transfers that originate in NSCC s ACATS system Participants will be notified that an issue is tracked and will receive a trade for trade Balance Order ticket e The transfer of shares
20. Pledged IPO Control and Free Account shares are moved to the Pledge 14 account IPO shares are segregated in the 114 Account Pledge Releases If released during the tracking period Pledge shares are delivered back to their original accounts In cases where both IPO and Secondary Market shares were pledged released Free shares will be returned to the Free Account first up to the quantity of Free shares pledged The balance of the shares is returned to the IPO Control Account If released after tracking has ended all Pledge shares are delivered to the Free Account regardless of the account of origin Reclaims Reclaim Deliveries DTC will automatically process a matched reclamation based on the DO transaction number and other transaction information provided until one day after settlement Clearing Brokers can enter Matched Reclaims via the PTS functions ART and DO NDOM and via CCF CCFIl and MDH When you reclaim a delivery the reclaimed DO is matched to the original delivery and the information in the IPO database is reversed Note Partial reclaims are not permitted Matched Reclaim Deliveries via ART Matched Reclaims can be made on settlement date and the day after These reclaims can not be reclaimed by the original deliverer and are not subject to risk management controls 1 Enter R to the left of the item to be reclaimed on the ATP Activity Summary Screen Matched Reclaim Deliveries via DO or NDOM Matched Reclaim
21. Resolve Internal Account Number Discrepancies in ID Sell Transactions When the AIA number on the sale transaction does not match an AIA number in the IPO Tracking database the system generates a warning message Error 91 Error 91 flags an unmatched Internal Account number three times e ID Confirmation e ID Affirmation e Authorization and Exception ANE Error 91 also appears on machine readable output If the Internal Account number is still unmatched when validation occurs at Authorization and Exception ANE time ANE will not reject the transaction because the system assumes the delivery will use Secondary Market shares However an automated release will not be generated and the delivery will pend Unmatched AIA numbers can be corrected in the IPO database prior to the settlement date cutoffs of 10 00 a m EST for Global processing and 2 30 p m for Trade for Trade processing This allows the ID trade to be authorized and settle that day through the automated settlement feature of the ID system Note The ANE inquiry function and T 3 hard copy report will display a code of F in the status field to indicate an Initial Distribution trade that has been rejected from settlement and an I to indicate a Secondary Market trade that has been rejected The F and I codes will be displayed in cases where the Internal Account number on an IPO trade does not match the Internal Account number as stored on the IPO database These transaction
22. Unavailable adjacent to the flipped share quantity e Trade Date the date of the transaction in YYMMDD format as captured from the DO ID transaction or the IPO release e Price the price calculated from the net amount appearing on the DO or ID transaction or the IPO release e Share Type Displays the type of transaction This column lists for each customer e Flipped Total of shares potentially flipped by the Customer e In the case in which a Syndicate Member s customer transfers its accounts to another Participant via IPOU Option 4 Customer Account Transfer the movement is not reported as a potential flip For reporting purposes the IPO database moves the original Syndicate Member s Participant number and customer BIA number with each transfer of a customer s position Note If an account transfer is performed using the PTS function DO or NDOM Reason Code 40 it must be released manually from the IPO Account to the Free Account and those releases will mark the shares as potential flips in DTC s tracking reports In the case of releases the IPO tracking system captures flips for Brokers when shares are released from a Broker s IPO Control Account to prepare for delivery of a Secondary Market sale Since the release not the actual settlement indicates a flip flips on the Report should be considered potential flips Releases can be performed on the individual customer level by including the Internal Account number of the cus
23. and must be for the total IPO and Secondary Market position the customer has in its account e On the IPO Tracking System Main Menu screen select option 4 Customer Account Transfer e Enter information in the following fields of the IPO Customer Account Transfer screen e Corresp Account enter the Correspondent Syndicate Member s ID Broker Dealer number e To Participant enter the receiving Participant number e From Internal Customer enter the existing AIA number for the customer Note If no match is found for the From Internal Customer field AlA number the transfer cannot be processed e To Internal Customer enter the receiving Participant s AIA number e Share Quantity enter the number of whole shares being transferred up to 13 positions e Settlement Amount enter the settlement amount for the account transfer optional e Reason Code enter the Reason Code by which this account transfer is to be processed Note The following Reason Codes may be entered for Account Transfers Reason Code 40 this Reason Code will not reduce the delivering Participant s memo segregation position if the account transfer is valued but will reduce the delivering Participant s memo segregation position by the account transfer quantity is free of value Reason Code 88 this Reason code will reduce the delivering Participant s memo segregation position by the quantity of the account transfer only if the account transfer is free of settlemen
24. be included on the delivery instruction in order to allow the ID system to populate the database appropriately and to make the delivery If the Internal Account number is omitted or inaccurately added an Error Code of 91 will appear Error Code 91 will flag a missing Internal Account number three times The first two at confirm and affirm time offer the Lead Manager or Syndicate Member time to correct the error by adding or correcting the Internal Account number it is then possible to deliver the shares via the ID system If the flag appears for a third time however at Authorization and Exception ANE time the trade has already been excepted from the ID system and must be completed via the PTS Deliver Order DO or NDOM function or via CCF CCFII or MDH Lead Managers or Syndicate Members must then enter customer level details into the DO screen fields in order to populate the database Note Customer level detail that is extracted from an ID trade or a DO populates the IPO database at the time the transaction is completed The only exception is a Broker Custody delivery which populates at confirm time Retail Customers Retail customers are individual investors who purchase IPO shares through the Lead Manager or a Syndicate Member and whose positions are held in a Broker Dealer s IPO Control Account Customer Level Detail for Retail Clients Lead Managers and Syndicate Members may populate the IPO database with customer level detail f
25. database the system generates a warning message Error 91 Error 91 flags an unmatched Internal Account number three times e ID Confirmation e ID Affirmation e Authorization and Exception ANE Error 91 also appears on machine readable output If the Internal Account number is still unmatched when validation occurs at Authorization and Exception ANE time ANE will not reject the transaction because the system assumes the delivery will use Secondary Market shares However an automated release will not be generated and the delivery will pend Unmatched AIA numbers can be corrected in the IPO database prior to the Settlement date cutoffs of 10 00 a m EST for Global processing and 2 30 p m for Trade for Trade processing This allows the ID trade to be authorized and settled that day through the automated Settlement feature of the ID system Note The ANE inquiry function and T 3 hard copy report will display a code of F in the status field to indicate an Initial Distribution trade that has been rejected from Settlement and an I to indicate a Secondary Market trade that has been rejected The F and I codes will be displayed in cases where the Internal Account number on an IPO trade does not match the Internal Account number as stored on the IPO database These transactions may be reprocessed for up to 21 days You may resolve Internal Account number discrepancies in the following ways e Have the Custodian update the Internal
26. each of your Correspondent Syndicate Members The following information is provided List of potential flips by own Retail and Institutional customers e Potential flips by customers broken down by trade date and price if customer used more than one Syndicate Member the flip quantity is prorated e Separate line for WTs e Separate line for stock loans quantity reported represents the net amount outstanding loans less returns e Retail account transfers showing the receiving Participant number e Institutional account transfers showing the receiving Participant number and BIA number Refer to Reports for further information Clearing Broker Tasks Required Field Information amp DTC Output TASK FIELD INFORMATION REQUIRED DTC m I Initial Distribution To Distribution To Agent Banks via ID a Code Market Code 11 L Code 48 Agent I nternal Account Agent Bank s Internal Account Reason Code 49 Broker Internal Account Executing Broker s Internal Account optional Recv Pt Agent Bank s Part Agent Banks via DO NDOM Activity Code 48 REAS Reason Code 50 Reason Code 50 Int Acct Agent Bank s Internal Account Bkr Acct Executing Broker s Internal Account optional Market Code Market Code 11 Prime Brokers via ID Activity Code 47 Agent I nternal Account Prime Broker s Internal Account Reason Code 49
27. function and T 3 hard copy report will display a code of F in the status field to indicate an Initial Distribution trade that has been rejected from settlement and an I to indicate a Secondary Market trade that has been rejected from settlement The F code indicates that the AIA number on an IPO trade is missing and the I code indicates that the AIA number is missing or does not match the AIA number as stored on the IPO database These transactions may be reprocessed for up to 21 days Internal Account number discrepancies can be resolved in the following ways e Have the Custodian update the Internal Account number in the IPO database to match the number on the ID transaction by performing an IPO customer level adjustment Refer to Update Customer Level Detail e Cancel the ID transaction and re enter it in the ID system as per the Custodian s instructions received via the PTS function IDEM Refer to IDTI for additional information e Have the Custodian except the ID transaction from automated settlement and enter a DO with the AIA number as it appears in the IPO database Refer to Distribute Shares via DO or NDOM Withdrawals By Transfer If certificate denominations are available Withdrawals by Transfer WTs of tracked issues are permitted starting on closing day via the PTS functions NWT1 Night Withdrawal by Transfer and RWT1 Rush Withdrawal by Transfer as well as via CCF and CCFII WTs are noted as separate line it
28. has been added for any of your customers e If an incorrect AIA number is entered the shares will not be released and the subsequent Deliver Order may pend e Trade Date enter a valid business date in MMDDYY format Note DTC edits to ensure that the trade date entered is no earlier than four days prior to the issue s closing in DTC and no later than the current date Dates entered on a release instruction that fall outside these parameters result in DTC rejecting the release instruction Contract Price enter a price greater than zero in 9999999 99 format Share Quantity enter the number of whole shares up to 13 positions 3 Refer to Appendix D for additional field and processing information Result If you and your customer have position in the IPO database an immediate release is processed If you and your customer do not have position refer to the following sections Pending Releases You and your customer must have position in the IPO database in order for a release to be processed If the customer Lead Manager does not have position the release will pend hold for up to three days after Trade Date or for up to 30 calendar days depending on the recycle option selected by the Participant If you and your customer do have position but not enough to satisfy the entire release DTC will release the available shares from the customer Lead Manager s account and pend the balance of the release request partial hold Participants
29. in the database or to the Prime Broker s IPO Control Account Update Customer Level Information via IPOU Customer level detail in the IPO database can be added and or updated via the PTS function POU The following sections describe some of the activities a Co Manager can perform via POU Warning If customer level detail has been added for any of your customers it must be added for all your customers or you will not be able to perform subsequent transactions e g WTs customer account transfers for those customers Refer to Appendix D for additional information IPOU procedures Allocate Shares to Retail Customers Add Customer Level Detail After delivering Initial Distribution shares to your Institutional customers Prime Brokers Agent Banks you can allocate the shares you retain to your Retail customers IPOU Option 2 allows you to populate the IPO database by adding their Retail clients customer level details and share allocations Note Participants cannot allocate shares to Institutional customers 1 On the IPO Tracking System Main Menu Screen select Option 2 Add Customer Level Detail 2 Enter information in the following required fields of the IPO Add Customer Level Detail Screen e Internal Customer enter the Internal Account number of the customer e Share Quantity enter the whole number quantity up to 13 positions e Sign enter to increase shares 3 Refer to Appendix D for additional processing informa
30. number populated by DTC Regardless as with all other deliveries when delivering borrowed shares the AIA number entered by the bank in its delivery instruction must match the IPO database in order for DTC to process the delivery Stock Loan Returns Custodian Banks can process Stock Loan Returns by using the appropriate DO NDOM Reason Codes All stock loans are returned to the lender s Free account as Free secondary market shares in the IPO database It is not necessary to include the AIA number 1 Enter Reason Code 20 in the REAS field of the Initial Public Offering Deliver Orders Screen 2 Refer to DO or NDOM for additional Deliver Order field and processing information Stock Loan Return Receipts Stock Loan Returns are delivered to the Lender s Free Account as Free secondary market shares in the IPO database Pledges Pledges of Collateral Custodian Banks can pledge shares with or without value via the PTS function COLL Refer to COLL for field and processing information Pledge Releases All Pledge shares are returned to the Custodian Bank s Free Account Reclaims Reclaim Deliveries DTC will automatically process a matched reclamation based on the DO transaction number and other transaction information provided until one day after settlement Custodian Banks can enter Matched Reclaims via the PTS functions ART and DO NDOM and via CCF CCFIIl and MDH Partial reclaims are not permitted Note When a Custodian Bank rec
31. of the Participant listed in the Synd Part Number column Correspondent Account Number the ID Broker Dealer number identifying the Correspondent in the ID system This in conjunction with the Participant number of the Clearing Agent listed in the Synd Part Number field identifies the Syndicate Member Note If due to relaxed editing the Syndicate Member cannot be identified and appears as Unknown on the Lead Manager s report the Agent Bank is identified in the Correspondent Account Number field as having delivered the Initial Distribution shares e Trade Date the date of the transaction in YYMMDD format as captured from the DO ID transaction or the IPO release e Price the price calculated from the net amount appearing on the DO or ID transaction or on the IPO release e Share Type Displays the types of transactions for three categories Unknown Syndicate Member Syndicate Member and Grand Total for the CUSIP e Share Type for Unknown Syndicate Members lists the following for each unknown Syndicate Member e Total Flipped total of all potentially flipped shares for an unknown Syndicate Member e Total Stock Loan the net amount of stock loans showing outstanding loans less loan returns for an unknown Syndicate Member e Total Withdrawal total will always be zero e Total CNS Short total will always be zero e Unknown Grand Total Flipped net amount of shares flipped for unknown Syndicate Members e Unknown Grand Total Sto
32. of the transaction If either is missing or entered incorrectly an error code of 91 will appear on the Confirmation and Affirmation tickets Refer to Resolve Internal Account Number Discrepancies for information on how to correct the Agent Internal Account number 2 Refer to IDTI for additional ID field and processing information Result Shares move from the Co Manager s Free Account to the Agent Bank s Free Account and are marked as IPO shares in the database or to the Prime Broker s IPO Control Account Distribute Oversubscribed Directed Shares to Agent Banks and Prime Brokers via DO or NDOM 1 Enter the information in the following fields of the Initial Public Offering Deliver Orders Screen Recv Pt enter the Agent Bank or Prime Broker s Participant number REAS enter Reason Code 550 e Int Acct enter the Agent Bank or Prime Broker s Internal Account number for the customer e Bkr Acct enter the Executing Broker s Internal Account BIA number for the customer optional Note The Internal Account numbers must be entered correctly in order to ensure accurate processing of the transaction DTC rejects Initial Distribution deliveries in which either number is missing Result The system captures the AIA number along with the BIA number and the associated Syndicate Member and populates the IPO database with this information Shares move from the Co Manager s Free Account to the Agent Bank s Free Account and marked as IPO shares
33. originate in NSCC s ACATS system Participants will be notified that an issue is tracked and will receive a trade for trade Balance Order ticket 2 The transfer of shares in a tracked CUSIP must be accomplished by the IPO Customer Account Transfer function and must be for the total position the customer has in its IPO Control and Free Accounts 1 On the IPO Tracking System Main Menu Screen select Option 4 Customer Account Transfer 2 Enter information in the following fields of the IPO Customer Account Transfer Screen To Participant enter the receiving Participant s number From Internal Customer enter the existing AIA number for the customer To Internal Customer enter the receiving Participant s AIA number for the customer Share Quantity enter the number of whole shares being transferred up to 13 positions Settlement Amount enter the settlement amount for the account transfer optional Reason Code enter Reason Code by which this account transfer is to be processed 3 Refer to Appendix D for additional field and processing information Result Transfers can also be performed using the PTS functions DO or NDOM However since this requires manual releases to the Free Account these transfers will be recorded as potential flips on DTC s tracking reports Note Account transfers of IPO and Free Secondary Market shares from a Broker Participant will result in two DOs generated Share Movement for Customer Account Transfers Deliveri
34. quantity information you must input exactly the total number of shares the To Internal Customer should have If you are not sure of the exact total the customer should have refer to the following section 3 Refer to Appendix D for additional field and processing information Transfer of Customer s Position Between Participants You can transfer your customers positions to another Participant without that transfer being reported as a potential flip For reporting purposes the IPO database moves the original Syndicate Member s Participant number and BIA number with each transfer of a customer s position Memo Segregation and Sub Account Segregated positions do not need to be released prior to attempting any customer account transfers IPO account transfer transactions can bypass Memo Segregation Customer level detail is required for account transfers Transfer Customer s Position via IPOU 1 For those transfers that originate in NSCC s ACATS system Participants will be notified that an issue is tracked and will receive a trade for trade Balance Order ticket 2 The transfer of shares in a tracked CUSIP must be accomplished by the IPO Customer Account Transfer function and must be for the total position the customer has in its IPO Control and Free Accounts 1 On the IPO Tracking System Main Menu Screen select Option 4 Customer Account Transfer 2 Enter information in the following fields of the IPO Customer Account Transfer Scre
35. the Free Account are subject to normal collateralization rules Reconcile Customer Level Detail with Internal Records You should reconcile the Customer Level Detail in the IPO database with your internal records daily using an POCLD machine readable file This file contains the Agent Bank or Prime Broker s Internal Account numbers of all your customers on file as well as the Executing Broker s Internal Account numbers for those customers Contact DTC s Participant Interface Planning Department or your Relationship Manager for assistance Make Inquiries via IPOI The PTS function IPOI Initial Public Offering Tracking System Inquiry allows you to make inquiries about tracked issues The following information is provided via POI A list of all tracked IPO issues A summary of tracked IPO issues in which the Participant has position A summary of customer level details by Participant issue A summary of IPO pending canceled released transactions For additional information on the IPO Tracking System Inquiry function refer to the Overview and Appendix E Prime Broker Tasks Required Field Information amp DTC Output TASK FIELD INFORMATION DTC RED Customer Level Customer Level Updates Update Customer Level Detail via IPOU Option 5 From Lu Customer Old Internal Account To Internal Customer New Internal Account optional Share Quantity New whole number quantity optional Secondary Marke
36. the IPO database with this information Distribute Shares for Oversubscriptions When you have less shares than it needs to make its Initial Distribution deliveries it can purchase or borrow shares from the Secondary Market for distribution Oversubscription Shares purchased or borrowed in the Secondary Market for Oversubscription Distribution will reside in the Co Manager s Free Account The Lead Manager has two options for delivering Oversubscribed shares e Move the shares back to its IPO Control Account via the PTS function IPOU Option 6 and perform an Initial Distribution ID or DO NDOM delivery e Deliver the shares directly from its Free Account using the appropriate ID or DO NDOM codes Move Shares From the Free Account to the IPO Control Account for Oversubscriptions 1 On the IPO Tracking System Main Menu Screen select Option 6 Oversubscription for Lead Underwriter 2 Enter information in the following fields of the IPO Oversubscription for Lead Underwriter Screen e CUSIP enter the issue s CUSIP number e Share Quantity enter the number of Free shares being transferred to the IPO Control Account 3 Press the ENTER key 4 Refer to Appendix D for additional field and processing information 5 Perform an Initial Distribution DO NDOM or ID delivery Refer to Distribute Shares to Agent Banks and Prime Brokers via ID and Distribute Shares to Agent Banks and Prime Brokers via DO or NDOM in this chapter for infor
37. the Initial Public Offering Deliver Orders screen e Refer to DO or NDOM for additional Deliver Order field and processing information Stock Loan Return Receipts All stock loans are delivered to the lender s general free account as free Secondary Market shares in the IPO database Pledges Pledges of Collateral Clearing Banks can pledge shares with or without value on behalf of their Correspondent Syndicate Members via the PTS function COLL Refer to COLL for additional field and processing information Shares are moved to the Pledge 14 Account Pledge Releases All Pledge shares are returned to the Clearing Bank s general free account Reclaims Reclaim Deliveries DTC will automatically process a matched reclamation based on the DO transaction number and other transaction information provided until one day after settlement Clearing Banks can enter Matched Reclaims on behalf of their Correspondent Syndicate Members via the PTS functions ART and DO NDOM and via CCF CCFII and MDH Partial reclaims are not permitted Note When a Clearing Bank reclaims a delivery the reclaimed DO will be matched to the original delivery and the information in the IPO database will be reversed Matched Reclaim Deliveries via ART Matched Reclaims can be made on settlement date and the day after These reclaims cannot be reclaimed by the original deliverer e g the Lead Manager and are not subject to Risk Management Controls e En
38. the SDFS Initial Public Offering Deliver Orders Screen 2 Refer to DO and NDOM for additional Deliver Order field and processing information Stock Loan Return Receipts All Stock Loan Returns are delivered to the lender s Free Account as Free Secondary Market shares in the IPO database Pledges Pledges of Collateral You can pledge shares with or without value from either their IPO Control or Free Accounts via the PTS function COLL 1 Enter the following information on the Free Pledge Service Screen e IPO enter Y if the shares are being pledged from the IPO Control Account e OR Enter N if the shares are being pledged from the Free Account 2 Refer to COLL for processing information Result Pledged IPO Control and Free Account shares are moved to the Pledge 14 Account IPO shares are segregated in the 114 Account Pledge Releases If released during the tracking period Pledge shares are delivered back to their original accounts In cases where both IPO and Secondary Market shares were pledged released Free shares are returned to the Free Account first up to the quantity of Free Account shares pledged The balance of the shares return to the IPO Control Account If released after tracking has ended all Pledge shares are delivered to the Free Account regardless of what their account of origin Reclaims Reclaim Deliveries DTC will automatically process a matched reclamation based on the DO transaction number and oth
39. the Secondary Market reside in your Free Account Secondary market shares are not tracked at this time Update Customer Level Information via IPOU Customer level detail in the IPO database can be added and or updated via the PTS function POU The following sections describe some of the activities a Prime Broker can perform via POU Warning If customer level detail has been added for any of your customers it must be added for all your customers or you will not be able to perform subsequent transactions e g WTs customer account transfers for those customers Refer to Appendix D for additional information IPOU procedures Update Customer Level Detail IPOU Option 5 allows you to correct or update your customer Internal Account numbers and adjust the share quantities allocated to your customers 1 On the IPO Tracking System Main Menu Screen select Option 5 Customer Level Adjustment 2 Enter information in the following required fields of the IPO Customer Level Adjustment screen From Internal Customer enter the existing AlA number of the customer To Internal Customer enter the new AIA number of the customer required if the Participant wants to change the existing number to a new one e Reallocated Share Quantity enter the number of whole shares being adjusted up to 13 positions required if the Participant is adjusting a share quantity from existing customers to the new customer Note Because the system overlays the share
40. they become available for the duration of the recycle period When shares are released they are listed on the tracking reports as potential flips Ending the Tracking Period DTC ends tracking at the close of business on the 90th calendar day of tracking or any day prior as instructed by the Lead Manager Shares are moved from Brokers IPO Control Accounts to their Free Accounts and are subject to DTC s normal collateralization rules Activities chilled during the tracking period e g CODs and Deposits can then be performed On ELISC A the tracking indicator and end tracking date are updated to blank spaces The PTS function GWIZ is updated to indicate that tracking for that issue has been turned off and final tracking reports are generated for the Lead Manager Co Managers Syndicate Members Clearing Agents and primary Co Reporters IPO Tracking System Functions IPOU Update Functions e Inquiry Option 1 provides access to the IPOI Inquiry functions e Add Customer Level Detail Option 2 allows users to populate customer level detail for Retail shares and allows Clearing firms to populate customer level detail for their Correspondent s Retail shares as well It also allows Brokers and Clearing Firms to adjust Retail customer level detail Note Participants cannot add customer level detail for institutional customers These customers are populated automatically by DTC s ID system e Release IPO Shares to the Free Account Option
41. with Free secondary market shares and will satisfy the balance if necessary with the bank s IPO shares All stock loans are made on an omnibus basis No customer account numbers are tagged to stock loans An AIA number entered in a stock loan delivery is ignored by DTC however the exception to this is for stock loans to banks in which case the Participant number of the receiving bank must be entered as the AIA number in order to allow the receiving bank the ability to deliver borrowed shares All loans of IPO shares are noted as separate line items in Lead Underwriter and Syndicate Member Flipping Activity Reports and are categorized according to Participant type of lender and borrower The quantity of loaned IPO shares is prorated across all Syndicate Members that deliver initial distribution shares to the bank 1 Enter Reason Code 10 in the REAS field of the Initial Public Offering Deliver Orders Screen 2 Refer to DO or NDOM for additional Deliver Order field and processing information Stock Loan Receipts All shares of stock loans delivered to a bank are credited to the receiving bank s Free account and are considered Free secondary market shares DTC updates the bank s IPO database by using the receiving bank s own Participant number as the default AIA number for borrowed shares The receiving bank can adjust the IPO database to attach a valid customer number to the borrowed shares or can maintain the shares with the default AIA
42. 1 for additional WT field and processing information Stock Loans and Returns Stock Loan Deliveries Prime Brokers are able to process stock loans using the appropriate DO NDOM Reason Codes As for all broker Participants DTC fulfills a Prime Broker s stock loan delivery quantity with Free Account shares only If insufficient shares are available in the Prime Broker s Free Account the Participant must instruct DTC to process a Stock Loan Release to release IPO shares from its IPO Control account to its Free account for the balance DTC distinguishes between stock loan releases and regular releases and reports each type as separate line items on Lead Underwriter and Syndicate Member Flipping Activity Reports All stock loan releases are categorized according to Participant type of lender and borrower To dissuade Participants from using the stock loan release facility for regular releases DTC monitors the quantity of IPO shares moved to the Participant s Free account via stock loan releases versus the quantity of shares loaned by the Participant on the same day and reports discrepancies to the Lead Underwriter and appropriate Syndicate Members All stock loans are made on an omnibus basis No customer account numbers are tagged to stock loans An AIA number entered in a stock loan delivery is ignored by DTC however the exception to this is for stock loans to banks in which case the Participant number of the receiving bank must be entered as t
43. 3 allows Brokers to release shares from their IPO Control Accounts into their Free Accounts Brokers can release shares on a Syndicate Member level or on a customer level to their Free Accounts Clearing Brokers can release their Correspondent Retail customers IPO shares on a Syndicate Member Correspondent level or on a customer level as well e Customer Account Transfer Option 4 allows users to transfer shares between Participants and updates customer level detail of the Deliverer s and Receiver s accounts Customer level detail is required Account transfers can be for value or for non value Note Participants must use this account transfer option when attempting to transfer IPO positions e Customer Level Adjustment Option 5 allows users to adjust customer numbers and or share quantities e Oversubscription for Lead Underwriter Option 6 allows the Lead Manager to move Free shares to its own IPO Control Account for oversubscription distribution This function will generate two one sided next day journals Free and IPO e IPO Pending Transactions Cancel Option 7 allows users to cancel hold releases e Correspondent Position Adjustment Option 8 allows Clearing Agents to move positions in the IPO database among Correspondents and between themselves and Correspondents e Stock Loan Release Option 9 allows Brokers to release shares from their IPO Control Accounts into their Free Accounts for the purpose of lending the share
44. 540 Oversubscription Directed Concessions To Agent Banks via ID Agent Banks via DO NDOM Market Code Market Code 53 Agent Internal Account Agent Bank s Internal Account Broker I nternal Account Executing Broker s Internal Account optional Recv Pt Agent Bank s Part REAS Reason Code 550 Int Acct Agent Activity Code 26 Reason Code 559 Activity Code 26 Reason Code 550 Prime Brokers via ID Prime Brokers via DO NDOM Customer Level Updates Add Customer Level Detail via POU Option 2 Update Customer Level Detail via IPOU Option 5 Release of IPO shares to Free Account via IPOU Option 3 Secondary Market Activity Bank s Internal Account Bkr Acct Executing Broker s Internal Account optional Market Code Market Code 53 Activity Code 49 Reason Code 559 Agent Internal Account Prime Broker s Internal Account Broker I nternal Account Executing Broker s Internal Account optional Recv Pt Prime Broker s Part Activity Code 49 REAS Reason Code 550 Reason Code 550 Int Acct Prime Broker s Internal Account Bkr Acct Executing Broker s Internal Account optional Internal Customer Internal Account Share Quantity Whole number quantity Sign or to increase or decrease shares From Internal Customer Old Internal Ac
45. 9 Free Shares 26 Reason Code 20 Account Transfer to Broker IPO To Participant Receiving Activity shares via IPOU Option 4 Broker s Part From Code 47 Internal Customer Current Internal Account Code 40 Reason To Internal Customer New Internal Account TASK FIELD INFORMATION DTC REQUI RED OUTPUT Account Transfer to Broker Free shares via IPOU Option 4 Account Transfer to Bank IPO shares via POU Option 4 Account Transfer to Bank Free shares via POU Option 4 Share Quantity Number of whole shares being transferred Settlement Amount Settlement amount optional To Participant Receiving Broker s Part From Internal Customer Current Internal Account To Internal Customer New Internal Account Share Quantity Number of whole shares being transferred Settlement Amount Settlement amount optional To Participant Receiving Bank s Part From Internal Customer Current Internal Account To Internal Customer New Internal Account Share Quantity Number of whole shares being transferred Settlement Amount Settlement amount optional To Participant Receiving Bank s Part From Internal Customer Current Internal Account To Internal Customer New Internal Account Share Quantity Number of whole shares being transferred Activity Code 26 Reason Code 40 Activity Code 48 Reason Code 40 Activity Code 26 Reason Code 40
46. Account number in the IPO database to match the number on the ID transaction by performing an IPO customer level adjustment Refer to Update Customer Level Detail e Cancel the ID transaction and re enter it in the ID system as per the Custodian s instructions Refer to Distribute Shares via ID in this chapter e Have the Custodian except the ID transaction from automated Settlement and enter a DO with the AIA number as it appears in the IPO database Withdrawals by Transfer WTs If certificate denominations are available Withdrawals by Transfers WTs of tracked issues are permitted starting on closing day via the PTS functions NWT1 Night Withdrawal by Transfer and RWT1 Rush Withdrawal by Transfer as well as via CCF and CCFII WTs are noted as separate line items on tracking reports e Requests for WTs must include customer level detail e The IPO database must be populated with the customer level detail prior to requesting a WT 1 Enter information in the following fields of the Night W T Data Collection Screen or the Rush Withdrawal Transfer System Add Function Screen e Int Cust enter the AIA number of the customer for whom shares are being withdrawn e AgtID enter the ID Agent number optional 2 Refer to NWT1 and RWT1 for additional WT field and processing information Result DTC processes WT requests using shares from your IPO Control Account first DTC generates releases from your IPO Control Account to its Fr
47. Bank s Part number To Internal Customer New AIA number ID Agent ID Agent number optional IPO Share Quantity Number of whole IPO shares being transferred Free Share Quantity Number of whole Free shares being transferred Settlement Amount Settlement amount optional Reason Code Appropriate Reason Code for delivery Lead Manager Procedures Set Up Tracked Issues With DTC Before an issue can be tracked you must work with DTC s Underwriting Department to make the issue DTC eligible and set the issue up for tracking The procedures are similar to those for non tracked issues 1 Send DTC s Underwriting Department a Prospectus and a completed Eligibility Questionnaire 10 days prior to distribution Result Within 48 hours DTC will contact you to confirm that the issue can be made DTC eligible and to provide additional instructions 2 Provide the Underwriting Department with the CUSIP number s for the issue seven days prior to the distribution date Result Once the CUSIP is received DTC will add it to its Master File DTC will provide you with a denominational break down for the certificates This will enable DTC to have a working inventory in its vault 3 Prepare the certificates as instructed by DTC 4 Confirm in writing to DTC s Underwriting Department by no later than 3 00 p m Eastern Standard Time EST S 2 that the issue is to be tracked This should include an estimated length of tracking
48. C s Rules and Procedures or other applicable contractual obligations to check the accuracy where applicable of Participant Daily Activity Statements and all other statements and reports received from DTC and to notify DTC of any discrepancies DTC DOES NOT REPRESENT THE ACCURACY ADEQUACY TIMELINESS COMPLETENESS OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY INFORMATION AS DEFINED ABOVE PROVIDED TO PARTICIPANTS AND OTHER AUTHORIZED USERS WHICH IS PROVIDED AS IS DTC SHALL NOT BE LIABLE FOR ANY LOSS RELATED TO SUCH INFORMATION OR THE ACT OR PROCESS OF PROVIDING SUCH INFORMATION RESULTING DIRECTLY OR INDIRECTLY FROM MISTAKES ERRORS OR OMISSIONS OTHER THAN THOSE CAUSED DIRECTLY BY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF DTC Further such Information is subject to change Participants and other authorized users should obtain monitor and review independently any available documentation relating to their activities and should verify independently information received from DTC DTC SHALL NOT BE LIABLE FOR 1 ANY LOSS RESULTING DIRECTLY OR INDIRECTLY FROM INTERRUPTIONS DELAYS OR DEFECTS ARISING FROM OR RELATED TO ITS SERVICES AND 2 ANY SPECIAL CONSEQUENTIAL EXEMPLARY INCIDENTAL OR PUNITIVE DAMAGES The services provided by DTC to its Participants and other authorized users are provided only pursuant to the terms and conditions of the Participants Agreement which references the Rules and Procedures of DTC and or other c
49. Copyright IMPORTANT LEGAL INFORMATION The contents of all Service Guides constitute Procedures of The Depository Trust Company DTC as defined in the Rules of DTC If Participants or other authorized users of DTC s services fail to follow these Procedures precisely DTC shall bear no responsibility for any losses associated with such failures In connection with their use of the Corporation s services Participants and Pledgees must comply with all applicable laws including all applicable laws relating to securities taxation and money laundering From time to time DTC receives from outside sources notices and other documents including corporate action information and communications concerning financial assets Although DTC may make certain of such documents and communications or extracts therefrom Information available to Participants and other authorized users it shall be under no obligation to do so nor having once or more done so shall DTC have a continuing obligation to make available Information of a certain type Information is not independently verified by DTC and is not intended to be a substitute for obtaining advice from an appropriate professional advisor Therefore Participants and other authorized users are advised to obtain and monitor Information independently In addition nothing contained in Information made available to Participants and other authorized users shall relieve them of their responsibility under DT
50. Corr Acct the Correspondent via NWT1 RWT1 Syndicate Member s ID Broker Dealer Int Cust Internal Account Agt ID ID Agent optional REAS Reason Code 10 Activity Code IPO shares 48 Free shares 26 Reason Code 10 Activity Code Stock Loan Return via DO REAS Reason Code 20 NDOM IPO shares 49 Free shares 26 Reason Code 20 Activity Code 47 Account Transfer to Broker IPO Shares via POU Option 4 Corresp Account the Correspondent Syndicate Member s ID Broker Dealer Reason Code 40 To Participant Receiving Broker s Part From Internal Customer Current Internal Account To Internal Customer New Internal Account Share Quantity Number of whole shares being transferred Settlement Amount Settlement amount optional Account Transfer to Broker Free shares via POU Option 4 Corresp Account the Correspondent Syndicate Member s ID Broker Dealer Activity Code 26 Reason Code 40 To Participant Receiving Broker s Part From Internal Customer Current Internal Account To Internal Customer New Internal Account Share Quantity Number of whole shares being transferred Settlement Amount Settlement amount optional Co Manager Receive Shares from Primary Lead Manager The Primary Lead Manager sets up deliveries of IPO shares to its Co Man
51. F CCFII and MDH trade files The Internal Account number the BIA number and the associated Syndicate Member are extracted from ID trades upon authorization On closing date the IPO database is populated 2 Refer to IDTI for additional ID field and processing information Distribute Unaffirmed ID Trade Shares via DO or NDOM When a trade is unaffirmed excepted or rejected from the ID system you can settle that trade via the PTS functions DO option 4 and NDOM option 6 1 Enter the information in the following fields of the Initial Public Offering Deliver Orders Screen Recv Pt enter the Agent Bank or Prime Broker s Participant number REAS enter Reason Code 50 e Int Acct enter the Agent Bank or Prime Broker s Internal Account number for the customer Note The Internal Account number must be entered correctly to ensure accurate processing of the transaction e Bkr Acct enter the Executing Broker s Internal Account BIA number for the customer optional Note The Executing Broker Internal Account number BIA is optional However there are several advantages to entering this information the BIA provides more detailed reporting of flipping activity and this information can easily be extracted from CCF CCFII and MDH trade files The system captures the Agent Bank Prime Broker Internal Account number along with the BIA number and associated Syndicate Member and populates the IPO database 2 Refer to DO or NDOM for addi
52. IPO database must be populated with the customer level detail prior to requesting a WT 1 Enter information in the following fields of the Night W T Data Collection Screen or the Rush Withdrawal Transfer System Add Function Screen e Int Cust enter the AIA number of the customer for whom shares are being withdrawn e AgtID enter the ID Agent number optional 2 Refer to NWT1 and RWT1 for additional WT field and processing information DTC processes WT requests using shares from your IPO Control Account first DTC generates releases from your IPO Control Account to its Free Account 1 Since the IPO Tracking System records all manual releases as potential flips you should not manually release shares for WT processing 2 DTC generates releases from your IPO Control Account only if the Internal Account number already exists in the IPO database If the Internal Account number does not exist a release will not be generated and the WT will be assumed to be from Free shares only Request a WT Using Free Shares Only 1 Enter information in the following fields of the Night W T Data Collection Screen or the Rush Withdrawal Transfer System Add Function Screen e Int Cust enter a dummy AIA number one that does not exist in the IPO database Note The use of a dummy Internal Account number in the Int Cust field will default the system to use Free shares for WT processing e AgtID enter the ID Agent number optional 2 Refer to NWT1 and RWT
53. Loan Return Receipts All Stock Loan Returns are delivered to the lender s Free Account as Free Secondary Market shares in the IPO database Pledges Pledge Releases If released during the tracking period Pledge shares are delivered back to their original accounts In cases where both IPO and Secondary Market shares were pledged released Free shares are returned to the Free Account first up to the quantity of Free Account shares pledged The balance of the shares return to the IPO Control Account If released after tracking has ended all Pledge shares are delivered to the Free Account regardless of what their account of origin Reclaims Reclaim Deliveries DTC will automatically process a matched reclamation based on the DO transaction number and other transaction information provided until one day after settlement You can enter Matched Reclaims via the PTS functions ART and DO NDOM and via CCF CCFII and MDH When you reclaim a delivery the reclaimed DO will be matched to the original delivery and the information in the IPO database will be reversed Note Partial reclaims are not permitted Matched Reclaim Deliveries via ART Matched Reclaims can be made on settlement date and the day after These reclaims can not be reclaimed by the original deliverer and are not subject to risk management controls 1 Enter R to the left of the item to be reclaimed on the ATP Activity Summary Screen 2 Refer to ART for additional fi
54. Market shares IPO Initial Distribution shares are broken down in the database by Syndicate Member When Initial Distribution shares of an IPO tracked issue are received into the Custodian Bank s Free Account the IPO database automatically updates the Custodian Bank s IPO position in the IPO database and extracts the following customer information from the ID or DO transaction Agent Internal Account AIA number Note If the AIA number has not been provided by the Executing Broker for an ID transaction the Custodian Bank will receive an Error Code 91 message Refer to Relaxed Editing and Resolve AIA Number Discrepancies in ID Deliveries e Executing Broker Internal Account BIA number and the associated Syndicate Member Participant number e Number of shares allocated to that customer e The Custodian Bank Note The ID Agent number will default to the Custodian Bank s Participant number Secondary Market Activity Note Secondary Market shares can be viewed via the Free Available field of IPOI Option 3 Customer Level Detail Deliver Shares for Secondary Market Sales Custodian Banks can deliver shares for Secondary Market sales by using the PTS functions DO or NDOM or by having the Executing Broker input the transaction via DTC s ID system If an Institutional customer has both IPO and Secondary Market shares the system will use the Secondary Market shares to complete a delivery before using the IPO shares IPO shares use
55. Reason Code 50 Reason Code 50 Int Acct Prime Broker s Internal Account Bkr Acct Executing Broker s Internal Account optional Customer Level Updates Add Customer Level Detail Internal Customer Internal via IPOU Option 2 Account Share Quantity Whole number quantity Sign or to increase or decrease shares Update Customer Level From Internal Customer Old Detail via IPOU Option 5 Internal Account To Internal Customer New Internal Account optional Share Quantity New whole number quantity optional Secondary Market Activity Sale of Free shares Same as for non tracked issues Activity Code 26 Release of IPO shares to Internal Customer Internal Activity Free Account via POU Code 46 Option 3 Account Trade Date Trade date Contract Price Contract price Withdrawals by Transfer Int Cust Internal Account via NWT1 RWT1 Agt ID ID Agent D optional Stock Loan via DO NDOM REAS Reason Code 10 Activity Code IPO shares 48 Free shares 26 Reason Code 10 Stock Loan Return via REAS Reason Code 20 Activity DO NDOM Code IPO shares 49 Free shares 26 Reason Code 20 Account Transfer to To Participant Receiving Activity Broker IPO Shares via Broker s Part Code 47 IPOU Option 4 From Internal Customer Reason Current Internal Account Code 40 To Internal Customer New Internal Account Share Quantity number of whole share
56. SIPs must be accomplished by the IPO Customer Account Transfer function and must be for the total IPO and Secondary Market position the customer has in its Account 1 On the IPO Tracking System Main Menu Screen select Option 4 Customer Account Transfer 2 Enter information in the following fields of the IPO Customer Account Transfer Screen e To Participant enter the receiving Participant number e From Internal Customer enter the existing AIA number for the customer Note If no match is found for the From Internal Customer AIA number the transfer can not be processed e To Internal Customer enter the receiving Participant s new AIA number e 1D Agent enter the ID Agent ID number optional e Share Quantity enter the number of whole shares being transferred up to 13 positions e Settlement Amount enter the settlement amount for the account transfer optional 3 Reason Code enter the Reason Code by which the account transfer is to be processed Note The following Reason Codes may be entered for Account Transfers Reason Code 40 this Reason Code will not reduce the delivering Participant s memo segregation position if the account transfer is valued but will reduce the delivering Participant s memo segregation position by the account transfer quantity if the account transfer is free of value Reason Code 88 this Reason code will reduce the delivering Participant s memo segregation position by the quantity of the accou
57. TC s ID system 1 Follow the Initial Distribution procedures described in Distribute Shares via ID entering your own Participant number as both the Executing Broker and the Custodian of the transaction Result Because there is no actual movement of shares the IPO database is populated with customer level detail and the associated Syndicate Member upon Confirmation of Broker Custody trades Distribute Shares for Directed Concessions You can deliver a block of IPO shares directly to a Syndicate Member s Institutional Customer at the customer s request Directed Concession You are set up as the associated Syndicate Member in the IPO database Directed Concessions can be distributed via DTC s ID system or via the PTS functions DO Option 4 or NDOM Option 6 Directed Concession deliveries are flagged on your tracking reports with an asterisk and with the delivering custodian s Participant number If a Directed Concession customer flips you must check your internal records to identify the customer s Syndicate Member Distribute Directed Concession Shares via ID 1 Enter information in the following fields of the Institutional Delivery Trade Input Screen Market Code enter Market Code 51 Agent Internal Account enter the Agent Bank or Prime Broker s Internal Account number for the customer e Broker Internal Account enter the Executing Broker s Internal Account BIA number for the customer Note The Internal Account numbers mu
58. Trade Date 2 Refer to DO or NDOM for additional field and processing information Bank to Bank Deliveries When delivering to other Banks i e Bank to Bank deliveries the Custodian Bank enters its own Internal Account number for its customer The receiving Bank s database is populated with a customer number matching its own Participant number The receiving Bank may maintain its own Participant number as its account number for this customer or may adjust the number to the actual customer number When subsequently delivering the shares the Bank must use the account number on the database at the time of the delivery As with any Custodian Bank delivery the customers Free shares will be moved first then if needed its IPO shares If IPO shares are moved via a Bank to Bank delivery the receiving Bank will receive tagged IPO shares but a flip will not be reported Receive Shares from Secondary Market Buys Shares bought on the Secondary Market reside in the Custodian Bank s Free Account and are segregated in the IPO database as Secondary Market shares The Syndicate Member is not captured in the IPO database for Secondary Market transaction shares For Banks Secondary Market Shares are tracked for the duration of the tracking period Relaxed Editing Custodian Banks customers can start setting up sales of Initial Distribution shares on the Secondary Market as early as trade date These sales referred to as turnaround sales will se
59. a the PTS functions DO or NDOM if e The reclaim transaction number cannot be matched to an original delivery e The reclaim occurs after the Matched Reclaim deadline has passed e Custodian Banks must manually input transaction details including the appropriate Deliver Order Reclaim Reason Code DTC treats these Reclaim transactions as original deliveries which in turn can be reclaimed by the receiver Reclaim Receipts Initial Distribution deliveries that are reclaimed within the deadline S through S 1 will be returned to the Custodian Bank s Free Account IPO shares will be marked in the IPO database Note Custodian Banks can reclaim Unmatched Freeform Reclaim Deliveries Deposits Deposits are chilled for tracked issues during the tracking period DWAC Deposit Withdrawal at Custodian activity is permitted on a very limited basis during the tracking period and only with the consent of the Lead Underwriter Certificates On Demand CODs CODs are chilled for tracked issues during the tracking period Make Inquiries via IPOI The PTS function IPO Initial Public Offering Tracking System Inquiry allows the Custodian Bank to make inquiries about tracked issues The following information is provided via POI A list of all tracked IPO issues A summary of tracked IPO issues in which the Participant has position A summary of customer level details by Participant issue A summary of IPO pending canceled released transactions
60. agers Co Reporters and Syndicate Members prior to closing using the appropriate Deliver Order Reason Codes By 1 15 p m closing date DTC receives a call from the Primary Lead Manager permitting the distribution of shares to the Co Managers Co Reporters and Syndicate Members DTC then delivers shares from the Primary Lead Manager s IPO Control Account to your IPO Control Account in accordance with the Primary Lead s Deliver Order instructions Note Shares remain in the IPO Control Account for the duration of the tracking period unless released transferred or distributed to Syndicate Members or Institutional customers at Agent Banks or Prime Brokers This establishes your Participant number as an Alternate Lead for that issue in the IPO database All subsequent share movements e g distributions allocations and Secondary Market transactions will be applied to the Alternate Lead s Participant number Syndicate Takedowns Prior to receiving shares in your IPO Control Accounts you should set up deliveries for distribution of shares to their Syndicate Members Syndicate Takedown A Syndicate Takedown is performed by using Option 4 of the PTS function DO or NDOM Option 6 Note The term Syndicate Members refers to selling group members as well Co Managers indicate a Syndicate Takedown delivery by entering the appropriate Reason Codes as described in the following sections in the REAS field of the Initial Public Offering Deliv
61. alloc The quantity reflects the Syndicate Member s portion of IPO shares originally reported as a stock loan flip transacted by a custodian but which have been reallocated to satisfy the Syndicate Member s custodian s delivery transaction a regular flip See SL SM Realloc below Since the customer s flip will be reported under the Flipped category this SL SM Free To IPO Realloc quantity should be subtracted from one of the quantities reported as IPO shares loaned by custodians SL Custodian To Lead or SL Custodian to Other categories in order to avoid double counting e SL SM Realloc the quantity of the Syndicate Member s IPO shares reallocated to a stock loan flip at a custodian because another Syndicate Member at the Custodian was reallocated out of the original loan quantity This quantity should be added to the SL Custodian To Lead SL Custodian To Other SL Firm To Lead or SL Firm To Other categories since it represents an increase in this Syndicate Member s IPO Shares loaned by the custodian e SL Inst Unmatch Release the quantity of the Syndicate Member s stock loan releases for Institutional customers that exceeded the total quantity of shares used for stock loan deliveries This quantity should be added to the SL Custodian To Lead or SL Custodian To Other categories since had the custodian delivered the shares in a timely fashion it would represent an increase in this Syndicate Member s IPO shares loaned by the Custodian e SL Retai
62. an individual customer level and require customer level detail You can extract customer level details from Trade files and reformat them into IPO machine readable format for transmission via MDH CCF CCFII You can also adjust customer level details via the PTS function POU Note Releases from the IPO Control Account are recorded as potential flips regardless of whether or not delivery is made 1 On the IPO Tracking System Main Menu Screen select Option 3 Release IPO Shares To The Free Account 2 Enter information in the following fields of the IPO Release IPO Shares To The Free Account Screen e Internal Customer enter the Internal Account number of the customer identified in the IPO database Note If an incorrect Internal Account number is entered the release will remain on hold and the subsequent Deliver Order will pend Refer to Pending Releases Trade Date enter a valid trade date in MMDDYY format Contract Price enter a number greater than zero in 9999999 99 format e Share Quantity enter the number of whole shares up to 13 positions If you and your customer have position in the IPO database an immediate release is generated If the customer Prime Broker does not have position refer to the following sections 3 Refer to Appendix D for additional field and processing information Pending Releases You and your customer must have position in the IPO database in order for a release to be processed If you or your cus
63. an releases and regular releases and reports each type as separate line items on Lead Underwriter and Syndicate Member Flipping Activity Reports All stock loan releases are categorized according to Participant type of lender and borrower To dissuade Participants from using the stock loan release facility for regular releases DTC monitors the quantity of IPO shares moved to the Participant s Free Account via stock loan releases versus the quantity of shares loaned by the Participant on the same day and reports discrepancies to the Lead Underwriter and appropriate Syndicate Members All stock loans are made on an omnibus basis No customer account numbers are tagged to stock loans An AIA number entered in a stock loan delivery is ignored by DTC however the exception to this is for stock loans to banks in which case the Participant number of the receiving bank must be entered as the AIA number in order to allow the receiving bank the ability to deliver borrowed shares Stock Loan Receipts DTC delivers all Stock Loans to the Borrower s Free Account Processing Stock Loan Returns You can process Stock Loan Returns by using the appropriate Reason Codes via the PTS functions DO or NDOM All stock loan returns are delivered from the borrower s Free Account 1 Enter Reason Code 20 in the REAS field of the SDFS Initial Public Offering Deliver Orders Screen 2 Refer to DO and NDOM for additional Deliver Order field and processing information Stock
64. are delivered back to their original accounts In cases where both IPO and Secondary Market shares were pledged released Free shares are returned to the Free Account first up to the quantity of Free Account shares pledged The balance of the shares return to the IPO Control Account If released after tracking has ended all Pledge shares are delivered to the Free Account regardless of what their account of origin Reclaims Reclaim Deliveries DTC will automatically process a matched reclamation based on the DO transaction number and other transaction information provided until one day after settlement You can enter Matched Reclaims via the PTS functions ART and DO NDOM and via CCF CCFII and MDH When You reclaim a delivery the reclaimed DO will be matched to the original delivery and the information in the IPO database will be reversed Note Partial reclaims are not permitted Matched Reclaim Deliveries via ART Matched Reclaims can be made on settlement date and the day after These reclaims can not be reclaimed by the original deliverer and are not subject to risk management controls 1 Enter R to the left of the item to be reclaimed on the ATP Activity Summary Screen Matched Reclaim Deliveries via DO or NDOM Matched Reclaims can be made on settlement date and the day after These reclaims can not be reclaimed by the original deliverer and are not subject to risk management controls 1 Enter information in the following f
65. as well as DTC Important Notices which address the contents of the Service Guides on DTC s internet site dtcservices dtcc com DTC shall bear no responsibility for any losses associated with the failure of Participants or other authorized users to follow DTC s most current Service Guides and or Important Notices Participants or other authorized users may direct inquiries about the Service Guides as well as requests for additional copies to the Customer Training and Information Services Department The Depository Trust Company 55 Water Street 27th Floor New York NY 10041 0099 USA fax number 212 855 2283 e mail address training administrator dtcc com DTCC About IPO Overview What is the IPO Tracking System The Initial Public Offering IPO Tracking System is a Depository Trust Company DTC system used to track the movement of IPO shares for a designated period in a book entry environment The system monitors the market activity associated with an IPO issue including the sale or flipping of IPO shares during a stabilization penalty bid period and generates daily reports for the underwriters itemizing these activities The goals of the system are to provide automated tracking of IPOs with no disruption to the normal book entry process accurate comprehensive and timely reports to the Lead Manager and Syndicate Members and by allowing IPOs to be distributed and tracked in a book entry environment the greatest possib
66. atabase Note The use of a dummy Internal Account number in the Int Cust field will default the system to use Free shares for WT processing e Corr Acct enter the Correspondent Syndicate Member s ID Broker Dealer number e AgtID enter the ID Agent number optional 2 Refer to NWT1 and RWT1 for additional WT field and processing information Stock Loans and Returns Stock Loan Deliveries Syndicate Members are able to process stock loans using the appropriate DO NDOM Reason Codes As for all broker Participants DTC fulfills a Syndicate Member s stock loan delivery quantity with Free Account shares only If insufficient shares are available in the Syndicate Member s Free Account the Participant must instruct DTC to process a Stock Loan Release to release IPO shares from its IPO Control account to its Free account for the balance DTC distinguishes between stock loan releases and regular releases and reports each type as separate line items on Lead Underwriter and Syndicate Member Flipping Activity Reports All stock loan releases are categorized according to Participant type of lender and borrower To dissuade Participants from using the stock loan release facility for regular releases DTC monitors the quantity of IPO shares moved to the Participant s Free account via stock loan releases versus the quantity of shares loaned by the Participant on the same day and reports discrepancies to the Lead Underwriter and appropriate Syndicate Member
67. ating rules and will be considered NA or MA depending on the SDFS Account Coding Instructions Shares in the IPO Control Account will not be considered collateral after the first day they are received MA NA intra day moves will not be permitted Shares in the Free Account are subject to normal collateralization rules Reconcile Customer Level Detail with Internal Records You should reconcile the Customer Level Detail in the IPO database with your internal records daily using an POCLD machine readable file This file contains the Agent Bank or Prime Broker s Internal Account numbers of all your customers on file as well as the Executing Broker s Internal Account numbers for those customers Contact DTC s Participant Interface Planning Department or your Relationship Manager for assistance Make Inquiries via IPOI The PTS function IPO Initial Public Offering Tracking System Inquiry allows you to make inquiries about tracked issues The following information is provided via POI A list of all tracked IPO issues A summary of tracked IPO issues in which the Participant has position A summary of customer level details by Participant issue A summary of IPO pending canceled released transactions For additional information on the IPO Tracking System Inquiry function refer to the Overview and Appendix E Notify DTC to End Tracking Unless notified otherwise DTC s Underwriting Department will automatically end tracking at the en
68. ative versions of the daily reports reflect the full history of the tracked issue and indicate that the tracking period has ended This is the last report Participants receive for the tracked CUSIP Syndicate Member Receive Shares from Lead Manager The Lead Manager sets up deliveries of IPO shares to its Co Managers Co Reporters and Syndicate Members prior to closing using the appropriate Deliver Order Reason Codes By 1 15 p m closing date DTC receives a call from the Lead Manager permitting the distribution of shares to Co Managers Co Reporters and Syndicate Members DTC then delivers shares from the Lead Manager s IPO Control Account to each Syndicate Member s IPO Control Account in accordance with the Lead Manager s Deliver Order instructions Syndicate Takedown Note Shares remain in the IPO Control Account for the duration of the tracking period unless transferred released or distributed to Institutional customers at Agent Banks or Prime Brokers Initial Distribution Initial Distribution the delivery of IPO shares to a Syndicate Member s Institutional customers at Agent Banks or Prime Brokers takes place after the Syndicate Takedown Although Initial distribution shares can be delivered on or after the closing date you can set up their Initial Distribution deliveries prior to receiving shares from the Lead Manager An Initial Distribution is performed by using either DTC s ID system or the PTS functions DO or NDOM You
69. ay through the automated settlement feature of the ID system Note The ANE inquiry function and T 3 hard copy report will display a code of F in the status field to indicate an Initial Distribution trade that has been rejected from settlement and an I to indicate a Secondary Market trade that has been rejected from settlement The F code indicates that the Internal Account number on an IPO trade is missing and the I code indicates that the Internal Account number missing or does not match the Internal Account number as stored on the IPO database These transactions may be reprocessed for up to 21 days You may resolve Internal Account number discrepancies in the following ways e Have the Custodian update the Internal Account number in the IPO database to match the number on the ID transaction by performing an IPO customer level adjustment Refer to Update Customer Level Detail e Cancel the ID transaction and re enter it in the ID system Refer to Deliver Shares to Agent Banks and Prime Brokers via ID e Have the Custodian Except the ID transaction from automated settlement and enter a DO for the transaction with the Internal Account number as it appears in the IPO database Withdrawals by Transfer WTs If certificate denominations are available Withdrawals by Transfer WTs of tracked issues are permitted starting on closing day via the PTS functions NWT1 Night Withdrawal by Transfer and RWT1 Rush Withdrawal by Trans
70. be permitted Shares in the Free Account are subject to normal collateralization rules Refer to the Settlement Service Guide for additional collateralization information Reconcile Customer Level Detail with Internal Records You should reconcile the Customer Level Detail in the IPO database with your internal records daily using an POCLD machine readable file This file contains the Agent Bank or Prime Broker s Internal Account numbers of all your customers on file as well as the Executing Broker s Internal Account numbers for those customers Contact DTC s Participant Interface Planning Department or your Participant Services representative for assistance Make Inquiries via IPOI The PTS function IPOI Initial Public Offering Tracking System Inquiry allows you to make inquiries about tracked issues The following information is provided via POI A list of all tracked IPO issues A summary of tracked IPO issues in which the Participant has position A summary of customer level details by Participant issue A summary of IPO pending canceled released transactions For additional information on the IPO Tracking System Inquiry function refer to the Overview and Appendix E Receive Reports from DTC DTC prepares and distributes daily to you cumulative hard copy reports of tracked issues The following information is provided List of potential flips by own Retail and Institutional customers e Potential flips by customers are br
71. can indicate an Initial Distribution delivery by entering the appropriate Market Code on the Institutional Delivery Trade Input Screen for ID trades or by entering the appropriate Reason Code in the REAS field of the Initial Public Offering Deliver Orders Screen for Day or Night DOs Note Initial Distribution transactions are not settled through CNS Distribute Shares to Agent Banks and Prime Brokers Distribute Shares via ID Note Customer level detail is required for Initial Distribution transactions 1 Enter information in the following fields of the Institutional Delivery Trade Input Screen Market Code enter Market Code 11 Agent Internal Account enter the Agent Bank or Prime Broker s Internal Account number for the customer Note The Internal Account number must be entered correctly in order to ensure accurate processing of the transaction If it is missing or entered incorrectly an error code of 91 will appear on the Confirmation and Affirmation tickets Refer to Resolve Internal Account Number Discrepancies for information on how to correct the Internal Account number e Broker Internal Account enter the Executing Broker s Internal Account BIA number for the customer optional Note The Executing Broker Internal Account number BIA is optional However there are several advantages to entering this information the BIA provides more detailed reporting of flipping activity and this information can easily be extracted from CC
72. can set up Initial Distribution deliveries on behalf of your Correspondent Syndicate Members prior to receiving shares from the Lead Manager An Initial Distribution is performed by using either DTC s ID system or the PTS functions DO or NDOM You can indicate an Initial Distribution delivery by entering the appropriate Market Code on the Institutional Delivery Trade Input Screen for ID trades or by entering the appropriate Reason Code in the REAS field of the Initial Public Offering Deliver Orders Screen for Day and Night DOs Note Initial Distribution transactions are not settled through CNS Distribute Shares to Agent Banks and Prime Brokers Distribute Shares via ID Note Customer level detail is required for Initial Distribution transactions 1 Enter information in the following fields of the Institutional Delivery Trade Input Screen Market Code enter Market Code 11 Agent Internal Account enter the Agent Bank or Prime Broker s Internal Account number for the customer e Broker Internal Account enter the Executing Broker s Internal Account BIA number for the customer Note The Internal Account numbers must be entered correctly in order to ensure accurate processing of the transaction If either is missing or entered incorrectly an error code of 91 will appear on the Confirmation and Affirmation tickets Refer to Resolve Internal Account Number Discrepancies for information on how to correct the Agent Internal Account number Res
73. ccount Number used by the Executing Broker BIA Number Syndicate Member to identify its customer Clearing Agent DTC Participant Bank or Broker that processes transactions at DTC on behalf of a non DTC Participant Date on which an issue closes the Issue s shares are distributed by the Lead Manager and Syndicate Members to Retail and Institutional investors Closing Date CNS Continuous Net Settlement The Net Settlement System employed by the National Securities Clearing Corporation NSCC to settle IPO Secondary Market transactions Co Lead See Co Manager Co Manager One of two entities acting in equal capacities as Lead Manager Co Manager relationships often allow different Participants to handle domestic and international portions of an IPO Co Reporter Underwriter Lead Manager uses two Participant numbers for distribution of an IPO e g one for domestic distribution and one for international distribution Non DTC Participant that uses a DTC Participant as a Clearing Agent to process transactions at DTC Correspondent The number used by a Clearing Broker Dealer or Clearing Bank to identify its correspondent CUSIP Number The unique nine digit identifier of an issue Custodian Bank Bank that holds shares for an Institutional customer shares are in custody for that customer Customer Account Transfer The movement of a customer s posit
74. certain time period usually 30 days ID Agent Bank Identifier See Agent Bank Number ID Agent Bank Number See Agent Bank Number ID Affirmation DTC output indicating the Custodian s affirmation agreement of the details of a trade ID Broker Dealer Number The number used to identify a Broker Dealer in DTC s ID System ID Confirmation DTC output outlining the details of a trade entered into the ID system Initial Distribution Shares Shares delivered from the Lead Manager or Syndicate Members to their customers Shares are considered Initial Distribution shares until they are sold in the Secondary Market Institutional Customer Large Investors such as Insurance Companies Retirement Funds etc Positions are held by an Agent Bank or Prime Broker Internal Account Number Number used by an Agent Bank Prime Broker or Executing Broker to identify its customer Investment Manager See Institutional Customer IPO Agent Bank Identifier See Agent Bank Number IPO Control Account Account established for Brokers to separate tracked IPO shares during the tracking period IPOI PTS inquiry function that provides information including list of tracked issues list of tracked issues in which the Participant has position customer level details and the status of IPO Control Account releases IPOU PTS update function that allows Participants to perform transactions with their IPO
75. ched deliveries to the AIA numbers populated on the Custodian Bank s IPO database The system attempts to reconcile these AIA number discrepancies nightly during the relaxed editing period so that DTC can report these sales correctly to Underwriters If a match is found the system updates its records to accurately report the delivering customer and its associated Syndicate Member The Custodian Bank is also identified on the report as having delivered the shares If a match is not found the system is unable to identify the Syndicate Member associated with the shares and therefore reports the delivery to the Lead Underwriter as Unknown indicating a potential flip by a customer of an unknown Syndicate Member The Custodian Bank is identified on the report as having delivered the shares Custodian Banks can view unmatched transactions that settled through relaxed editing via IPOI Option 3 The following information is displayed A customer is added displaying the unmatched AIA number an Unknown Syndicate Member a negative Available Share Quantity and a flipped quantity to the negative share quantity Refer to Make Inquiries via IPOI for additional information Note After the relaxed editing period ends deliveries with unmatched AIA numbers will not settle Refer to Resolve AIA Number Discrepancies in ID Deliveries Resolve AIA Number Discrepancies in ID Deliveries When the AIA number on an Initial Distribution buy transact
76. cific instructions Initial Distribution After the Lead Manager distributes shares to the Syndicate Members in the Syndicate Takedown the Lead Manager s and Syndicate Members then distribute shares to their Institutional and Retail customers Initial Distribution Any of the following actions may occur at this point e Distribution of Institutional Shares to Institutions custodians Agent Banks or Prime Brokers Directed Concessions Lead Manager only Oversubscriptions Lead Manager only Directed Concessions Oversubscriptions Lead Manager only Allocation to Retail Customers Initial Distribution deliveries require customer level detail Lead Managers Co Managers Co Reporters Syndicate Members Clearing Brokers and Banks can set up Initial Distribution deliveries prior to the closing of the issue These deliveries may be performed by using either DTC s ID system or the PTS functions DO or NDOM Secondary Market e Secondary Market sells can also be set up in advance by reformatting Secondary Market sell transaction files In order to deliver Secondary Market sells Broker Dealers must release IPO shares from their IPO Control Accounts Those releases can be set up as early as 6 00 a m EST trade date Releases submitted on trade date will recycle until settlement date or for up to 30 calendar days depending on the recycle option selected by the Participant The system will recycle the transactions and release positions as
77. ck Loan net amount of stock loans for unknown Syndicate Members e Unknown Grand Total Withdrawal total will always be zero e Share Type for Syndicate Member The following may be listed for each Syndicate Member e SL Inst Unmatch Release the quantity of the Syndicate Member s stock loan releases for Institutional customers that exceeded the total quantity of shares used for stock loan deliveries This quantity should be added to the SL Custodian To Lead or SL Custodian To Other categories since had the custodian delivered the shares in a timely fashion it would represent an increase in this Syndicate Member s IPO shares loaned by the Custodian e SL Retail Unmatch Release the quantity of the Syndicate Member s stock loan releases for Retail customers that exceeded the total quantity of shares used for stock loan deliveries This quantity should be added to the SL Firm To Lead or SL Firm To Other categories since had the custodian delivered the shares in a timely fashion it would represent an increase in this Syndicate Member s IPO shares loaned by the Custodian e In the case in which a Syndicate Member s customer transfers its accounts to another Participant via IPOU Option 4 Customer Account Transfer the movement is not reported as a potential flip For reporting purposes the IPO database moves the original Syndicate Member s Participant number and customer BIA number with each transfer of a customer s position Note Account transf
78. claim Wrong Money Receiver reclaims an Oversubscription delivery the money charged is incorrect Oversubscription Reclaim Account Information Missing Receiver reclaims an Oversubscription delivery additional account information is needed to identify the delivery Oversubscription Reclaim Due Bill Missing Receiver reclaims an Oversubscription delivery the due bill is missing ID Oversubscription Delivery Oversubscription Directed Concession Delivery Lead Manager delivers oversubscribed shares directly to a Syndicate Member s Institutional customer at its Agent Bank or Prime Broker at the Institution s request Shares are moved from the Lead Manager s IPO Control Account to a Prime Broker s IPO Control Account or to an Agent Bank s Free Account and are marked as IPO shares in the IPO database 551 Oversubscription Directed Concession Reclaim DK Receiver reclaims an Oversubscription Directed Concession delivery the Receiver doesn t know the delivery 552 Oversubscription Directed Concession Reclaim Wrong Quantity Receiver reclaims an Oversubscription Directed Concession delivery the wrong quantity of shares was delivered 553 Oversubscription Directed Concession Reclaim Wrong Security Receiver reclaims an Oversubscription Directed Concession delivery the wrong security was delivered 554 Oversubscription Directed Concession Reclaim Wrong Money Receiver reclaims an Oversubscription Directed Concession
79. count To Internal Customer New Internal Account optional Reallocated Share Quantity New whole number quantity optional Internal Customer Internal Account Activity Code 46 Trade Date Trade date Contract Price Contract price Sale of Free shares Same as for non tracked Activity issues Code 26 Move Free shares to IPO Control Account for Oversubscriptions via IPOU Option 6 CUSIP The issue s CUSIP Share Quantity Number of shares being moved Withdrawals by Transfer via NWT1 RWT1 Stock Loan via DO NDOM Stock Loan Return via DO NDOM Account Transfer to Broker IPO Shares via IPOU Option 4 Int Cust Internal Account Agt ID ID Agent optional REAS Reason Code 10 Activity Code 48 IPO shares 48 Free shares 26 Reason Code 10 REAS Reason Code 20 Activity Code IPO shares 49 Free shares 26 Reason Code 20 To Participant Activity Receiving Broker s Part Code 47 From Internal Reason Customer Current Code 40 Internal Account To Internal Customer New Internal Account Share Quantity Account Transfer to Broker Free shares via POU Option 4 Account Transfer to Bank IPO Shares via IPOU Option 4 Account Transfer to Bank Free shares via POU Option 4 Number of whole shares being transferred Settlement Amount Settlement amount optional To Participant Activity Receiving Broker s Part Cod
80. credited to the receiving Bank s general free account Transfer position to a Broker Shares marked as IPO shares in the IPO database for the Clearing Bank move to the receiving Broker s IPO Control Account in ART and are marked as IPO shares in the IPO database Shares marked as Secondary Market shares in the IPO database for the Clearing Bank move to the Broker s general free account in ART Secondary market shares are not captured in the IPO database for broker Participants Share Movement for Customer Account Transfers Receipts Clearing Banks receive customer account transfer positions from other Participants on behalf of their Correspondent Syndicate Members in one of the following ways Receive position from a Bank All shares move to the Clearing Bank s Free Account in ART Shares marked as IPO shares in the IPO database for the delivering Bank are marked as IPO shares in the IPO database for the receiving Clearing Bank and credited to the receiving Bank s general free account Shares marked as Secondary Market shares in the IPO database for the delivering Bank are marked as Secondary Market IPO shares in the IPO database for the Clearing Bank and credited to the receiving Bank s general free account Receive position from a Broker All shares move to the general free account in ART Shares delivered from the Broker s IPO Control Account are marked as IPO shares in the IPO database for the Clearing Bank and credited to the receiving Bank
81. d If you and your customer do not have position refer to the following sections Pending Releases You and your customer must have position in the IPO database in order for a release to be processed If the customer Syndicate Member does not have position the release will pend hold for up to 3 days after Trade Date or for up to 30 calendar days depending on the recycle option selected by the Participant If you and your customer do have position but not enough to satisfy the entire release DTC will release the available shares from the customer Syndicate Member s account and pend the balance of the release request partial hold Participants that do not populate the IPO database with customer level detail can use an omnibus or dummy account number This allows for partial releases of their position as shares are sold Cancel Pending Releases You can cancel pending releases via the POU function 1 On the IPO Tracking System Main Menu Screen select Option 7 IPO Pending Transaction Cancel 2 Enter information in the following fields of the IPO Pending Transaction Screen e CUSIP enter the issue s CUSIP number e Date enter a date range From and To in YYMMDD format The default is the current date 3 Press the ENTER key Result A list of pending transactions is displayed 4 Enter S to the left of the selected transaction to view details 5 Enter C cancel to the left of the selected transaction Result The me
82. d of the 90 calendar day maximum tracking period However you may end tracking of an IPO issue at any time before that Instruct DTC s Underwriting Department in writing to end tracking no later than 4 00 p m the day tracking is to be ended DTC will end tracking on the close of business on the specified date Shares still residing in the IPO Control Account are moved to the Free Account and are subject to normal collateralization rules unless prior arrangements have been made to move shares into the subaccount segregation account Activities chilled during the tracking period e g CODs and Deposits can be performed The ELISCA file and PTS function GWIZ are updated to indicate that tracking for that issue has been turned off and a final tracking report is generated Receive Reports from DTC DTC prepares and distributes daily to you cumulative hard copy reports of your tracked issues The following information is provided List of potential flips by customers of Syndicate Members Correspondents List of own Retail and Institutional customers that potentially flipped Potential flips by Directed Concessions indicated with an Separate line for WTs Separate line for Stock Loans quantity reported represents the net amount outstanding loans less returns Retail account transfers showing the receiving Participant number e Institutional account transfers showing the receiving Participant number and BIA e List of CNS sho
83. d correctly in order to ensure accurate processing of the transaction DTC rejects Initial Distribution deliveries in which either number is missing 2 Refer to DO or NDOM for additional Deliver Order field and processing information Result Shares move from the Lead Manager s Free Account to the Agent Bank s Free Account and are marked as IPO shares in the database or to the Prime Broker s IPO Control Account Distribute Shares for Oversubscriptions Directed Concessions You can deliver oversubscribed shares directly to a Syndicate Member s Institutional customer at the customer s request Oversubscription Directed Concession via DTC s ID system or via the PTS functions DO or NDOM The Lead Manager is set up as the associated Syndicate Member in the IPO database Distribute Oversubscribed Directed Shares to Agent Banks and Prime Brokers via ID 1 Enter information in the following fields of the Institutional Delivery Trade Input Screen e Market Code enter Market Code 53 e Agent Internal Account enter the Agent Bank or Prime Broker s Internal Account number for the customer e Broker Internal Account enter the Executing Broker s Internal Account BIA number for the customer Note The Internal Account numbers must be entered correctly in order to ensure accurate processing of the transaction If either is missing or entered incorrectly an error code of 91 will appear on the Confirmation and Affirmation tickets Refer to Resolv
84. d to complete a delivery will be reported as potential flips Potential flips of Initial Distribution shares are reported as such on the daily reports to Lead managers and Syndicate Members Tracking of all IPO shares continues until the Lead Manager terminates tracking or until the 90 calendar day maximum tracking period is over If a customer has received shares from more than one Broker Dealer and then sells shares on the Secondary Market the system prorates the sale among the Syndicate Members servicing that customer Note Customer level detail is required for all Secondary Market sales Exception If a Custodian Bank has never received Initial Distribution shares for the tracked issue that Bank s shares are not tracked and customer level detail is not required for those Secondary Market sales Deliver Shares via DO or NDOM Shares sold in the Secondary Market can be delivered via the PTS functions DO or NDOM using the existing DO Reason Codes 1 Enter information in the following fields of the Initial Public Offering Deliver Orders Screen e Int Acct enter the Agent Bank s Internal Account number for the customer Note The Agent Internal Account AIA number must be entered correctly in order to ensure accurate processing of the transaction If the AIA number is not correct the trade will be rejected Refer to Relaxed Editing for exceptions and Resolve AlA Number Discrepancies in ID Deliveries e Trade Dt enter the
85. d to your customers 1 On the IPO Tracking System Main Menu Screen select Option 5 Customer Level Adjustment 2 Enter information in the following required fields of the IPO Customer Level Adjustment screen e From Internal Customer enter the existing AIA number of the customer From BIA enter the existing BIA number for the customer optional To Internal Customer enter the new AIA number of the customer required if the Participant wants to change the existing number to a new one e Reallocated Share Quantity enter the number of whole shares being adjusted up to 13 positions required if the Participant is adjusting a share quantity from existing customers to the new customer Note Because the system overlays the share quantity information you must input exactly the total number of shares the To Internal Customer should have If you are not sure of the exact total the customer should have refer to the following section 3 Refer to Appendix D for additional field and processing information Update Customer Level Detail Using the Add Customer Level Detail Function IPOU Option 2 Add Customer Level Detail provides a way for you to adjust share quantities for their customers without knowing the total number of shares each customer should have This method can also be used to eliminate an old Internal Account number from the IPO database and add a new one 1 On the IPO Tracking system Main Menu Screen select Option 2 Add Customer
86. ded its IPO shares If IPO shares are moved via a Bank to Bank delivery the receiving Bank will receive tagged IPO shares and a flip will not be reported Receive Shares from Secondary Market Buys Shares bought on the Secondary Market reside in the Clearing Bank s general free account and are segregated in the IPO database as Secondary Market shares For Banks Secondary Market shares are tracked for the duration of the tracking period Relaxed Editing Clearing Banks can set up sales of their Correspondent Syndicate Members customers Initial Distribution shares on the Secondary Market as early as trade date These sales referred to as turnaround sales will settle on the same day the issue closes possibly before the IPO database has been populated Relaxed editing allows Clearing Banks to process Secondary Market sell transactions on settlement date without a match of the AIA number or share quantity to the IPO database As long as the Clearing Bank itself has received sufficient shares to cover deliveries the Clearing Bank can process sales of Correspondent Syndicate Members customers Initial Distribution shares on settlement date without matching customer level detail As soon as the Clearing Bank receives the Initial Distribution shares e D deliveries that were set up for customers between trade date and the day before settlement date S 1 are delivered regardless of unmatched Internal Account numbers or share quantity
87. delivery the money charged is incorrect 556 Oversubscription Directed Concession Reclaim Account Information Missing Receiver reclaims an Oversubscription Directed Concession delivery additional account information is needed to identify the delivery 557 Oversubscription Directed Concession Reclaim Due Bill Missing Receiver reclaims an Oversubscription Directed Concession delivery the due bill is missing 559 ID Oversubscription Directed Concession Delivery 560 Co Manager Co Reporter Delivery IPO Foreign Distribution Lead Manager delivers shares to a second Lead Manager Co Manager or to its own second Participant number Co Reporter 561 Co Manager Co Reporter Delivery Reclaim DK Receiver reclaims a Co Manager Co Reporter delivery the Receiver doesn t know the delivery 562 Co Manager Co Reporter Delivery Reclaim Wrong Quantity Receiver reclaims a Co Manager Co Reporter delivery the wrong quantity of shares was delivered 563 Co Manager Co Reporter Delivery Reclaim Wrong Security Receiver reclaims a Co Manager Co Reporter delivery the wrong security was delivered 564 Co Manager Co Reporter Delivery Reclaim Wrong Money Receiver reclaims a Co Manager Co Reporter delivery the money charged is incorrect 566 Co Manager Co Reporter Delivery Reclaim Account Information Missing Receiver reclaims a Co Manager Co Reporter delivery additional account information is needed to identify the delivery 567 Co Manag
88. dline S through S 1 will be placed in the Receiver s Free Account These deliveries can be reclaimed Memo Segregation Although position may reside in both the IPO Control and Free Accounts you can enter Memo Segregation instructions for tracked issues using the same procedures currently used for non tracked issues Memo Segregation bridges the IPO Control and Free Accounts The share quantity in the Memo Segregation instruction will be subtracted from the combined share total in the IPO Control and Free Accounts The resulting share total must be greater than the quantity of any Deliver Orders entered If the quantity is less the Deliver Orders will not be processed and will pend Deposits Deposits are chilled for tracked issues for the duration of the tracking period No DWAC Deposit Withdrawal at Custodian activity is permitted during the tracking period Certificates On Demand CODs CODs are chilled for tracked issues for the duration of the tracking period Collateralization of IPO Shares Shares in the IPO Control Account will be considered collateral NA only on the day they are received for value into the account Shares received into the IPO Control Account without value will follow the normal accounting updating rules and will be considered NA or MA depending on the SDFS Account Coding Instructions Shares in the IPO Control Account will not be considered collateral after the first day they are received MA NA int
89. e 26 From Internal Reason Customer Current Code 40 Internal Account To Internal Customer New Internal Account Share Quantity Number of whole shares being transferred Settlement Amount Settlement amount optional To Participant Activity Receiving Bank s Part Code 48 From Internal Reason Customer Current Code 40 Internal Account To Internal Customer New Internal Account Share Quantity Number of whole shares being transferred Settlement Amount Settlement amount optional To Participant Activity Receiving Bank s Part Code 26 From Internal Reason Customer Current Code 40 Internal Account To Internal Customer New Internal Account Share Quantity Number of whole shares being transferred Settlement Amount Settlement amount optional Custodian Bank Procedures Receive Initial Distribution Shares from Lead Manager Syndicate Members On closing day the Lead Manager and Syndicate Members of an IPO tracked issue deliver shares to Custodian Banks for their Institutional Customers Initial Distribution via the Institutional Delivery ID system or Deliver Orders DO or NDOM These shares are delivered to the Custodian Bank s Free Account Throughout the tracking period Bank transactions for that issue are monitored through the IPO system All shares are stored in the Bank s Free Account and are tagged in the IPO database as either IPO Initial Distribution or IPO Secondary
90. e DO NDOM deliveries set up for customers are made until 3 00 p m EST on settlement date regardless of unmatched Internal Account numbers or share quantities After the trade settles Banks can update the unmatched Internal Account number to the correct Internal Account number via the PTS function POU Refer to Update Customer Level Information via IPOU Each night during the relaxed editing period DTC attempts to reconcile the AIA numbers of unmatched deliveries not adjusted during the processing day After DTC s cutoff for deliveries and prior to cutoff for the machine readable customer level detail files the system automatically attempts to match the AIA numbers of made unmatched deliveries to the AIA numbers populated on the Custodian Bank s IPO database The system attempts to reconcile these AIA number discrepancies nightly during the relaxed editing period so that DTC can report these sales correctly to Underwriters If a match is found the system updates its records to accurately report the delivering customer and its associated Syndicate Member The Custodian Bank is also identified on the report as having delivered the shares If a match is not found the system is unable to identify the Syndicate Member associated with the shares and therefore reports the delivery to the Lead Underwriter as Unknown indicating a potential flip by a customer of an unknown Syndicate Member The Custodian Bank is identified on the report as having d
91. e Internal Account Number Discrepancies for information on how to correct the Agent Internal Account number 2 Refer to IDTI for additional ID field and processing information Result Shares move from your Free Account to the Agent Bank s Free Account and are marked as IPO shares in the database or to the Prime Broker s IPO Control Account Distribute Oversubscribed Directed Shares to Agent Banks and Prime Brokers via DO or NDOM 1 Enter the information in the following fields of the Initial Public Offering Deliver Orders Screen Recv Pt enter the Agent Bank or Prime Broker s Participant number REAS enter Reason Code 550 Int Acct enter the Agent Bank or Prime Broker s Internal Account number for the customer e Bkr Acct enter the Executing Broker s Internal Account BIA number for the customer Result The system captures the AIA number along with the BIA number and the associated Syndicate Member and populates the IPO database with this information Note The Internal Account numbers must be entered correctly in order to ensure accurate processing of the transaction DTC rejects Initial Distribution deliveries in which either number is missing 2 Refer to DO or NDOM for additional DO field and processing information Result Shares move from the Lead Manager s Free Account to the Agent Bank s Free Account and marked as IPO shares in the database or to the Prime Broker s IPO Control Account Updating Customer Level Informa
92. e Movement for Customer Account Transfers Receipts You will receive a customer s position from another Participant in one of the following ways e Receive position from a Bank Shares marked as IPO shares in the Bank s Free Account move to your IPO Control Account in ART and are marked as IPO shares in the IPO database Shares marked as Secondary Market shares in the Bank s Free Account move to your Free Account in ART These shares are not captured in the IPO database e Receive position from a Broker Shares from the Delivering Broker s IPO Control Account move to your IPO Control Account in ART and are marked as IPO shares in the IPO database Shares from the Delivering Broker s Free Account move to your Free Account in ART These shares are not captured in the IPO database Secondary Market Release Shares from the IPO Control Account for Secondary Market Sales All Secondary Market sell transactions settle from the Free Account In order to deliver shares sold by a Correspondent Syndicate Member s customers in the Secondary Market those shares must first be released from the Clearing Broker s IPO Control Account to its Free Account using the PTS function POU Failure to release shares to the Free Account could result in a CNS short or DOs for Secondary Market sales dropping in ART Releases can be performed on the individual customer level by including the Internal Account number of the customer on the release or on the Syndicate Member
93. e Takedown Affirmed ID Syndicate Trades Delivery to Agent Banks Prime Brokers via ID Market Codes e 11 Initial Distribution e 51 Directed Concessions e 52 Oversubscriptions e 53 Oversubscriptions Directed Concessions Unaffirmed ID Syndicate Trades Performed via DO NDOM Delivery to Institutional clients at Prime Broker Agent Bank via DO NDOM Reason Codes e 50 Initial Distribution e 530 Directed Concessions e 540 Oversubscriptions e 550 Oversubscriptions Directed Concessions Secondary Market ID Trades Secondary Market deliveries with ID Market Codes other than 11 51 52 53 Secondary Market DO NDOM Trades Secondary Market deliveries with DO NDOM Reason Code e 30 Delivery Versus Payment Appendix B GLOSSARY Agent Bank See Custodian Bank Agent Bank Number The number identifying banks in DTC s ID system Also referred to as Agent Bank Identifier ID Agent Bank Identifier IPO Agent Bank Identifier ID Agent Bank Number Agent Bank I dentifier See Agent Bank Number Agent Internal Account The number used by the Custodian Bank or AIA Number Prime Broker to identify its customer Also referred to as the Internal Account number Balance Order Ticket NSCC output indicating a firm s remaining long or short positions after a day s transactions have been netted Broker Custody Trade Trade in which the Executing Broker and the Custodian are the same entity Broker I nternal A
94. e shares to Institutional customers 1 On the IPO Tracking System Main Menu Screen select Option 2 Add Customer Level Detail 2 Enter information in the following required fields of the IPO Add Customer Level Detail Screen e Corresp Account enter the Correspondent Syndicate Member s ID Broker Dealer number e Internal Customer enter the Internal Account number of the customer Share Quantity enter the number of whole shares up to 13 positions Sign enter to indicate shares should be increased 3 Refer to Appendix D for additional field and processing information Update Customer Level Detail IPOU Option 5 allows you to correct or update your Correspondent Syndicate Member s customer Internal Account numbers and adjust the share quantities allocated to their customers 1 On the IPO Tracking System Main Menu select Option 5 Customer Level Adjustment 2 Enter information in the following required fields of the IPO Customer Level Adjustment Screen e Corresp Account enter the Correspondent Syndicate Member s ID Broker Dealer number e From Internal Customer enter the existing Internal Account number of the customer From BIA enter the existing BIA number for the customer optional To Internal Customer enter the new Internal Account number of the customer required if the Participant wants to change it e Reallocated Share Quantity enter the number of whole shares being adjusted up to 13 positions required if the Par
95. ease the available shares from the customer Co Manager s account and pend the balance of the release request partial hold Participants that do not populate the IPO database with customer level detail can use an omnibus or dummy account number This allows for partial releases of their position as shares are sold Cancel Pending Releases You can cancel pending releases via the IPOU function 1 On the IPO Tracking System Main Menu Screen select Option 7 IPO Pending Transaction Cancel 2 Enter information in the following fields of the IPO Pending Transaction Screen e CUSIP enter the issue s CUSIP number e Date enter a date range From and To in YYMMDD format The default is the current date 3 Press the ENTER key Result A list of pending transactions is displayed 4 Enter S to the left of the selected transaction to view details 5 Enter C cancel to the left of the selected transaction Result The message PRESS PF1 13 TO CONFIRM CANCEL appears 6 Press the PF1 13 key Result The transaction is canceled 7 Refer to Appendix D for additional information Secondary Market Deliveries Secondary Market deliveries are performed using the same procedures currently used for deliveries of non tracked issues Note The ID Agent number must be included for Secondary Market DO deliveries to Prime Brokers and Banks When delivering to a Bank the ID Agent number will default to the receiving Bank s Participant number
96. econdary Market for distribution Oversubscription Shares purchased or borrowed in the Secondary Market for Oversubscription Distribution will reside in your Free Account You have two options for delivering Oversubscribed shares e Move the shares back to your IPO Control Account via the PTS function POU Option 6 and perform an Initial Distribution ID or DO NDOM delivery e Deliver the shares directly from your Free Account using the appropriate ID or DO NDOM codes Move Shares From the Free Account to the IPO Control Account for Oversubscriptions 1 On the IPO Tracking System Main Menu Screen select Option 6 Oversubscription for Lead Underwriter 2 Enter information in the following fields of the IPO Oversubscription for Lead Underwriter Screen e CUSIP enter the issue s CUSIP number e Share Quantity enter the number of Free shares being transferred to the IPO Control Account 3 Press the ENTER key 4 Refer to Appendix D for additional field and processing information 5 Perform an Initial Distribution DO NDOM or ID delivery Refer to Distribute Shares to Agent Banks and Prime Brokers via ID and Distribute Shares to Agent Banks and Prime Brokers via DO or NDOM for more information Distribute Oversubscribed Shares to Agent Banks and Prime Brokers via ID 1 Enter information in the following fields of the Institutional Delivery Trade Input Screen Market Code enter Market Code 52 Agent Internal Account enter the
97. ed on or after the closing date you can set up your Initial Distribution deliveries prior to receiving shares into your IPO Control Account An Initial Distribution is performed by using either DTC s ID system or the PTS functions DO or NDOM You can indicate an Initial Distribution delivery by entering the appropriate Market Code on the Institutional Delivery Trade Input Screen for ID trades or by entering the appropriate Reason Code in the REAS field of the Initial Public Offering Deliver Orders Screen for Day and Night DOs Note Initial Distribution transactions are not settled through CNS Distribute Shares to Agent Banks and Prime Brokers via ID Note Customer level detail is required for Initial Distribution transactions 1 Enter information in the following fields of the Institutional Delivery Trade Input Screen Market Code enter Market Code 11 Agent Internal Account enter the Agent Bank or Prime Broker s Internal Account number for the customer e Broker Internal Account enter the Executing Broker s Internal Account BIA number for the customer Note The Internal Account numbers must be entered correctly in order to ensure accurate processing of the transaction If either is missing or entered incorrectly an error code of 91 will appear on the Confirmation and Affirmation tickets Refer to Resolve Internal Account Number Discrepancies for information on how to correct the Agent Internal Account number Result The AIA number
98. ed to eliminate an old Internal Account number from the IPO database and add a new one 1 On the IPO Tracking system Main Menu Screen select Option 2 Add Customer Level Detail 2 Enter Information in the following required fields e Internal Customer enter the Internal Account number of the customer e Share Quantity enter the number of whole shares up to 13 positions you wish to increase decrease the account by e Sign enter to indicate the shares should be increased or to indicate the shares should be decreased Result The system adds subtracts the share quantities for the account and updates them accordingly If the share quantity for an Account number is reduced to zero the system deletes that number from the IPO database 3 Refer to Appendix D for additional information Transfer of Customer s Position Between Participants You can transfer your customers positions to another Participant without that transfer being reported as a potential flip For reporting purposes the IPO database moves the original Syndicate Member s Participant number and BIA number with each transfer of a customer s position Memo Segregation and Sub Account Segregated positions do not need to be released prior to attempting any customer account transfers IPO account transfer transactions can bypass Memo Segregation Customer level detail is required for account transfers Transfer Customer s Position via IPOU 1 For those transfers that
99. ee Account e Since the IPO Tracking System records all manual releases as potential flips you should not manually release shares for WT processing e DTC generates releases from your IPO Control Account only if the Internal Account number already exists in the IPO database If the Internal Account number does not exist a release will not be generated and the WT will be assumed to be from Free shares only Requesting a WT Using Free Shares Only 1 Enter information in the following fields of the Night W T Data Collection Screen or the Rush Withdrawal Transfer System Add Function Screen e Int Cust enter a dummy AIA number one that does not exist in the IPO database Note The use of a dummy Internal Account number in the Int Cust field will default the system to use Free shares for WT processing e AgtID enter ID the Agent number optional 2 Refer to NWT1 and RWT1 for additional WT field and processing information Stock Loans and Returns Stock Loan Deliveries Lead managers are able to process stock loans using the appropriate DO NDOM Reason Codes As for all broker Participants DTC fulfills a Lead Manager s stock loan delivery quantity with Free Account shares only If insufficient shares are available in the Lead Manager s Free Account the Participant must instruct DTC to process a Stock Loan Release to release IPO shares from its IPO Control account to its Free account for the balance DTC distinguishes between stock lo
100. elationship in the IPO database The system will validate the relationship against the Broker section of the ID Master File 2 If delivering to a Clearing Bank the number entered in the Recv Pt and Corr Acct fields can be the same provided that relationship exists in the Broker section of the ID Master File 2 Refer to DO or NDOM for additional Deliver Order field and processing information Distribute Shares for Oversubscriptions When you have less shares than you need to make your Syndicate Takedown deliveries you can borrow or purchase shares from the Secondary Market Oversubscriptions Shares borrowed or purchased in the Secondary Market for Oversubscription Distribution will reside in your Free Account You have two options for delivering Oversubscribed shares e Move the shares back to your IPO Control Account via the PTS function IPOU Option 6 and perform a Syndicate Takedown DO NDOM delivery e Deliver the shares directly from your Free Account using the appropriate ID or DO NDOM codes Move Shares from the Free Account to the IPO Control Account 1 On the IPO Tracking System Main Menu Screen select Option 6 Oversubscription for Lead Underwriter 2 Enter information in the following fields of the IPO Oversubscription for Lead Underwriter Screen e CUSIP enter the issue s CUSIP number e Share Quantity enter the number of Free shares being transferred to the IPO Control Account 3 Press the ENTER key 4 Ref
101. eld and processing information Matched Reclaim Deliveries via DO or NDOM Matched Reclaims can be made on settlement date and the day after These reclaims can not be reclaimed by the original deliverer and are not subject to risk management controls 1 Enter information in the following fields of the SDFS Automatic Reclaim Deliver Orders Screen e Trans enter the transaction number of the transaction being reclaimed e Reas Code enter the appropriate Reason Code Refer to Codes for Reclaim Reason Codes e Orig Date Ind enter T to reclaim a DO entered today or P to reclaim a DO entered on the previous business day 2 Refer to FFSP for additional information Note If made during the Matched Reclaims timeframe DTC will also match Freeform Reclaims provided the appropriate DO Reason Code and correct information is entered Unmatched Freeform Reclaim Deliveries Reclaims must be entered freeform via CCF CCFII MDH or the PTS functions DO NDOM if e The reclaim transaction number cannot be matched to an original delivery e The reclaim occurs after the Matched Reclaim deadline has passed You must input transaction details freeform including the appropriate DO Reclaim Reason Code DTC treats these Reclaim transactions as original deliveries which in turn can be reclaimed by the receiver Reclaim Receipts IPO shares that are reclaimed within the Matched Reclaim deadline S through S 1 will be returned to the account from w
102. elivered the shares Clearing Banks can view unmatched transactions that settled through relaxed editing via IPOI option 3 The information is displayed as follows A customer row is added displaying the unmatched Internal Account number an Unknown Syndicate Member a negative Available Share Quantity and a flipped quantity equal to the negative share quantity Refer to Make Inquiries via IPOI for additional information Note After the relaxed editing period deliveries with unmatched AIA numbers will not settle Resolve AIA Number Discrepancies in ID Sell Transactions When the AIA number on a sale transaction is missing or does not match an AIA number in the IPO Tracking database the system generates a warning message Error 91 Error 91 flags an unmatched Internal Account number three times e ID Confirmation e D Affirmation e Authorization and Exception ANE Error 91 also appears on machine readable output When validation occurs at Authorization and Exception ANE time ANE will reject the transaction if the Internal Account number is still unmatched or missing and the delivery will be excepted from automated processing Unmatched AIA numbers can be corrected in the IPO database prior to the settlement day cutoffs for Global processing and for Trade for Trade processing This will allow the ID trade to be authorized and settle that day through the automated settlement feature of the ID system Note The ANE inquiry
103. ems on tracking reports 1 Enter information in the following fields of the Night W T Data Collection screen or the Rush Withdrawal Transfer System Add Function screen e Int Cust enter the AIA number of the customer for whom shares are being withdrawn e Corr Acct enter the Correspondent s ID Broker Dealer number e ID Agent enter the ID Agent Broker Dealer number optional Note Requests for WTs must include the AIA number Also the customer must already exist in the IPO database or the WT is rejected 2 Refer to NWT1 and RWT1 for additional WT field and processing information DTC processes WT requests using the Clearing Bank s Secondary Market shares first If necessary DTC then uses IPO shares to complete a WT request Stock Loans and Returns Stock Loan Deliveries Clearing Banks are able to process stock loans using the appropriate DO NDOM Reason Codes When processing a stock loan DTC attempts to fulfill the loan quantity with Free secondary market shares and will satisfy the balance if necessary with the bank s IPO shares All stock loans are made on an omnibus basis No customer account numbers are tagged to stock loans An AIA number entered in a stock loan delivery is ignored by DTC however the exception to this is for stock loans to banks in which case the Participant number of the receiving Bank must be entered as the AIA number in order to allow the receiving Bank the ability to deliver borrowed shares All loans of
104. en To Participant enter the receiving Participant s number From Internal Customer enter the existing AIA number for the customer To Internal Customer enter the receiving Participant s AIA number for the customer Share Quantity enter the number of whole shares being transferred up to 13 positions Settlement Amount enter the settlement amount for the account transfer optional Reason Code enter Reason Code by which this account transfer is to be processed 3 Refer to Appendix D for additional field and processing information Transfers can also be performed using the PTS functions DO or NDOM However since this requires manual releases to the Free Account these transfers will be recorded as potential flips on DTC s tracking reports Note Account transfers of IPO and Free Secondary Market shares from a Broker Participant will result in two DOs generated Share Movement for Customer Account Transfers Deliveries When you transfer a customer s position to another Participant DTC moves the shares in one of the following ways Transfer position to a Bank Both IPO Control and Free Account shares move to the receiving Bank s Free Account in ART The IPO database marks the shares delivered from your IPO Control Account as IPO shares and shares delivered from your Free Account are marked as Secondary Market shares in the IPO database Transfer position to a Broker Shares delivered from your IPO Control Account move to the receiving Bro
105. ent Internal Account Prime Broker s Internal Account Broker I nternal Account Executing Broker s Internal Account optional Recv Pt Prime Broker s Part REAS Reason Code 50 Int Acct Prime Broker s Internal Account Bkr Acct Executing Broker s Internal Account optional Activity Code 47 Reason Code 49 Activity Code 47 Reason Code 50 Directed Concessions To Agent Banks via ID Agent Banks via DO NDOM Prime Brokers via ID Market Code Market Code 51 Agent Internal Account Agent Bank s Internal Account Broker I nternal Account Executing Broker s Internal Account optional Recv Pt Agent Bank s Part REAS Reason Code 530 Int Acct Agent Bank s Internal Account Bkr Acct Executing Broker s Internal Account optional Market Code Market Code 51 Agent Internal Account Prime Broker s Activity Code 48 Reason Code 539 Activity Code 48 Reason Code 530 Activity Code 47 Reason Code 539 Prime Brokers via DO NDOM Internal Account Broker I nternal Account Executing Broker s Internal Account optional Recv Pt Prime Broker s Part REAS Reason Code 530 Int Acct Prime Broker s Internal Account Bkr Acct Executing Broker s Internal Account optional Activity Code 47 Reason Code 530 Oversubscriptions To Syndicate Members via DO NDOM Clearing Banks of Correspondent Syndicate Members v
106. ents customer level details and share allocations Note Participants cannot allocate shares to Institutional customers 1 On the IPO Tracking System Main Menu Screen select Option 2 Add Customer Level Detail 2 Enter information in the following required fields of the IPO Add Customer Level Detail Screen e Internal Customer enter the Internal Account number of the customer e Share Quantity enter the whole number quantity up to 13 positions e Sign enter to increase shares 3 Refer to Appendix D for additional processing information Update Customer Level Detail IPOU Option 5 allows you to correct or update your customer Internal Account numbers and adjust the share quantities allocated to your customers 1 On the IPO Tracking System Main Menu Screen select Option 5 Customer Level Adjustment 2 Enter information in the following required fields of the IPO Customer Level Adjustment screen e From Internal Customer enter the existing AlA number of the customer From BIA enter the existing BIA number for the customer optional To Internal Customer enter the new AIA number of the customer required if the Participant wants to change the existing number to a new one e Reallocated Share Quantity enter the number of whole shares being adjusted up to 13 positions required if the Participant is adjusting a share quantity from existing customers to the new customer Note Because the system overlays the share quantity infor
107. eports 1 Requests for WTs must include customer level detail 2 The IPO database must be populated with the customer level detail prior to requesting a WT 1 Enter information in the following fields of the Night W T Data Collection Screen or the Rush Withdrawal Transfer System Add Function Screen e Int Cust enter the AIA number of the customer for whom shares are being withdrawn e AgtID enter the ID Agent number optional 2 Refer to NWT1 and RWT1 for additional WT field and processing information DTC processes WT requests using shares from your IPO Control Account first DTC generates releases from your IPO Control Account to its Free Account 1 Since the IPO Tracking System records all manual releases as potential flips you should not manually release shares for WT processing 2 DTC generates releases from your IPO Control Account only if the Internal Account number already exists in the IPO database If the Internal Account number does not exist a release will not be generated and the WT will be assumed to be from Free shares only Request a WT Using Free Shares Only 1 Enter information in the following fields of the Night W T Data Collection Screen or the Rush Withdrawal Transfer System Add Function Screen e Int Cust enter a dummy AIA number one that does not exist in the IPO database Note The use of a dummy Internal Account number in the Int Cust field will default the system to use Free shares for WT processin
108. er at the customer s request The Syndicate Member gets the benefit of the selling concession The Lead Manager is set up as the associated Syndicate Member in the IPO database Penalty Bid Period Established time period in which the Lead Manager has the right to penalize Syndicate Members for their customers flipping activity The Initial Distribution of shares of an PO the delivery of shares from the Lead Manager and Syndicate Members to their customers Primary Market Prime Broker A broker dealer acting as a Custodian for an Institution or a large Retail customer that is set up like an Institution Reclaim The return of a delivery by the Receiver Relative Block Number Identification number of a trade processed RBN Transaction Number via CCF CCFII MDH or PTS This along with other CCF transaction information including the Deliverer the Receiver the CUSIP number the dollar value and the settlement value is used by DTC to effect a matched reclaim of a specific delivery Feature of the IPO tracking system that allows a Secondary Market sell transaction to be settled by the Custodian Bank without an Agent Internal Account number match or sufficient position Retail Customer An individual investor Risk Management Controls Features Net Debit Caps and Collateral Monitor used to provide protection to all DTC Participants against the inability of one or more Pa
109. er Co Reporter Delivery Reclaim Due Bill Missing Receiver reclaims a Co Manager Co Reporter delivery the due bill is missing 570 Syndicate Takedown Delivery of shares from Lead Manager s IPO Control Account to Syndicate Members IPO Control Accounts 571 Syndicate Takedown Reclaim DK Receiver reclaims a Syndicate Takedown delivery the Receiver doesn t know the delivery 572 Syndicate Takedown Reclaim Wrong Quantity Receiver reclaims a Syndicate Takedown delivery the wrong quantity of shares was delivered 573 Syndicate Takedown Reclaim Wrong Security Receiver reclaims a Syndicate Takedown delivery the wrong security was delivered 574 Syndicate Takedown Reclaim Wrong Money Receiver reclaims a Syndicate Takedown delivery the money charged is incorrect 576 Syndicate Takedown Reclaim Account Information Missing Receiver reclaims a Syndicate Takedown delivery additional account information is needed to identify the delivery 577 Syndicate Takedown Reclaim Due Bill Missing Receiver reclaims a Syndicate Takedown delivery the due bill is missing ID Trade Input Market Codes and Information Warning Codes Note Market Codes are used for trade input Market Codes should not be confused with Reason or Activity Codes MARKET DESCRI PTI ON CODE 11 Syndicate Takedown Lead Manager delivers shares to its Co Managers Co Reporters and Syndicate Members 51 Directed Concession Lead Manager delivers shares directly to a Synd
110. er Orders Screen Deliveries to Co Reporters and Syndicate Members receive top priority in the delivery queue Distribute Shares to Co Reporter for Foreign Distribution You can set up deliveries to their own second Participant number Co Reporter for foreign distributions 1 Enter information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter your second Co Reporter Participant number e REAS enter Reason Code 560 2 Refer to DO or NDOM for additional Deliver Order field and processing information Distribute Shares to Syndicate Members 1 Enter information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Syndicate Member s Participant number e REAS enter Reason Code 570 e Corr Acct enter the Syndicate Member s Participant number 2 Refer to DO or NDOM for additional Deliver Order field and processing information Distribute Shares to Correspondent Syndicate Members 1 Enter information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Clearing Broker or Clearing Bank s Participant number REAS enter Reason Code 570 Corr Acct enter the Correspondent Syndicate Member s FINS number 1 Entering the Clearing Broker Bank s Participant number in the Recv Pt field and the Correspondent Syndicate Member s ID Broker Dealer number in the Corr Acct field will identify this as a Correspondent r
111. er to Appendix D for additional field and processing information Result Two one sided next day DO journals are generated one to decrease Free Account shares and another to increase shares in the IPO Control Account 5 Perform a Syndicate Takedown DO or NDOM delivery Distribute Oversubscribed Shares to Syndicate Members via DO or NDOM 1 Enter information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Syndicate Member s Participant number e REAS enter Reason Code 540 e Corr Acct enter the Syndicate Member s Participant number 2 Refer to DO or NDOM for additional Deliver Order field and processing information Result Shares move from the your Free Account to the Syndicate Member s IPO Control Account Note Refer to Distribute Shares to Syndicate Members in this chapter for information on other distributions to Syndicate Members Distribute Oversubscribed Shares to Correspondents via DO or NDOM 1 Enter information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Clearing Bank or Clearing Broker s Participant number e REAS enter Reason Code 540 e Corr Acct enter the Correspondent Syndicate Member s FINS number 2 Refer to DO or NDOM for additional Deliver Order field and processing information Note Refer to Distribute Shares to Correspondent Syndicate Members in this chapter for information on other Correspondent distribut
112. er transaction information provided until one day after settlement You can enter Matched Reclaims via the PTS functions ART and DO NDOM and via CCF CCFII and MDH When you reclaim a delivery the reclaimed DO will be matched to the original delivery and the information in the IPO database will be reversed Note Partial reclaims are not permitted Matched Reclaim Deliveries via ART Matched Reclaims can be made on settlement date and the day after These reclaims can not be reclaimed by the original deliverer and are not subject to risk management controls 1 Enter R to the left of the item to be reclaimed on the ATP Activity Summary Screen 2 Refer to the Settlement Service Guide for additional ART field and processing information Matched Reclaim Deliveries via DO or NDOM Matched Reclaims can be made on settlement date and the day after These reclaims can not be reclaimed by the original deliverer and are not subject to risk management controls 1 Enter information in the following fields of the SDFS Automatic Reclaim Deliver Orders Screen e Trans enter the transaction number of the transaction being reclaimed e Reas Code enter the appropriate Reason Code Refer to Codes in this Manual for Reclaim Reason Codes e Orig Date Ind enter T to reclaim a DO entered today or P to reclaim a DO entered on the previous business day Note If made during the Matched Reclaims timeframe DTC will also match Freeform Reclaims provided t
113. ernal Account BIA number for the customer Note The Internal Account numbers must be entered correctly in order to ensure accurate processing of the transaction DTC rejects Initial Distribution deliveries in which either number is missing Result The system captures the AIA number along with the BIA number and the associated Syndicate Member and populates the IPO database with this information Shares move from the Co Manager s Free Account to the Agent Bank s Free Account and are marked as IPO shares in the database or to the Prime Broker s IPO Control Account Distribute Shares for Oversubscriptions Directed Concessions Co Managers can deliver oversubscribed shares directly to a Syndicate Member s Institutional customer at the customer s request Oversubscription Directed Concession via DTC s ID system or via the PTS functions DO or NDOM The Co Manager is set up as the associated Syndicate Member in the IPO database Distribute Oversubscribed Directed Shares to Agent Banks and Prime Brokers via ID 1 Enter information in the following fields of the Institutional Delivery Trade Input Screen Market Code enter Market Code 53 Agent Internal Account enter the Agent Bank or Prime Broker s Internal Account number for the customer e Broker Internal Account enter the Executing Broker s Internal Account BIA number for the customer Note The Internal Account numbers must be entered correctly in order to ensure accurate processing
114. ers of an IPO tracked issue deliver shares to Prime Brokers Initial Distribution via Institutional Delivery ID or Deliver Order DO or NDOM These shares are delivered to the Prime Broker s IPO Control Account Note If the Internal Account number has not been provided by the Executing Broker the Prime Broker will receive an Error Code 91 Refer to Resolve Internal Account Number Discrepancies in ID Deliveries Shares remain in the IPO Control Account for the duration of the tracking period unless they are transferred or released for settlement of Secondary Market sell transactions Potential flips of Initial Distribution shares are reported as such on the daily reports to Lead managers and Syndicate Members Tracking of all IPO shares continues until the Lead Manager terminates tracking or until the 90 calendar day maximum tracking period is over Secondary Market Activity Release Shares from the IPO Control Account for Secondary Market Sales All Secondary Market sell transactions settle from the Free Account In order to deliver shares sold in the Secondary Market by your customers the shares must be released from your IPO Control Account to your Free Account using the PTS function POU Failure to release shares to the Free Account could result in a Continuous Net Settlement CNS short or DOs for Secondary Market sales dropping in ART Releases are generated by DTC automatically or performed manually by you depending on the
115. ers performed via PTS function DO or NDOM Reason Code 40 are reported as potential flips since IPO shares must first be released to the Free Account before processing the transfers and DTC reports releases as potential flips e In the case in which a customer receives shares from multiple Broker Dealers and a sale occurs the system prorates the sale among the Syndicate Members servicing that customer Note Shares potentially flipped on the same day at the same price are aggregated e Total Flipped total of all shares potentially flipped for a Syndicate Member e Total Stock Loan net amount of stock loans for a Syndicate Member showing outstanding loans less returns e Total Withdrawal total amount of IPO shares used to satisfy WTs e Total CNS Short total CNS short position for each Syndicate Member that has a long position in its IPO Control account Indicates sales by Syndicate Member s customers that are possibly not reflected by releases to enable settlement of those sales e Grand Total of Shares for the CUSIP These totals appear at the end of the report e Total CNS Short Shares for CUSIP lists the present aggregate total of all CNS short shares for the CUSIP for all Participants regardless of whether or not they are Syndicate Members Grand Total Flipped the grand total of potentially flipped shares for the CUSIP Grand Total Stock Loan the grand total of stock loans for the CUSIP showing outstanding loans less loan ret
116. es When you transfer a customer s position to another Participant DTC moves the shares in one of the following ways e Transfer position to a Bank Both IPO Control and Free Account shares move to the receiving Bank s Free Account in ART The IPO database marks the shares delivered from your IPO Control Account as IPO shares and those delivered from your Free Account are marked as Secondary Market shares in the IPO database e Transfer position to a Broker Shares delivered from your IPO Control Account move to the receiving Broker s IPO Control Account in ART and are marked as IPO shares in the IPO database Shares delivered from your Free Account move to the Receiving Broker s Free Account in ART These Free Account shares are not captured in the IPO database Share Movement for Customer Account Transfers Receipts You will receive a customer s position from another Participant in one of the following ways e Receive position from a Bank Shares marked as IPO shares in the Bank s Free Account move to the your IPO Control Account in ART and are marked as IPO shares in the IPO database Shares marked as Secondary Market shares in the Bank s Free Account move to your Free Account in ART These Free Account shares are not captured in the IPO database e Receive position from a Broker Shares from the delivering Broker s IPO Control Account move to your IPO Control Account in ART and are marked as IPO shares in the IPO database Shares from the Del
117. esiding in Brokers IPO Control Accounts are released to their Free Accounts if special arrangements have been made shares may be released to a subaccount segregation location and Bank transactions are no longer monitored Participants may access the tracking status of an issue over the CCF CCFII ELISC A files or via the Participant Terminal System PTS functions GWIZ Security Inquiry and IPOI Initial Public Offering Inquiry Option 1 List of Tracked Issues The IPO Database Populating Customer Level Detail The IPO database stores customer level detail for Lead Managers and Syndicate Members Institutional and Retail customers The database is populated differently for Institutional and Retail customers and Lead Managers and Syndicate Members must be aware of the procedures options and requirements associated with this process Institutional Customers Institutional customers are usually investment managers whose trades are executed by an Executing Broker via the ID system and whose positions are held in a Custodian Bank s Free Account or a Prime Broker s IPO Control Account Customer Level Detail for Institutional Customers When an Initial Distribution trade settles through the ID system customer level detail is extracted automatically from each authorized ID trade identified with an IPO market code The Agent Bank or Prime Broker Internal Account number and the Executing Broker s Internal Account Number for the customer must
118. fer as well as via CCF CCFII WTs are noted as separate line items on tracking reports e Requests for WTs must include customer level detail e The IPO database must be populated prior to requesting a WT 1 Enter information in the following fields of the Night W T Data Collection Screen or the Rush Withdrawal Transfer System Add Function Screen e Int Cust enter the Internal Account number of the customer e Corr Acct enter the Correspondent Syndicate Member s ID Broker Dealer number e AgtID enter the ID Agent number optional 2 Refer to NWT1 and RWT1 for additional WT field and processing information DTC processes WT requests using shares from your IPO Control Account first DTC generates releases from your IPO Control Account to your Free Account e Since the IPO Tracking System records all manual releases as potential flips Clearing Brokers should not manually release shares for WT processing e DTC generates releases from the Clearing Broker s IPO Control Account only if the Internal Account number already exists in the IPO database If the Internal Account does not exist a release will not be generated and the WT will be assumed to be from Free shares only Request a WT Using Free Shares Only 1 Enter information in the following fields of the Night W T Data Collection Screen or the Rush Withdrawal Transfer System Add Function Screen e Int Cust enter a dummy Internal Account number one that does not exist in the IPO d
119. g e AgtID enter ID the Agent number optional 2 Refer to NWT1 and RWT1 of the PTS Manual for additional WT field and processing information Stock Loans and Returns Stock Loan Deliveries Syndicate Members are able to process stock loans using the appropriate DO NDOM Reason Codes As for all broker Participants DTC fulfills a Syndicate Member s stock loan delivery quantity with Free Account shares only If insufficient shares are available in the Syndicate Member s Free Account the Participant must instruct DTC to process a Stock Loan Release to release IPO shares from its IPO Control account to its Free account for the balance DTC distinguishes between stock loan releases and regular releases and reports each type as separate line items on Lead Underwriter and Syndicate Member Flipping Activity Reports All stock loan releases are categorized according to Participant type of lender and borrower To dissuade Participants from using the stock loan release facility for regular releases DTC monitors the quantity of IPO shares moved to the Participant s Free account via stock loan releases versus the quantity of shares loaned by the Participant on the same day and reports discrepancies to the Lead Underwriter and appropriate Syndicate Members All stock loans are made on an omnibus basis No customer account numbers are tagged to stock loans An AIA number entered in a stock loan delivery is ignored by DTC however the exception to this is f
120. g Broker s Internal Account optional Agent Banks via DO NDOM Recv Pt Agent Bank s Activity Part Code 48 REAS Reason Code 50 Reason Code 50 Int Acct Agent Bank s TASK FIELD INFORMATION DTC REQUI RED OUTPUT Prime Brokers via ID Prime Brokers via DO NDOM Internal Account Bkr Acct Executing Broker s Internal Account optional Market Code Market Code 11 Agent I nternal Account Prime Broker s Internal Account Broker Internal Account Executing Broker s Internal Account optional Recv Pt Prime Broker s Part REAS Reason Code 50 Int Acct Prime Broker s Internal Account Bkr Acct Executing Broker s Internal Account optional Activity Code 47 Reason Code 49 Activity Code 47 Reason Code 50 Directed Concessions To Agent Banks via ID Agent Banks via DO NDOM Prime Brokers via ID Market Code Market Code 51 Agent Internal Account Agent Bank s Internal Account Broker Internal Account Executing Broker s Internal Account optional Recv Pt Agent Bank s Part REAS Reason Code 530 Int Acct Agent Bank s Internal Account Bkr Acct Executing Broker s Internal Account optional Market Code Market Code 51 Activity Code 48 Reason Code 539 Activity Code 48 Reason Code 530 Activity Code 47 TASK FIELD INFORMATION DTC REQUI RED OUTPUT Agent I nternal Account Reason Prime Broker s Internal Accoun
121. ger one of two entities acting in equal capacities as Lead Manager for a single IPO issue e Co Reporter one of two entities within a single firm that is acting as Lead Manager The firm uses two Participant numbers for distribution of an IPO one for domestic distribution and one for international distribution e Correspondent a non DTC Participant that uses a Clearing Agent to process transactions at DTC e Syndicate Members Selling Group a group of Broker Dealers that agrees to purchase shares of a new issue from the issuer for resale to the investment public e Custodian Bank a Bank that acts as a custodian for an Institutional customer s shares e Clearing Bank a DTC Participant that processes transactions at DTC on behalf of a Correspondent e Prime Broker a Broker Dealer that acts as a custodian for an Institutional Customer or for a large Retail Customer that is set up like an Institutional Customer e Clearing Broker a DTC Participant that processes transactions at DTC on behalf of a Correspondent The Tracking Period The tracking period is the time during which the Lead Manager instructs DTC to track an IPO issue DTC monitors the activity of the IPO tracked issue and presents daily reports to the Lead Manager and Syndicate Members itemizing that activity The length of the IPO tracking period is determined by the Lead Manager who has until 3 00 p m Eastern Standard Time EST two days before settlement to notify DTC of its
122. gh the automated settlement feature of the ID system Note The ANE inquiry function and T 3 hard copy report will display a code of F in the status field to indicate an Initial Distribution trade that has been rejected from settlement and an I to indicate a Secondary Market trade that has been rejected from settlement The F code indicates that the Internal Account number on an IPO trade is missing and the I code indicates that the Internal Account number is missing or does not match the Internal Account number as stored on the IPO database These transactions may be reprocessed for up to 21 days The Prime Broker can notify the Executing Broker of the correct Internal Account number via the PTS function IDEM Refer to IDEM for additional information Prime Brokers may resolve Internal Account number discrepancies in three ways e Update the Internal Account number in the IPO database by performing an IPO customer level adjustment Refer to Update Customer Level Detail via IPOU e Except the ID transaction from automated settlement and enter a DO with the Internal Account number as it appears in the IPO database Refer to Deliver Shares via DO or NDOM Note If a trade is excepted from ID settlement the same customer level detail fields must be provided for DO transactions e Cancel the ID transaction and have the Executing Broker re enter it in the ID system Receive Shares from Secondary Market Buys Shares bought on
123. he AIA number in order to allow the receiving bank the ability to deliver borrowed shares Stock Loan Receipts DTC delivers all Stock Loans to the Borrower s Free Account Stock Loan Returns You can process Stock Loan Returns by using the appropriate Reason Codes via the PTS functions DO or NDOM All stock loan returns are delivered from the borrower s Free account 1 Enter Reason Code 20 in the REAS field of the SDFS Initial Public Offering Deliver Orders Screen 2 Refer to DO and NDOM for additional Deliver Order field and processing information Stock Loan Return Receipts All Stock Loan Returns are delivered to the lender s Free Account as Free Secondary Market shares in the IPO database Pledges Pledges of Collateral You can pledge shares with or without value from either their IPO Control or Free Accounts via the PTS function COLL 1 Enter the following information on the Free Pledge Service Screen e IPO enter Y if the shares are being pledged from the IPO Control Account e OR Enter N if the shares are being pledged from the Free Account 2 Refer to COLL for additional field and processing information Pledged IPO Control and Free Account shares are moved to the Pledge 14 Account IPO shares are segregated in the 114 Account Pledge Releases If released during the tracking period Pledge shares are delivered back to their original accounts In cases where both IPO and Secondary Market shares were pledged relea
124. he ID system The Custodian Bank can notify the Executing Broker of the correct AIA number via the PTS function IDEM Refer to IDEM for additional information regarding DEM Note The ANE inquiry function and T 3 hard copy report will display a code of F in the status field to indicate an Initial Distribution trade that has been rejected from settlement and an I to indicate a Secondary Market trade that has been rejected from settlement The F code indicates that the AIA or BIA number on an IPO trade is missing and the I code indicates that the AIA number is missing or does not match the AIA number as stored on the IPO database These transactions may be reprocessed for up to 21 days Update Customer Level Information via IPOU Customer level detail in the IPO database can be updated via the PTS function POU The following sections depict some of the activities Custodian Banks can perform via IPOU Refer to Appendix D for additional information regarding POU Update Customer Level Detail This option allows Custodian Banks to change an existing customer Internal Account number and to reallocate a share quantity from one customer to another 1 On the IPO Tracking System Main Menu Screen select Option 5 Customer Level Adjustment 2 Enter information in the following fields of the IPO Customer Level Adjustment screen e From Internal Customer enter the existing AIA number for the customer Note If a match is not found f
125. he IPO database 3 Refer to Appendix D for additional information Transfer of Customer s Position Between Participants You can transfer your customers positions to another Participant without that transfer being recorded as a potential flip For reporting purposes the IPO database moves the original Clearing Broker s Participant number and the Correspondent Syndicate Member s ID Broker Dealer number with each transfer of a customer s position Memo Segregation and Sub Account Segregation positions do not need to be released prior to attempting any customer account transfers Customer level detail is required for account transfers Transfer Customer s Position via IPOU e For transfers that originate in NSCC s ACATS system Participants will be notified that an issue is tracked and will receive a trade for trade Balance Order ticket e The transfer must be accomplished by the IPO Customer Account Transfer function and must be for the total position the customer has in its IPO Control and Free Accounts 1 On the IPO Tracking System Main Menu Screen select Option 4 Customer Account Transfer 2 Enter information in the following required fields of the IPO Customer Account Transfer Screen e Corresp Account enter the Correspondent Syndicate Member s ID Broker Dealer number To Participant enter the receiving Participant s number From Internal Customer enter the existing Internal Account number for the customer e To Internal Custo
126. he appropriate DO Reason Code and correct information is entered Unmatched Freeform Reclaim Deliveries Reclaims must be entered Freeform via CCF CCFI MDH or the PTS functions DO NDOM if e The reclaim transaction number cannot be matched to an original delivery e The reclaim occurs after the Matched Reclaim deadline has passed You must input transaction details Freeform including the appropriate DO Reclaim Reason Code DTC treats these Reclaim transactions as original deliveries which in turn can be reclaimed by the receiver Reclaim Receipts IPO shares that are reclaimed within the Matched Reclaim deadline S through S 1 will be returned to the account from which they originated provided the issue is still being tracked Reclaims performed after the Matched Reclaim deadline or after tracking has ended will be placed in the Receiver s Free Account These deliveries can be reclaimed Memo Segregation Although position may reside in both the IPO Control and Free Accounts you can enter Memo Segregation instructions for tracked issues using the same procedures currently used for non tracked issues Memo Segregation bridges the IPO Control and Free Accounts The share quantity in the Memo Segregation instruction will be subtracted from the combined share total in the IPO Control and Free Accounts The resulting share total must be greater than the quantity of any Deliver Orders entered If the quantity is less the Deliver Order
127. hich they originated provided the issue is still being tracked Reclaims performed after the Matched Reclaim deadline or after tracking has ended will be placed in the Receiver s Free Account These deliveries can be reclaimed Memo Segregation Although position may reside in both the IPO Control and Free Accounts you can enter Memo Segregation instructions for tracked issues using the same procedures currently used for non tracked issues Memo Segregation bridges the IPO Control and Free Accounts The share quantity in the Memo Segregation instruction will be subtracted from the combined share total in the IPO Control and Free Accounts The resulting share total must be greater than the quantity of any Deliver Orders entered If the quantity is less the Deliver Orders will not be processed and be pending Deposits Deposits are chilled for tracked issues for the duration of the tracking period DWAC Deposit Withdrawal at Custodian activity is permitted on a very limited basis during the tracking period and only with consent of the Lead Underwriter Certificates On Demand CODs CODs are chilled for tracked issues for the duration of the tracking period Collateralization of IPO Shares Shares in the IPO Control Account will be considered collateral NA only on the day they are received into the account and only if received for value Shares received into the IPO control account without value will follow the normal accounting upd
128. ia DO NDOM Clearing Brokers of Correspondent Syndicate Members via DO NDOM Agent Banks via ID Recv Pt Syndicate Member Part REAS Reason Code 540 Corr Acct Syndicate Member Part Recv Pt Clearing Bank s Part REAS Reason Code 540 Corr Acct Correspondent Syndicate Member s FINS Recv Pt Clearing Broker s Part REAS Reason Code 540 Corr Acct Correspondent Syndicate Member s FINS Market Code Market Code 52 Agent Internal Account Agent Bank s Internal Account Broker I nternal Account Executing Broker s Internal Account Activity Code 49 Reason Code 540 Activity Code 26 Reason Code 540 Activity Code 49 Reason Code 540 Activity Code 26 Reason Code 549 Agent Banks via DO NDOM Prime Brokers via ID Prime Brokers via DO NDOM Recv Pt Agent Bank s Part REAS Reason Code 540 Int Acct Agent Bank s Internal Account Bkr Acct Executing Broker s Internal Account optional Market Code Market Code 52 Agent Internal Account Prime Broker s Internal Account Broker I nternal Account Executing Broker s Internal Account optional Recv Pt Prime Broker s Part REAS Reason Code 540 Int Acct Prime Broker s Internal Account Bkr Acct Executing Broker s Internal Account optional Activity Code 26 Reason Code 540 Activity Code 49 Reason Code 549 Activity Code 49 Reason Code
129. ic Reclaim Deliver Orders Screen Trans enter the transaction number of the transaction being reclaimed Reas Code enter the appropriate Reason Code Refer to Codes in this Manual for Reclaim Reason Codes e Orig Date Ind enter T to reclaim a DO entered today or P to reclaim a DO entered on the previous business day Note If made during the Matched Reclaims timeframe DTC will also match Freeform Reclaims provided the appropriate DO Reason Code and correct information is entered Unmatched Freeform Reclaim Deliveries Reclaims must be entered freeform via CCF CCFII MDH or the PTS functions DO NDOM if e The reclaim transaction number cannot be matched to an original delivery e The reclaim occurs after the Matched Reclaim deadline has passed You must input transaction details freeform including the appropriate DO Reclaim Reason Code DTC treats these Reclaim transactions as original deliveries which in turn can be reclaimed by the receiver Reclaim Receipts IPO shares that are reclaimed within the Matched Reclaim deadline S through S 1 will be returned to the account from which they originated provided the issue is still being tracked Reclaims performed after the Matched Reclaim deadline or after tracking has ended will be placed in the Receiver s Free Account These deliveries can be reclaimed Memo Segregation Although position may reside in both the IPO Control and Free Accounts you can enter Memo Segregation ins
130. icate Member s Institutional customer at its Agent Bank or Prime Broker at the Institution s request 52 Oversubscription Lead manager delivers shares from its Free Account to a Syndicate Member s or Prime Broker s IPO Control Account or an Agent Bank s Free Account shares are marked as IPO shares in the IPO database 53 Oversubscription Directed Concession Lead Manager delivers oversubscribed shares directly to a Syndicate Member s Institutional customer at its Agent Bank or Prime Broker at the Institution s request WARNING DESCRIPTION CODE Unmatched Agent Internal Account number This warning code will appear on ID Confirmation and Affirmation output DTC Output Activity and Reason Codes ACTIVITY REASON DESCRIPTION a m Stock Loan Returns of IPO shares toa Bank Loan Returns of IPO shares to a Bank Bank Stock Loan of IPO sharesn Stock Loans of EEEE shares Stock Loan Returns of Freeshares Loan Returns of Free shares Broker transfers a customer s Free shares to Broker Broker transfers a customer s Free shares to Bank Bank transfers a customer s Free shares to Broker Bank transfers a customer s Free shares to Bank Bank transfers a customer s IPO shares to Bank Agent Bank Initial Distribution ID delivery Prime Broker Initial Distribution ID delivery 26 50 Agent Bank Initial Distribution DO NDOM delivery Prime Broker Initial Distribution DO NDOM delivery 46 Release of shares from a Broker s
131. icate Members via DO or NDOM 1 Enter information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Syndicate Member s Participant number e REAS enter Reason Code 540 e Corr Acct enter the Syndicate Member s Participant number 2 Refer to the DO or NDOM for additional Deliver Order field and processing information Result Shares move from the Lead Manager s Free Account to the Syndicate Member s PO Control Account Note Refer to Deliver Shares to Syndicate Members in this chapter for information on other distributions to Syndicate Members Distribute Oversubscribed Shares to Correspondents via DO or NDOM 1 Enter information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Clearing Bank or Clearing Broker s Participant number e REAS enter Reason Code 540 e Corr Acct enter the Correspondent Syndicate Member s ID Broker Dealer number 2 Refer to DO or NDOM for additional Deliver Order field and processing information Note Refer to Distribute Shares to Correspondents in this chapter for information on other Correspondent Distributions Initial Distribution After the Syndicate Takedown distribution to Institutional customers Initial Distribution occurs as follows Distribution to Agent Banks and Prime Brokers Directed Concessions Oversubscriptions Directed Concessions Oversubscriptions Although shares can be deliver
132. ields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter your second Co Reporter Participant number e REAS Pt enter Reason Code 560 2 Refer to DO or NDOM for additional Deliver Order field and processing information Distribute Shares to Syndicate Members 1 Enter information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Syndicate Member s Participant number e REAS enter Reason Code 570 e Corr Acct enter the Syndicate Member s Participant number 2 Refer to DO or NDOM for additional Deliver Order field and processing information Distribute Shares to Correspondent Syndicate Members 1 Enter information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Clearing Broker or Clearing Bank s Participant number REAS enter Reason Code 570 Corr Acct enter the Correspondent Syndicate Member s ID Broker Dealer number Note e Entering the Clearing Broker Bank s Participant number in the Recv Pt field and the Correspondent s ID Broker Dealer number in the Corr Acct field will identify this as a Correspondent relationship in the IPO database The system will validate the relationship against the Broker section of the ID Master File e When delivering to Clearing Banks the numbers in the Recv Pt and Corr Acct fields can be the same provided the relationship exists in the Broker section of the ID Master File 2 Refer
133. ields of the SDFS Automatic Reclaim Deliver Orders Screen Trans enter the transaction number of the transaction being reclaimed Reas Code enter the appropriate Reason Code Refer to Codes in this Manual for Reclaim Reason Codes e Orig Date Ind enter T to reclaim a DO entered today or P to reclaim a DO entered on the previous business day Note If made during the Matched Reclaims timeframe DTC will also match Freeform Reclaims provided the appropriate DO Reason Code and correct information is entered Unmatched Freeform Reclaim Deliveries Reclaims must be entered Freeform via CCF CCFI MDH or the PTS functions DO NDOM if e The reclaim transaction number cannot be matched to an original delivery e The reclaim occurs after the Matched Reclaim deadline has passed You must input transaction details Freeform including the appropriate DO Reclaim Reason Code DTC treats these Reclaim transactions as original deliveries which in turn can be reclaimed by the receiver Reclaim Receipts IPO shares that are reclaimed within the Matched Reclaim deadline S through S 1 will be returned to the account from which they originated provided the issue is still being tracked Reclaims performed after the Matched Reclaim deadline or after tracking has ended will be placed in the Receiver s Free Account These deliveries can be reclaimed Memo Segregation Although position may reside in both the IPO Control and Free Accounts you can e
134. in a tracked CUSIP must be accomplished by the IPO Customer Account Transfer function and must be for the total position the customer has in its IPO Control and Free Accounts 1 On the IPO Tracking System Main Menu Screen select Option 4 Customer Account Transfer 2 Enter information in the following fields of the IPO Customer Account Transfer Screen e To Participant enter the receiving Participant s number e From Internal Customer enter the existing AIA number for the customer e To Internal Customer enter the receiving Participant s AIA number for the customer e Share Quantity enter the number of whole shares being transferred up to 13 positions e Settlement Amount enter the Settlement amount for the account transfer optional e Reason Code enter Reason Code by which this account transfer is to be processed 3 Refer to Appendix D for additional field and processing information Result Transfers can also be performed using the PTS functions DO or NDOM However since this requires manual releases to the Free Account these transfers will be recorded as potential flips on DTC s tracking reports Note Account transfers of IPO and Free Secondary Market shares from a Broker Participant will result in two DOs generated Share Movement for Customer Account Transfers Deliveries When you transfer a customer s position to another Participant DTC moves the shares in one of the following ways Transfer position to a Bank Both IPO Con
135. intention to track an issue and who subsequently may notify DTC on any day prior to 3 00 p m EST to end the tracking The maximum tracking period is 90 calendar days A stabilization penalty bid period may coincide with the tracking period This period is also established by the Lead Manager and the issuer Stabilization indicates the Lead Manager s responsibility to stabilize the market possibly by intervening in the market to prevent the market price of the issue from falling below the offering price Penalty bid refers to the Lead Manager s ability to penalize Syndicate Members whose customers have flipped shares possibly by recovering selling concessions Decisions made by the Lead Manager and issuer regarding the stabilization penalty bid period have no bearing whatsoever on the tracking period Lead Managers may track IPO issues regardless of whether or not they have established a stabilization penalty bid period Similarly if a Lead Manager has implemented both a tracking period and a stabilization penalty bid period the Lead Manager may terminate the tracking period at any time before or after the stabilization penalty bid period is concluded At 90 calendar days however the tracking period expires automatically Note Although penalty bid and tracking refer to two separate activities in DTC s technical specifications the terms are used synonymously At the close of business on the day IPO tracking is terminated all shares r
136. ion from one Participant to another Customer Level Detail For transaction processing purposes the Internal Account number of a Participant s customer In IPOI Option 3 additional customer details include the allocated share quantity the available share quantity the flipped share quantity the customer s Custodian and Executing Broker Syndicate Member Correspondent Account Number Directed Concession Delivery of a block of IPO shares from the Lead Manager directly to a Syndicate Member s Institutional customer delivery is to the customer s Agent Bank or Prime Broker at the Institution s request The Syndicate Member gets the benefit of the selling concession The Lead Manager is set up as the associated Syndicate Member in the IPO database Executing Broker Broker Dealer that executes a buy or sell order Flipping The sale of Initial Distribution securities in the Secondary Market during the stabilization penalty bid period Free Account General DTC Participant Account For Brokers all shares of non tracked issues as well as Secondary Market shares of tracked issues reside there unless pledged loaned etc For Banks all shares including tracked IPO shares reside there Green Shoe The right of the Lead Manger to purchase a certain amount of additional shares usually equal to 15 of Initial Distribution amount from the Issuer at an agreed upon price within a
137. ion or a Secondary Market sell transaction is missing or does not match an AIA number in the IPO Tracking database the system generates a warning message Error 91 Error 91 flags an unmatched AIA number three times e ID Confirmation e ID Affirmation e Authorization and Exception ANE Error 91 also appears on machine readable output When validation occurs at Authorization and Exception ANE time ANE will reject the buy or sell transaction if the AIA number is still unmatched or missing and the delivery will be excepted from automated processing Unmatched AIA numbers can be corrected by the Custodian Bank in the IPO database prior to the settlement day cutoffs so that the ID trade may be authorized and settle that day through the automated settlement feature of the ID system Custodian Banks may resolve AIA number discrepancies in three ways e Update the AIA number in the IPO database by performing an IPO customer level adjustment to match to the AIA on the ID transaction Refer to Updating Customer Level Detail via POU in this chapter e Except the ID transaction from automated settlement The Custodian Bank can then enter a DO with the AIA number as it appears in the IPO database Refer to Deliver Shares via DO or NDOM Note If a trade is excepted from ID settlement the same customer level detail fields must be provided for DO transactions e Have the Executing Broker cancel the ID transaction and re enter it in t
138. ions Initial Distribution After the Syndicate Takedown distribution to Institutional customers Initial Distribution occurs as follows Distribution to Agent Banks and Prime Brokers Directed Concessions Oversubscriptions Directed Concessions Oversubscriptions Although shares can be delivered on or after the closing date you can set up your Initial Distribution deliveries prior to receiving shares into their IPO Control Account An Initial Distribution is performed by using either DTC s ID system or the PTS functions DO or NDOM You can indicate an Initial Distribution delivery by entering the appropriate Market Code on the Institutional Delivery Trade Input Screen for ID trades or by entering the appropriate Reason Code in the REAS field of the Initial Public Offering Deliver Orders Screen for Day and Night DOs Note Initial Distribution transactions are not settled through CNS Distribute Shares to Agent Banks and Prime Brokers Distribute Shares via ID Note Customer level detail is required for Initial Distribution transactions 1 Enter information in the following fields of the Institutional Delivery Trade Input Screen e Market Code enter Market Code 11 e Agent Internal Account enter the Agent Bank or Prime Broker s Internal Account number for the customer e Broker Internal Account enter the Executing Broker s Internal Account BIA number for the customer Note The Internal Account numbers must be entered correct
139. ithout that transfer being reported as a potential flip For reporting purposes the IPO database moves the original Syndicate Member s Participant number and BIA number with each transfer of a customer s position Memo Segregation and Sub Account Segregated positions do not need to be released prior to attempting any customer account transfers IPO account transfer transactions can bypass Memo Segregation Customer level detail is required for account transfers Transfer Customer s Position via IPOU 1 For those transfers that originate in NSCC s ACATS system Participants will be notified that an issue is tracked and will receive a trade for trade Balance Order ticket 2 The transfer of shares in a tracked CUSIP must be accomplished by the IPO Customer Account Transfer function and must be for the total position the customer has in its IPO Control and Free Accounts 1 On the IPO Tracking System Main Menu Screen select Option 4 Customer Account Transfer 2 Enter information in the following fields of the IPO Customer Account Transfer Screen To Participant enter the receiving Participant s number From Internal Customer enter the existing AIA number for the customer To Internal Customer enter the receiving Participant s AIA number for the customer Share Quantity enter the number of whole shares being transferred up to 13 positions Settlement Amount enter the settlement amount for the account transfer optional Reason Code ente
140. ivering Broker s Free Account move to your Free Account in ART These Free Account shares are not captured in the IPO database Secondary Market Release Shares From the IPO Control Account for Secondary Market Sales All Secondary Market sell transactions settle from the Free Account In order to deliver shares sold by your customers in the Secondary Market those shares must first be released from your IPO Control Account to your Free Account using the POU function Failure to release shares to the Free Account could result in a CNS short or DOs for Secondary Market sales dropping in ART Releases can be performed on the individual customer level by including the AIA number of the customer on the release or on the Co Manager Syndicate Member level Doing releases on the individual customer level allows DTC to provide a more detailed report of flipping activity by the your customers Releases can be submitted as early as 6 00 a m Eastern Standard Time EST trade date through the settlement of the trade Note Releases from the IPO Control Account cannot be reversed and will be recorded as potential flips regardless of whether or not delivery is made 1 On the IPO Tracking System Main Menu Screen select Option 3 Release IPO Shares To The Free Account 2 Enter information in the following required fields of the IPO Release IPO Shares To The Free Account Screen e Internal Customer enter the AIA number of the customer if alread
141. ivery by entering the appropriate Market Code on the Institutional Delivery Trade Input screen for ID trades or by entering the appropriate reason code in the Reas field of the Initial Public Offering Deliver Orders screen for day and night DOs Note Initial Distribution transactions are not settled through Continuous Net Settlement CNS Distribute Shares to Agent Banks and Prime Brokers via ID 1 Enter information in the following fields of the Institutional Delivery Trade Input screen e Market Code enter 11 e Agent Internal Account enter the Agent Bank or Prime Broker s Internal Account AIA number for the customer e Broker Internal Account enter the Executing Broker s Internal Account BIA number for the customer The AIA number the BIA number and the associated Syndicate Member are extracted from ID trades upon authorization On closing date the IPO database is populated Note The Internal Account numbers are required for Initial Distribution transactions and must be entered correctly in order to ensure accurate processing of the transaction 2 Refer to IDTI for additional ID field and processing information Distribute Unaffirmed ID Shares via DO or NDOM When a trade is unaffirmed excepted or rejected from the ID system the trade may be settled via option 4 of the PTS function DO or option 6 of the PTS function NDOM 1 Enter information in the following fields of the Initial Public Offering Deliver Orders screen
142. ker s IPO Control Account in ART and are marked as IPO shares in the IPO database Shares delivered from your Free Account move to the Receiving Broker s Free Account in ART These Free Account shares are not captured in the IPO database Share Movement for Customer Account Transfers Receipts You will receive a customer s position from another Participant in one of the following ways Receive position from a Bank Shares marked as IPO shares in the Bank s Free Account move to the your IPO Control Account in ART and are marked as IPO shares in the IPO database Shares marked as Secondary Market shares in the Bank s Free Account move to your Free Account in ART These Free Account shares are not captured in the IPO database Receive position from a Broker Shares from the delivering Broker s IPO Control Account move to your IPO Control Account in ART and are marked as IPO shares in the IPO database Shares from the Delivering Broker s Free Account move to your Free Account in ART These Free Account shares are not captured in the IPO database Withdrawals by Transfer WTs If certificate denominations are available Withdrawals by Transfers WTs of tracked issues are permitted starting on closing day via the PTS functions NWT1 Night Withdrawal by Transfer and RWT1 Rush Withdrawal by Transfer as well as via CCF and CCFII WTs are noted as separate line items on tracking reports 1 Requests for WTs must include customer level detail 2 The
143. l Unmatch Release the quantity of the Syndicate Member s stock loan releases for Retail customers that exceeded the total quantity of shares used for stock loan deliveries This quantity should be added to the SL Firm To Lead or SL Firm To Other categories since had the custodian delivered the shares in a timely fashion it would represent an increase in this Syndicate Member s IPO shares loaned by the Custodian e Total Retail Flipped the total number of shares potentially flipped by the Syndicate Member s Retail customers e Total Retail Withdrawal the total amount of IPO shares used to satisfy WTs by the Syndicate Member s Retail customers e Total Institutional Flipped the total number of shares potentially flipped by the Syndicate Member s Institutional customers e Total Institutional Withdrawal the total amount of IPO shares used to satisfy WTs by the Syndicate Member s Institutional customers e Grand Total Flipped total of all shares potentially flipped by the Syndicate Member s customers e Grand Total Withdrawal the total amount of IPO shares used to satisfy the WTs by the Syndicate Member s customers Number of Shares the total number of shares transferred potentially flipped or withdrawn by transfer Final Reports When the Lead Manager notifies DTC that the tracking period is over DTC issues final reports to the Lead Manager Co Managers Syndicate Members Clearing Agents and primary Co Reporters These cumul
144. laims a delivery the reclaimed DO will be matched to the original delivery and the information in the IPO database will be reversed Matched Reclaim Deliveries via ART Matched reclaims can be made on settlement date and the day after These reclaims cannot be reclaimed by the original deliverer and matched reclaims are not subject to Risk Management Controls 1 Enter R to the left of the item to be reclaimed on the ATP Activity Summary Screen 2 Refer to ART for field and processing information Matched Reclaim Deliveries via DO or NDOM Matched reclaims can be made on settlement date and the day after S though S 1 Matched reclaims can be made on settlement date and the day after S though S 1 Matched reclaims are not subject to risk management controls 1 Enter information in the following fields of SDFS Automatic Reclaim Deliver Orders Screen e Trans enter the transaction number of the transaction being reclaimed e Reas Code enter the appropriate Reason Code Refer to Codes in this Manual for Reclaim Reason Codes e Orig Date Ind enter T to reclaim a DO entered today or P to reclaim a DO entered on the previous business day 2 Refer to DO or NDOM for additional information Note If made during the Match Reclaims timeframe DTC will also match Freeform Reclaims provided the appropriate DO Reason Code and correct information is entered Unmatched Freeform Reclaim Deliveries Reclaims must be entered Freeform vi
145. le economic efficiency The IPO Tracking System monitors the movement of shares residing with Brokers and Banks in different ways For Brokers tracked Initial Distribution shares are physically segregated from Secondary Market shares in each Broker s IPO Control Account In order for a Broker s customer to sell Initial Distribution shares on the Secondary Market the shares must be released from the Broker s IPO Control Account to its Free Account When shares are released they are listed on the tracking reports as flipped Since for Brokers it is not the sale of IPO Initial Distribution shares that registers them as flipped but the release made in preparation for that sale flipped on the tracking report always indicates a potential flip The tracking report does not indicate definitively that a Syndicate Member s customer has flipped Note Once shares are released from the IPO Control Account it is not possible to reverse the IPO release The tracking system monitors Brokers Initial Distribution shares and the subsequent sale of those positions It does not track any shares once they have been released from the IPO Control Account for any reason DTC monitors Bank shares differently In order to allow Banks to participate in tracking more passively the IPO Tracking System interfaces with DTC s Institutional Delivery ID System which monitors the Bank s transactions systemically Banks do not have IPO Control Accounts Both IPO I
146. level Doing releases on the individual customer level allows DTC to provide a more detailed report of flipping activity by the Syndicate Member s customers Releases can be submitted as early as 6 00 a m Eastern Standard Time EST trade date through settlement of the trade Note Releases from the IPO Control Account cannot be reversed and are recorded as potential flips regardless of whether or not delivery is made 1 On the IPO Tracking System Main Menu Screen select Option 3 Release IPO Shares To The Free Account 2 Enter information in the following required fields of the IPO Release IPO Shares To The Free Account Screen e Corresp Account enter the Correspondent Syndicate Member s ID Broker Dealer number e Internal Customer enter the Internal Account number for the customer if already identified in the IPO database e The Internal Customer field Internal Account number is required for all Secondary Market customer transactions if customer level detail has been added for any of your customers e f an incorrect Internal Account number is entered the shares will not be released and the subsequent Deliver Order will pend Trade Date enter a valid business date in MMDDYY format Contract Price enter a number greater than zero in 9999999 99 format e Share Quantity enter the number of whole shares up to 13 positions 3 Refer to Appendix D for additional field and processing information If you and the customer have po
147. ly in order to ensure accurate processing of the transaction If either is missing or entered incorrectly an error code of 91 will appear on the Confirmation and Affirmation tickets Refer to Resolve Internal Account Number Discrepancies for information on how to correct the Agent Internal Account number Result The AIA number BIA number and associated Syndicate Member are extracted from ID trades upon authorization On closing date the IPO database is populated 2 Refer to IDTI for additional ID field and processing information Distribute Unaffirmed ID Trade Shares via DO or NDOM When a trade is unaffirmed excepted or rejected from the ID system you can settle that trade via the PTS functions DO Option 4 or NDOM Option 6 1 Enter the information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Agent Bank or Prime Broker s Participant number REAS enter Reason Code 50 Int Acct enter the Agent Bank or Prime Broker s Internal Account number for the customer Note The Internal Account numbers must be entered correctly to ensure accurate processing of the transaction DTC rejects Initial Distribution deliveries in which either number is missing e Bkr Acct enter the Executing Broker s Internal Account BIA number for the customer Result The system captures the Agent Bank Prime Broker Internal Account number along with the BIA number and the associated Syndicate Member and po
148. mation Distribute Oversubscribed Shares to Agent Banks and Prime Brokers via ID 1 Enter information in the following fields of the Institutional Delivery Trade Input Screen e Market Code enter Market Code 52 e Agent Internal Account enter the Agent Bank or Prime Broker s Internal Account number for the customer e Broker Internal Account enter the Executing Broker s Internal BIA Account number for the customer Note The Internal Account numbers must be entered correctly in order to ensure accurate processing of the transaction If either is missing or entered incorrectly an error code of 91 will appear on the Confirmation and Affirmation tickets Refer to Resolve Internal Account Number Discrepancies for information on how to correct the Agent Internal Account number 2 Refer to IDTI for additional ID field and processing information Result Shares move from the Co Manager s Free Account to the Agent Bank s Free Account and are marked as IPO shares in the database or to the Prime Broker s IPO Control Account Distribute Oversubscribed Shares to Agent Banks and Prime Brokers via DO or NDOM 1 Enter the information in the following fields of the Initial Public Offering Deliver Orders Screen Recv Pt enter the Agent Bank or Prime Broker s Participant number REAS enter Reason Code 540 e Int Acct enter the Agent Bank or Prime Broker s Internal Account number for the customer e Bkr Acct enter the Executing Broker s Int
149. mation you must input exactly the total number of shares the To Internal Customer should have If you are not sure of the exact total the customer should have refer to the following section 3 Refer to Appendix D for additional field and processing information Update Customer Level Detail Using the Add Customer Level Detail Function IPOU Option 2 Add Customer Level Detail provides a way for you to adjust share quantities for their customers without knowing the total number of shares each customer should have This method can also be used to eliminate an old Internal Account number from the IPO database and add a new one 1 On the IPO Tracking system Main Menu Screen select Option 2 Add Customer Level Detail 2 Enter Information in the following required fields Internal Customer enter the Internal Account number of the customer Share Quantity enter the number of whole shares up to 13 positions you wish to increase decrease the account by e Sign enter to indicate the shares should be increased or to indicate the shares should be decreased The system adds subtracts the share quantities for the account and updates them accordingly If the share quantity for an Account number is reduced to zero the system deletes that number from the IPO database 3 Refer to Appendix D for additional information Transfer of Customer s Position Between Participants You can transfer your customers positions to another Participant w
150. mber To Internal Customer New Task Field Information Required DTC Output Internal Account number IPO Share Quantity Number of whole IPO shares being transferred Free Share Quantity Number of whole Free shares being transferred Settlement Amount Settlement amount optional Reason Code Appropriate Reason Code for delivery Clearing Broker Receive Shares from Lead Manager The Lead Manager sets up deliveries of IPO shares to its Co Managers Co Reporters and Syndicate Members prior to closing using the appropriate Deliver Order Reason Codes By 1 15 p m closing date DTC receives a call from the Lead Manager permitting the distribution of shares to Syndicate Members Co Managers and Co Reporters DTC then delivers the shares from the Lead Manager s IPO Control Account to the Clearing Broker s IPO Control Account on behalf of its Syndicate Members in accordance with the Lead Manager s Deliver Order instructions Syndicate Takedown Note Shares remain in the IPO Control Account for the duration of the tracking period unless transferred released or distributed to Institutional customers at Agent Banks or Prime Brokers Initial Distribution Initial Distribution the delivery of IPO shares to a Syndicate Member s Institutional customers at Agent Banks or Prime Brokers takes place after the Syndicate Takedown Although Initial Distribution shares can be delivered on or after the closing date you
151. mer enter the receiving Participant s Internal Account number for the customer Share Quantity enter the number of whole shares being transferred up to 13 positions Settlement Amount enter the settlement amount for the account transfer optional Reason Code enter Reason Code by which this account transfer is to be processed 3 Refer to Appendix D for additional field and processing information Result Transfers can also be performed using the PTS functions DO or NDOM However since this requires manual releases to the Free Account these transfers will be recorded as potential flips in DTC s tracking reports Share Movement for Customer Account Transfers Deliveries When you transfer a Correspondent Syndicate Member s customer s position to another Participant DTC moves the shares in one of the following ways e Transfer position to a Bank Both IPO Control and Free Account shares move to the Bank s Free Account in ART The IPO database marks the shares delivered from the your IPO Control Account as IPO shares Shares delivered from your Free Account are marked as Secondary Market shares in the IPO database e Transfer position to a Broker Shares delivered from your IPO Control Account move to the Receiving Broker s IPO Control Account in ART and are marked as IPO shares in the IPO database Shares delivered from your Free Account move to the Receiving Broker s Free Account in ART These shares are not captured in the IPO database Shar
152. must instruct the Executing Broker to input the trade via ID The following information must be included on the Institutional Delivery Trade Input Screen e Broker Internal Account Enter the Executing Broker s Internal Account number BIA e Agent Internal Account Enter the Prime Broker s Internal Account number Note The Agent Internal Account number must be entered correctly in order to ensure accurate processing of the transaction e Trade Date enter the Trade Date Note The system generates automatic releases for ID Secondary Market sell transactions that settle via Continuous Net Settlement CNS if there is a match on Internal Account information in the database Deliver Shares via DO or NDOM You can deliver shares sold in the Secondary Market via the PTS functions DO or NDOM using the current DO reason codes You must provide customer level detail for DOs in order to generate the necessary release 1 Enter the information in the following fields of the Initial Public Offering Deliver Orders Screen e 6Int Acct enter the Prime Broker s Internal Account number for the customer Note The Internal Account number must be entered correctly in order to ensure accurate processing of the transaction If the Internal Account number does not match in the IPO database the release will be put on hold Refer to Resolve Internal Account Number Discrepancies in ID Deliveries e Trade Dt enter the Trade Date e Net Amt enter the Set
153. must refer to their Syndicate Member reports Refer to IPO Tracking Preliminary Report Syndicate Member in this chapter Fields CUSIP the CUSIP number of the tracked issue Description the name of the tracked issue Tracking Period Start Date the start of tracking closing date of the issue Tracking Period End Date the projected end of tracking Columns e Synd Part Number displays the following Syndicate Member s Participant Number The Participant number of a Syndicate Member In the case of shares that have been transferred from one Participant custodian to another Participant custodian this number is the Participant number of the Syndicate Member In the case of a Directed Concession this number represents the receiving customer s custodian s Participant number and is marked with an asterisk In the case that a Directed Concession customer flips the Lead Manager must refer to its internal records to identify the Customer s Syndicate Member Unknown to Relaxed Editing in the Secondary Market Section of Chapter 2 or 3 Asterisk An asterisk next to a number in the Syndicate Participant number column indicates a potential flip by a Directed Concession customer In this case the number listed is the receiving custodian s Participant number If a Directed Concession customer flips the Lead Manager must check its internal records to identify the Customer s Syndicate Member Synd Part Description the name
154. n be reclaimed by the receiver Reclaim Receipts Initial Distribution deliveries that are reclaimed within the deadline S through S 1 will be returned to the Custodian Bank s general free account IPO shares will be marked in the IPO database Note Clearing Banks can reclaim Unmatched Freeform Reclaim Deliveries Memo Segregation Clearing Banks can enter Memo Segregation instructions for tracked issues using the same procedures currently used for non tracked issues Refer to MSEG for information on Memo Segregation instruction processing The share quantity in the Memo Segregation instruction will be subtracted from the combined share total of IPO and Secondary Market shares in the general free account The resulting share total must be greater than the quantity of any Deliver Orders entered If the quantity is less the Deliver Orders will not be processed and will remain pending Deposits Deposits are chilled for tracked issues during the tracking period DWAC Deposit Withdrawal at Custodian activity is permitted on a very limited basis during the tracking period and only with the consent of the Lead Underwriter Certificates On Demand COD s CODs are chilled for tracked issues during the tracking period Make Inquiries via IPOI The PTS function IPOI Initial Public Offering Tracking System Inquiry allows Clearing Banks to make inquiries about tracked issues on behalf of their Correspondent Syndicate Members The foll
155. nager for assistance Make Inquiries via IPOI The PTS function IPOI Initial Public Offering Tracking System Inquiry allows you to make inquiries about tracked issues The following information is provided via POI A list of all tracked IPO issues A summary of tracked IPO issues in which the Participant has position A summary of customer level details by Participant issue A summary of IPO pending canceled released transactions For additional information on the IPO Tracking System Inquiry function refer to the Overview and Appendix E Receive Reports from DTC DTC prepares and distributes daily cumulative hard copy reports to the Lead Manager of its tracked issues The following information is provided List of potential flips by customers of Syndicate Members Correspondents List of own Retail and Institutional customers that potentially flipped Potential flips by Directed Concessions indicated with an Separate line for WTs Separate line for Stock Loans quantity reported represents the net amount outstanding loans less returns Retail account transfers showing the receiving Participant number e Institutional account transfers showing the receiving Participant number and BIA e List of CNS short positions for Syndicate Members having long positions in their IPO Control Accounts indicating potential sales by Syndicate Members that have not yet released shares e List of all CNS short positions for the CUSIP
156. nd Date the projected end of tracking Issues can be tracked for a maximum of 90 calendar days Note Correspondent Syndicate Members are identified at the top of the report The Correspondent s ID Broker Dealer number is listed below its Clearer s Participant number Columns e Customer Number the Custodian s Internal Account AIA number for the Syndicate Member s Institutional customer at the Agent Bank or Prime Broker or the Syndicate Member s Internal Account number BIA for Retail customers Customer Level Information is Unavailable In the case where the Syndicate Member has not populated the IPO database with customer level detail for Retail customers the customer cannot be identified for potentially flipped shares e Broker Inter Acct The Syndicate Member s BIA number for its Institutional customer at a Custodian Bank or Prime Broker or the Syndicate Member s BIA for its Retail customer For Retail customers this number will be the same as the Customer Number e ID Agent the number in the ID system identifying Agent Banks e Acct Trans to Part indicates a transfer of position from one Participant to another Transfers implemented via POU Option 4 Customer Account Transfer are not reported as potential flips For Retail customers that transferred the report indicates the receiving party s Participant number Once a Retail customer transfers the customer s new Internal Account number is proprietary information
157. nitial Distribution and Secondary Market shares are delivered to Banks General Free Accounts but they are tagged in the IPO database as IPO Initial Distribution and IPO Secondary Market shares respectively During the IPO tracking period Bank transactions Primary and Secondary Market are monitored through the ID system and potential flips of Initial Distribution shares are reported as such on the daily reports Tracking of all IPO shares continues until the Lead Manager terminates tracking or until the 90 calendar day maximum tracking period is over Who is Affected by the IPO Tracking System All DTC Participants are affected by the IPO Tracking System Although a Participant may not be directly involved in a tracked offering at the time of distribution it may receive shares that are marked for IPO tracking into its account e g as the result of an account transfer Therefore Participants must learn to use the appropriate IPO functions to direct IPO tracked shares or they will be unable to complete their transactions successfully Moreover Brokers must be prepared to recognize their IPO Control Account and to include it when balancing their internal records Who Uses the IPO Tracking System IPO Tracking System users act in one or more of the following roles e Lead Manager the Broker Dealer that organizes and leads a syndicate of underwriters in the act of purchasing and distributing the shares of an IPO to investors e Co Mana
158. now the delivery Directed Concession Reclaim Wrong Quantity Receiver reclaims a Directed Concession delivery the wrong quantity of shares was delivered 533 534 536 537 599 540 541 542 543 544 546 547 549 550 Directed Concession Reclaim Wrong Security Receiver reclaims a Directed Concession delivery the wrong security was delivered Directed Concession Reclaim Wrong Money Receiver reclaims a Directed Concession delivery the money charged is incorrect Directed Concession Reclaim Need Account Information Receiver reclaims a Directed Concession delivery additional account information is needed to identify the original delivery Directed Concession Reclaim Due Bill Missing Receiver reclaims a Directed Concession delivery the due bill is missing ID Directed Concession delivery Oversubscription delivery Delivery from the Lead Manager s Free Account to Syndicate Member s or Prime Broker s IPO Control Account or to an Agent Bank s Free Account and marked as IPO shares in the IPO database Oversubscription Reclaim DK Receiver reclaims an Oversubscription delivery the Receiver doesn t know the delivery Oversubscription Reclaim Wrong Quantity Receiver reclaims an Oversubscription delivery the wrong quantity of shares was delivered Oversubscription Reclaim Wrong Security Receiver reclaims an Oversubscription delivery the wrong security was delivered Oversubscription Re
159. nt transfer only if the account transfer is free of settlement value Use of This Reason Code will not reduce memo segregation if the account transfer is for value Reason Code 95 this Reason Code will reduce the delivering Participant s memo segregation position by the account transfer quantity regardless of whether the account transfer is valued or free of value Reason Code 97 this Reason Code will reduce the delivering Participant s memo segregation position by the account transfer quantity regardless of whether the account transfer is valued as free of value Reason Code 98 this Reason Code will not reduce the delivering Participant s memo segregation position to transact the account transfer regardless of value e Refer to Appendix D for additional information Note Account transfers of IPO and Free secondary market shares to a broker Participant will result in two DOs generated Share Movement for Customer Account Transfers Deliveries When a Custodian Bank transfers a customer s position to another Participant DTC moves the shares in one of the following ways Transfer position to a Bank All shares move to the receiving Bank s Free Account in ART Shares marked as IPO shares in the IPO database for the delivering Custodian Bank are marked as IPO shares in the IPO database for the receiving Custodian Bank and credited to the receiving bank s Free Account Shares marked as Secondary Market shares in the IPO database fo
160. nter Memo Segregation instructions for tracked issues using the same procedures currently used for non tracked issues Memo Segregation bridges the IPO Control and Free Accounts Refer to the Settlement Service Guide for information on Memo Segregation instruction processing The share quantity in the Memo Segregation instruction will be subtracted from the combined share total in the IPO Control and Free Accounts The resulting share total must be greater than the quantity of any Deliver Orders entered If the quantity is less the Deliver Orders will not be processed and will pend Deposits Deposits are chilled for tracked issues for the duration of the tracking period DWAC Deposit Withdrawal at Custodian activity is permitted on a very limited basis during the tracking period and only with consent of the Lead Underwriter Certificates On Demand CODs CODs are chilled for tracked issues for the duration of the tracking period Collateralization of IPO Shares Shares in the IPO Control Account will be considered collateral NA only on the day they are received into the account and only if received for value Shares received into the IPO control account without value will follow the normal accounting updating rules and will be considered NA or MA depending on the SDFS Account Coding Instructions Shares in the IPO Control Account will not be considered collateral after the first day they are received MA NA intra day moves will not
161. ocessing information Result DTC processes WT requests using shares from your IPO Control Account first DTC generates releases from your IPO Control Account to its Free Account 1 Since the IPO Tracking System records all manual releases as potential flips you should not manually release shares for WT processing 2 DTC generates releases from your IPO Control Account only if the Internal Account number already exists in the IPO database If the Internal Account number does not exist a release will not be generated and the WT will be assumed to be from Free shares only Request a WT Using Free Shares Only 1 Enter information in the following fields of the Night W T Data Collection Screen or the Rush Withdrawal Transfer System Add Function Screen e Int Cust enter a dummy AIA number one that does not exist in the IPO database Note The use of a dummy Internal Account number in the Int Cust field will default the system to use Free shares for WT processing e AgtID enter ID the Agent number optional 2 Refer to NWT1 and RWT1 for additional WT field and processing information Stock Loans and Returns Stock Loan Deliveries Co Managers are able to process stock loans using the appropriate DO NDOM Reason Codes As for all broker Participants DTC fulfills a Co Manager s stock loan delivery quantity with Free Account shares only If insufficient shares are available in the Lead Manager s Free Account the Participant must instruc
162. oken down by trade date and price for customers using more than one Syndicate Member flipped quantities are prorated e Separate line for WTs e Separate line for stock loans quantity reported represents the net amount outstanding loans less returns e Retail account transfers showing the receiving Participant number e Institutional account transfers showing the receiving Participant number and BIA number Refer to Reports for further information Syndicate Member Tasks Required Field Information amp DTC Output TASK FIELD INFORMATION DTC RED m Initial Distribution To Initial Distribution To Distribution To Agent Banks via ID O Code Market Code 11 S Code 48 Agent Internal Account Agent Bank s Internal Account Reason Code 49 Broker I nternal Account Executing Broker s Internal Account optional Agent Banks via DO NDOM Recv Pt Agent Bank s Part Activity Code 48 REAS Reason Code 50 Reason Int Acct Agent Bank s Internal Code 50 Account Bkr Acct Executing Broker s Internal Account optional Market Code Market Code 11 Prime Brokers via ID Activity Code 47 Agent Internal Account Prime Broker s Internal Account Reason Code 49 Broker I nternal Account Executing Broker s Internal Account optional Prime Brokers via Recv Pt Prime Broker s Part DO NDOM Activity Code 47 REAS
163. okers via DO NDOM Recv Pt Prime Broker s Part Activity Code 49 REAS Reason Code 550 Reason Code 550 Int Acct Prime Broker s Internal Account Bkr Acct Executing Broker s Internal Account optional Customer Level Updates Add Customer Level Detail via Internal Customer IPOU Option 2 Internal Account Share Quantity Whole number quantity Sign or to increase or decrease shares Update Customer Level Detail via From Internal Customer IPOU Option 5 Old Internal Account To Internal Customer New Internal Account optional Reallocated Share Quantity New whole number quantity optional Secondary Market Activity Release of IPO shares to Free Internal Customer Activity Account via IPOU Option 3 Internal Account Code 46 TASK FIELD INFORMATION DTC REQUIRED OUTPUT Trade Date Trade date Contract Price Contract price Sale of Free shares Same as for non tracked Activity issues Code 26 Move Free shares to IPO Control CUSIP The issue s Account for Oversubscriptions via CUSI P IPOU Option 6 Share Quantity Number of shares being moved Withdrawals by Transfer via NWT1 Int Cust Internal RWT1 Account Agt I D ID Agent optional Stock Loan via DO NDOM REAS Reason Code 10 Activity Code IPO Shares 48 Free Shares 26 Reason Code 10 Stock Loan Return via DO NDOM REAS Reason Code 20 Activity Code IPO Shares 4
164. ontractual documents collectively the Contractual Documents DTC s obligations to Participants and other authorized users are therefore contractual in nature and are limited solely to those obligations expressly set forth in the Contractual Documents Participants and other authorized users are obligated to among other things follow precisely the procedures outlined in the Contractual Documents and provide DTC with complete and accurate information In accepting financial assets from Participants and or providing services to other authorized users DTC relies among other things upon the duty of Participants and other authorized users to exercise diligence in all aspects of each transaction processed through DTC Participants and other authorized users expressly acknowledge that the services provided by DTC are ministerial in nature Moreover as further reflected by DTC s fee structure which typically bears no relationship to the dollar value of any given transaction DTC does not accept any risk of loss to Participants other authorized users and possible third party beneficiaries with respect to transactions being processed by DTC Copyright 1999 2007 by The Depository Trust Company DTC All rights reserved This work including without limitation all text images logos compilation and design is copyrighted is proprietary and is intended for the exclusive use of DTC s Participants and other authorized users of DTC s services
165. or stock loans to banks in which case the Participant number of the receiving bank must be entered as the AIA number in order to allow the receiving bank the ability to deliver borrowed shares Stock Loan Receipts DTC delivers all Stock Loans to the Borrower s Free Account Stock Loan Returns You can process Stock Loan Returns by using the appropriate Reason Codes via the PTS functions DO or NDOM All stock loan returns are delivered from the borrower s Free account 1 Enter Reason Code 20 in the REAS field of the SDFS Initial Public Offering Deliver Orders Screen 2 Refer to DO and NDOM of the PTS Manual for additional Deliver Order field and processing information Stock Loan Return Receipts All Stock Loan Returns are delivered to the lender s Free Account as Free Secondary Market shares in the IPO database Pledges Pledges of Collateral You can pledge shares with or without value from either their IPO Control or Free Accounts via the PTS function COLL 1 Enter the following information on the Free Pledge Service Screen e IPO enter Y if the shares are being pledged from the IPO Control Account OR Enter N if the shares are being pledged from the Free Account 2 Refer to COLL for additional field and processing information Pledged IPO Control and Free Account shares are moved to the Pledge 14 Account IPO shares are segregated in the 114 Account Pledge Releases If released during the tracking period Pledge shares
166. or the From Internal Customer AIA number the transaction is rejected e From BIA enter the existing BIA number for the customer optional e To Internal Customer enter the new AIA number for the customer required if the Participant wants to change the existing number to a new number e Reallocated Share Quantity field enter the number of whole shares being adjusted up to 13 positions required if the Participant is reallocating a share quantity from the existing external customer to the new internal customer Note Because the system overlays the share quantity information you must input exactly the total number of shares the To Internal Customer should have e Refer to Appendix D for additional field and processing information Transfer Customer s Position Between Participants Custodian Banks can transfer customer positions to other Participants without those transfers being reported as flips For reporting purposes the IPO database moves the original Syndicate Member s Participant number and BIA number with each transfer of a customer s position Memo Segregation and Sub Account Segregated positions do not need to be released prior to attempting any customer account transfers IPO account transfer transactions can bypass memo segregation Customer level detail is required for account transfers Note Partial transfers will not be processed Transfer Customer s Position via IPOU Note Account transfers in tracked CU
167. or their Retail customers by entering Add Customer Level Detail transactions over PTS CCF CCFIl or MDH directly into the IPO database This can also be performed easily at Initial Distribution by extracting customer level details for Retail Primary Market buys from trade files and reformatting them in the IPO Add Customer Level Detail machine readable format for transmission via MDH CCF CCFII or by entering the customer level detail via the PTS function Although Lead Managers and Syndicate Members are not required to populate the IPO database with customer level detail for Retail customers there are several advantages to doing so If the IPO database is not populated the ensuing reports will not be specific and flipping will be reported on a Syndicate Member level The Syndicate Member s report will display the message Customer Level Information is Unavailable adjacent to the flipped share quantity Also certain transactions e g WTs customer account transfers require that customer level detail be entered before the transactions can be processed Lead Managers Syndicate Members Clearing Brokers and Banks that have not entered customer level detail will need to enter it in order to perform a customer account transfer or a WT Customer level detail may be submitted to DTC as early as trade date Brokers may submit reformatted trade files via CCF CCFII MDH or use the PTS IPO function to populate the IPO database by including customer le
168. ount you should set up deliveries for distribution of shares to your Syndicate Members Co Managers and Co Reporters A Syndicate Takedown is performed by using Option 4 of the PTS function DO or Option 6 of NDOM Note The term Syndicate Members includes selling group members as well You can indicate a Syndicate Takedown delivery by entering the appropriate Reason Codes as described in the following sections in the REAS field of the Initial Public Offering Deliver Orders Screen Deliveries to Syndicate Members Co Managers and Co Reporters go to the top of the delivery queue Distribute Shares to Co Managers and Co Reporters You can set up deliveries to your own second Participant number Co Reporter for foreign distribution or to a second Lead Manager Co Manager Note In a Co Manager relationship the deliverer the Lead Manager and the Receiver have different Primary Participant numbers in the Master File Entity System In a Co Reporting relationship the deliverer Lead Manager and receiver Lead Manager have the same primary Participant number Distribute Shares to Co Managers 1 Enter information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Co Manager s Participant number e REAS Pt enter Reason Code 560 2 Refer to DO or NDOM for additional Deliver Order field and processing information Distribute Shares to Co Reporters 1 Enter information in the following f
169. owing information is provided via POI A list of all tracked IPO issues A summary of tracked IPO issues in which the Participant has position A summary of customer level details and custodian relationships by Participant issue A summary of IPO pending canceled released transactions A summary of Correspondent Syndicate Members customer s Secondary Market share positions obtained from Secondary Market transactions For additional information on the IPO Tracking System Inquiry function refer to the Overview Receive Reports DTC prepares and distributes cumulative hard copy reports of their tracked issues for Syndicate Members Clearing Banks will receive reports on behalf of each of their Correspondent Syndicate Members e Potential flips by Retail and Institutional customers broken down by trade date and price if more than one Syndicate Member delivered IPO shares to a customer the flip quantity is prorated Separate line for WTs Separate lines for Stock lending activity Retail account transfers showing receiving Participant number and BIA number Institutional account transfers showing receiving Participant number and BIA number Refer to Reports for further information Clearing Bank Tasks Required Field Information amp DTC Output ac o Oe Field Information Required DTC Output Initial Distribution To Agent Banks via ID Market Code Market Code 11 Activity Code 26 Agent Internal Account Agent Bank s
170. position from a Bank Shares marked as IPO shares in the Bank s Free Account move to the your IPO Control Account in ART and are marked as IPO shares in the IPO database Shares marked as Secondary Market shares in the Bank s Free Account move to your Free Account in ART These Free Account shares are not captured in the IPO database e Receive position from a Broker Shares from the delivering Broker s IPO Control Account move to your IPO Control Account in ART and are marked as IPO shares in the IPO database Shares from the Delivering Broker s Free Account move to your Free Account in ART These Free Account shares are not captured in the IPO database Secondary Market Release Shares From the IPO Control Account for Secondary Market Sales All Secondary Market sell transactions settle from the Free Account In order to deliver shares sold by your customers in the Secondary Market those shares must first be released from your IPO Control Account to your Free Account using the IPOU function Failure to release shares to the Free Account could result in a CNS short or DOs for Secondary Market sales dropping in ART Releases can be performed on the individual customer level by including the AIA number of the customer on the release or on the Syndicate Member level Doing releases on the individual customer level allows DTC to provide a more detailed report of flipping activity by the your customers Releases can be submitted as early as 6 00 a m
171. pulates the IPO database 2 Refer to DO or NDOM for additional Deliver Order field and processing information Distribute Shares for Broker Custody Trades For trades where the Executing Broker and Custodian are the same entity Broker Custody you deliver shares to your own account via DTC s ID system 1 Follow the Initial Distribution procedures described in Distribute Shares via ID entering your own Participant number as both the Executing Broker and the Custodian of the transaction Result Because there is no actual movement of shares the IPO database is populated with customer level detail and the associated Syndicate Member upon Confirmation of Broker Custody trades Distribute Shares for Directed Concessions You can deliver a block of IPO shares directly to a Syndicate Member s Institutional Customer at the customer s request Directed Concession You are set up as the associated Syndicate Member in the IPO database Directed Concessions can be distributed via DTC s ID system or via the PTS functions DO Option 4 or NDOM Option 6 Directed Concession deliveries are flagged on your tracking reports with an asterisk and with the delivering custodian s Participant number If a Directed Concession customer flips you must check your internal records to identify the customer s Syndicate Member Distribute Directed Concession Shares via ID 1 Enter information in the following fields of the Institutional Delivery Trade In
172. put Screen e Market Code enter Market Code 51 e Agent Internal Account enter the Agent Bank or Prime Broker s Internal Account number for the customer e Broker Internal Account enter the Executing Broker s Internal Account BIA number for the customer Note The Internal Account numbers must be entered correctly in order to ensure accurate processing of the transaction If either is missing or entered incorrectly an error code of 91 will appear on the Confirmation and Affirmation tickets Refer to Resolve Internal Account Number Discrepancies for information on how to correct the Agent Internal Account number 2 Refer to IDTI for additional ID field and processing information Distribute Directed Concession Shares via DO or NDOM 1 Enter the information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Agent Bank or Prime Broker s Participant number REAS enter Reason Code 530 Int Acct enter the Agent Bank or Prime Broker s Internal Account number for the customer e Bkr Acct enter the Executing Broker s Internal Account BIA number for the customer Note The Internal Account numbers must be entered to ensure accurate processing of the transaction DTC rejects Initial Distribution deliveries in which either number is missing Result The system captures the Agent Bank Prime Broker Internal Account number along with the BIA number and the associated Syndicate Member and populates
173. r Reason Code by which this account transfer is to be processed 3 Refer to Appendix D for additional field and processing information Transfers can also be performed using the PTS functions DO or NDOM However since this requires manual releases to the Free Account these transfers will be recorded as potential flips on DTC s tracking reports Note Account transfers of IPO and Free Secondary Market shares from a Broker Participant will result in two DOs generated Share Movement for Customer Account Transfers Deliveries When you transfer a customer s position to another Participant DTC moves the shares in one of the following ways e Transfer position to a Bank Both IPO Control and Free Account shares move to the receiving Bank s Free Account in ART The IPO database marks the shares delivered from your IPO Control Account as IPO shares and those delivered from your Free Account are marked as Secondary Market shares in the IPO database e Transfer position to a Broker Shares delivered from your IPO Control Account move to the receiving Broker s IPO Control Account in ART and are marked as IPO shares in the IPO database Shares delivered from your Free Account move to the Receiving Broker s Free Account in ART These Free Account shares are not captured in the IPO database Share Movement for Customer Account Transfers Receipts You will receive a customer s position from another Participant in one of the following ways e Receive
174. r the delivering Custodian Bank are marked as Secondary Market shares in the IPO database for the receiving Custodian Bank and credited to the receiving bank s Free Account in the IPO database Transfer position to a Broker Shares marked as IPO shares in the IPO database for the Custodian Bank move to the receiving Broker s IPO Control Account in ART and are marked as IPO shares in the IPO database Shares marked as Secondary Market shares in the IPO database for the Custodian Bank move to the Broker s Free Account in ART Secondary Market shares are not captured in the IPO database for broker Participants Share Movement for Customer Account Transfers Receipts Custodian Banks will receive customer account transfer positions from other Participants in one of the following ways Receive position from a Bank All shares move to the receiving Bank s Free Account in ART Shares marked as IPO shares in the IPO database for the delivering Bank are marked as IPO shares in the IPO database for the receiving Custodian Bank and credited to the receiving bank s Free account Shares marked as Secondary Market shares in the IPO database for the delivering bank are marked as Secondary Market shares in the IPO database for the receiving Custodian Bank and credited to the receiving banks Free Account Receive position from a Broker All shares move to the Custodian Bank s Free Account in ART Shares received from the Broker s IPO Control Account are ma
175. ra day moves will not be permitted Shares in the Free Account are subject to normal collateralization rules Refer to the Settlement Service Guide for additional information on collateralization Reconcile Customer Level Detail with Internal Records Clearing Brokers should reconcile the customer level detail in the IPO database with their internal records daily using an POCLD machine readable file This file contains the Agent Bank or Prime Broker s Internal Account numbers for all of a Correspondent Syndicate Member s customers on file as well as the Executing Broker s Internal Account numbers for those customers Contact DTC s Participant Interface Planning Department or your Relationship Manager for assistance Make Inquiries via IPOI The PTS function IPOI Initial Public Offering Tracking System Inquiry allows Clearing Brokers to make inquiries on behalf of its Correspondent Syndicate Members The following information is provided via POI A list of all tracked IPO issues A summary of tracked IPO issues in which the Participant has position A summary of customer level details by Participant issue A summary of IPO pending canceled released transactions For additional information on the IPO Tracking System Inquiry function refer to the Overview and Appendix E Receive Reports from DTC DTC prepares and distributes daily cumulative hard copy reports for Syndicate Members of their tracked issues You will receive a report for
176. rked as IPO shares in the IPO database for the Custodian Bank and credited to the receiving banks Free Account Shares received from the Broker s Free Account are marked as Secondary Market shares in the IPO database for the Custodian Bank and credited to the receiving bank s Free account Withdrawals by Transfer WTs If certificate denominations are available Withdrawals by Transfer WTs of tracked issues are permitted starting on the closing day via the PTS functions NWT1 Night Withdrawal by Transfer and RWT1 Rush Withdrawal by Transfer as well as via CCF and CCFII WTs are noted as separate line items on the tracking reports 1 Enter information in the following fields of the Night W T Data Collection Screen or the Rush Withdrawal Transfer Screen e Int Cust enter the AIA number of the customer for whom shares are being withdrawn e Requests for WTs must include the AIA number The customer must already exist in the IPO database or the WT is rejected ID Agent enter the ID Agent ID number optional e Refer to NWT1 and RWT1 for additional WT field and processing information DTC processes WT requests using the Custodian Bank s Secondary Market shares first If necessary DTC uses IPO shares to complete a WT request Stock Loans and Returns Stock Loan Deliveries Custodian Banks are able to process stock loans using the appropriate DO NDOM Reason Codes When processing a stock loan DTC attempts to fulfill the loan quantity
177. rom BIA enter the existing BIA number for the customer optional To Internal Customer enter the new AIA number for the customer required if the Participant wants to change the existing number to a new number e Reallocated Share Quantity enter the number of whole shares being adjusted up to 13 positions required if the Participant is reallocating a share quantity from the existing internal customer to the new internal customer Note Because the system overlays the share quantity information you must input exactly the total number of shares the To Internal Customer should have Transfer Customer s Position Between Participants Clearing Banks can transfer a Correspondent Syndicate Member s customer s position to another Participant without that transfer being recorded as a potential flip For reporting purposes the IPO database moves the original Clearing Bank s Participant number Correspondent Syndicate Member s ID Broker Dealer number and BIA number with each transfer of a customer s position Memo Segregation and Sub Account Segregated positions do not need to be released prior to attempting any customer account transfers IPO account transfer transactions can bypass memo segregation Customer level detail is required for account transfers Note Partial transfers will not be processed Transfer Customer s Position via IPOU Note Account transfers in tracked CUSIPs must be accomplished by the IPO Customer Account Transfer function
178. rt positions for Syndicate Members having long positions in their IPO Control Accounts indicating potential sales by Syndicate Members that have not yet released shares List of all CNS short positions for the CUSIP Note Syndicate Member customer level information is not provided in your Lead Manager reports Refer to Reports for additional information and sample reports Lead Manager Tasks Required Field Information amp DTC Output ELS FI ELD I NFORMATI ON DTC REQUI RED OUTPUT Syndicate Takedown To Co Managers and Co Reporters via Recv Pt Co Activity DO NDOM Manager Reporter Part Code 47 REAS Reason Code 560 Reason Code 560 Syndicate Members via DO NDOM Recv Pt Syndicate Activity Member Part Code 47 REAS Reason Code 570 Reason Code Corr Acct Syndicate 570 Member Part Clearing Bank of Correspondent Recv Pt Clearing Bank s Activity Syndicate Members via DO NDOM Part Code 48 REAS Reason Code 570 Reason Code Corr Acct 570 Correspondent Syndicate Member s FINS Clearing Broker of Correspondent Recv Pt Clearing Broker s Activity Syndicate Members via DO NDOM Part Code 47 REAS Reason Code 570 Reason Code Corr Acct 570 Correspondent Syndicate Member s FINS Initial Distribution To Agent Banks via ID Market Code Market Activity Code 11 Code 48 Agent I nternal Account Reason Agent Bank s Internal Code 49 Account Broker Internal Account Executin
179. rticipants to settle its net settlement obligation Net Debit Caps are meant to assure liquidity while the collateral monitor assures sufficient collateral to avoid generalized losses if a failure is due to insolvency Relaxed Editing Scrubbing The IPO Tracking System process that adjusts the Internal Account number in order to reduce the number of unmatched Internal Account numbers on sale transactions The incoming Internal Account number is left aligned and stripped of all insignificant characters including leading zeros Only letters A Z and numbers 0 9 remain within the scrubbed Internal Account number Any incoming Internal Account number that when scrubbed results in all spaces is treated as if the Internal Account number was not entered and is edit rejected All internal processing by the IPO Tracking system occurs against the scrubbed version of the Internal Account number The original Internal Account number is stored in the IPO Transaction database and is returned to the Participant on output copies of Deliver Orders DOs ID Confirms IPO Customer Allocations IPO Account Transfers IPO Releases and IPO Customer Level Adjustments Secondary Market Where shares of a new issue are bought and sold after Initial Distribution Selling Group Entity that markets an Initial Public Offering that is not a part of the Syndicate Settlement Date Date on which a trade settle
180. s All stock loans are made on an omnibus basis No customer account numbers are tagged to stock loans An AIA number entered in a stock loan delivery is ignored by DTC however the exception to this is for stock loans to banks in which case the Participant number of the receiving bank must be entered as the AIA number in order to allow the receiving bank the ability to deliver borrowed shares Stock Loan Receipts DTC delivers all Stock Loans to the Borrower s Free Account Stock Loan Returns You can process Stock Loan Returns by using the appropriate Reason Codes via the PTS functions DO or NDOM All stock loan returns are delivered from the borrower s Free account e Enter Reason Code 20 in the REAS field of the SDFS Initial Public Offering Deliver Orders Screen e Refer to DO and NDOM for additional Deliver Order field and processing information Stock Loan Return Receipts All Stock Loan Returns are delivered to the lender s Free Account as Free Secondary Market shares in the IPO database Pledges Pledges of Collateral You can pledge shares with or without value from either their IPO Control or Free Account via the PTS function COLL 1 Enter the following information on of the Free Pledge Service Screen e IPO enter Y if the shares are being pledged from the IPO Control Account or e Enter N if the shares are being pledged from the Free Account 2 Refer to COLL for additional field and processing information Result
181. s By 1 15 p m closing date DTC receives a call from the Lead Manager permitting the distribution of shares to Syndicate Members DTC then delivers shares from the Lead Manager s IPO control account to the Clearing Bank s general free account on behalf of the Bank s Correspondent Syndicate Members in accordance with the Lead Manager s DO instructions Syndicate Takedown These shares are marked as IPO shares in the IPO database Clearing Banks may hold the shares or make deliveries on behalf of their Correspondent Syndicate Members Note Throughout the tracking period all bank transactions Initial Distribution and Secondary Market for the issue are monitored All shares of the tracked issue reside in the bank s general free account and are tagged in the IPO database as either IPO shares or Free Secondary Market shares Initial Distribution Initial Distribution the delivery of IPO shares to a Lead Manager s or Syndicate Member s customers at Agent Banks or Prime Brokers takes place after the Syndicate Takedown Although Initial Distribution shares can be delivered on or after the closing date Clearing Banks can set up Initial Distribution deliveries on behalf of their Correspondent Syndicate Members prior to receiving shares from the Lead Manager Initial Distribution shares are delivered by using either DTC s Institutional Delivery ID System or the PTS functions DO or NDOM The Clearing Bank indicates an Initial Distribution del
182. s Stabilization Period Duration of time that the Lead Manager is responsible for maintaining the price of a new issue Stock Loan The loaning of shares from one Participant to another Stock Loan Return The return of loaned shares from the Borrower back to the Lender Syndicate Member One of a group of Broker Dealers that agrees to purchase a New Issue of securities from the issuer for resale to the investment public Trade Date Date on which a trade is executed Trade For Trade Ticket NSCC output containing deliver or receive instructions for transactions that are ineligible for CNS processing Turnaround Sell To buy on Primary Market and sell in Secondary Market on the same day Both trades settle on the same day Withdrawal by Transfer WT The withdrawal of physical certificates from DTC for re registration The certificates are transferred out of DTC s nominee name Cede amp Co to a Participant or customer name Appendix C CODES Deliver Order Reason Codes REASON DESCRIPTION CODE 10 Stock Loan m m Stock Loan Reclaim DK Receiver reclaims a Stock Loan delivery the Receiver doesn t know the trade N Stock Loan Reclaim Wrong Quantity Receiver reclaims a Stock Loan delivery the wrong quantity of shares was delivered f Ww Stock Loan Reclaim Wrong Security Receiver reclaims a Stock Loan delivery the wrong security was delivered D
183. s No customer account information is accepted for stock loan releases For additional information regarding the IPO Tracking System Update function refer to POU IPOI Inquiry Function List of Tracked I ssues Option 1 displays a list of all issues that are currently being tracked the Lead Manager of each issue and the proposed date for end of tracking for each issue e Issues by Participants Option 2 displays a summary of tracked issues in which the Participant has position Each role that a Participant plays is represented e g Correspondent Syndicate Member Prime Broker etc e Customer Level Details by Participant I ssue Option 3 displays three screens that offer different levels of information e Screen 1 displays a Participant s general customer information regardless of which Syndicate Member delivered the shares e Screen 2 displays customer information broken down by Syndicate Member e Screen 3 provides detailed information for a specific customer Custodian relationships for that customer are also defined e These screens can be used for accessing more detailed information by entering a specific customer Executing Broker flip and customer type criteria in the appropriate fields IPO Release Transaction Option 4 offers optional date range criteria and lists all IPO releases in any status For additional information on the IPO Tracking System Inquiry function refer to IPOI IPO Tracking System User s Manual
184. s being transferred Settlement Amount Settlement amount optional Account Transfer to To Participant Receiving Activity Broker Free shares via Broker s Part Code 26 IPOU Option 4 From Internal Customer Reason Current Internal Account Code 40 To Internal Customer New Internal Account Account Transfer to Bank IPO Shares via POU Option 4 Account Transfer to Bank Free shares via POU Option 4 Share Quantity number of whole shares being transferred Settlement Amount Settlement amount optional To Participant Receiving Bank s Activity Part Code 48 From Internal Customer Reason Current Internal Account Code 40 To Internal Customer New Internal Account Share Quantity number of whole shares being transferred Settlement Amount Settlement amount optional To Participant Receiving Bank s Activity Part Code 26 From Internal Customer Reason Current Internal Account Code 40 To Internal Customer New Internal Account Share Quantity number of whole shares being transferred Settlement Amount Settlement amount optional IPO Appendix Appendix A Syndicate Prioritization Deliveries for an IPO tracked issue are prioritized in the following order Co Managers Co Reporters Delivery to Co Managers Co Reporters via DO NDOM Reason Code e 560 Co Manager Co Reporter Syndicate Members Delivery to Syndicate Members via DO NDOM Reason Code e 570 Syndicat
185. s can be made on settlement date and the day after These reclaims can not be reclaimed by the original deliverer and are not subject to risk management controls 1 Enter information in the following fields of the SDFS Automatic Reclaim Deliver Orders Screen e Trans enter the transaction number of the transaction being reclaimed e Reas Code enter the appropriate Reason Code Refer to Codes in this Manual for Reclaim Reason Codes e Orig Date Ind enter T to reclaim a DO entered today or P to reclaim a DO entered on the previous business day Note If made during the Matched Reclaims timeframe DTC will also match Freeform Reclaims provided the appropriate DO Reason Code and correct information is entered Unmatched Freeform Reclaim Deliveries Reclaims must be entered Freeform via CCF CCFIl MDH or the PTS functions DO or NDOM if e The reclaim transaction number cannot be matched to an original delivery e The reclaim occurs after the Matched Reclaim deadline has passed You must manually input transaction details including the appropriate DO Reclaim Reason Code DTC treats these Reclaim transactions as original deliveries which in turn can be reclaimed by the receiver Reclaim Receipts During the tracking period Initial Distribution shares that are reclaimed within the Matched Reclaim deadline S through S 1 will be returned to the account from which they originated Reclaims performed after the Match Reclaim dea
186. s for Institutional customers Shares are moved from the Lead Manager s or Syndicate Member s IPO Control Account to a Prime Broker s IPO Control Account or to an Agent Bank s Free Account New Issue Reclaim DK Receiver reclaims an Initial Distribution delivery the Receiver doesn t know the trade New Issue Reclaim Wrong Quantity Receiver reclaims an Initial Distribution delivery the wrong quantity of shares was delivered New Issue Reclaim Wrong Security Receiver reclaims an Initial Distribution delivery the wrong security was delivered New Issue Reclaim Wrong Money Receiver reclaims an Initial Distribution delivery the money charged is incorrect New Issue Reclaim Account Information Missing Receiver reclaims an Initial Distribution delivery additional account information is needed to identify the original delivery New Issue Reclaim Due Bill Missing Receiver reclaims an Initial Distribution delivery the due bill is missing Directed Concession Delivery Lead Manager delivers a block of IPO shares directly to a Syndicate Member s Institutional customer at its Agent Bank or Prime Broker at the Institution s request Shares are moved from the Lead Manager s IPO Control Account to a Prime Broker s IPO Control Account or to an Agent Bank s Free Account and are marked as IPO shares in the IPO database Directed Concession Reclaim DK Receiver reclaims a Directed Concession delivery the Receiver doesn t k
187. s general free account Shares from the Broker s general free account are marked as Secondary Market shares in the IPO database for the Clearing Bank and credited to the receiving Bank s general free account Secondary Market Secondary Market Deliveries Free shares sold in the Secondary Market can be delivered using the current ID and DO NDOM Codes The following additional information is required to process Secondary Market sales Internal Account AIA number Note Trades with unmatched AIA numbers will be rejected Refer to Relaxed Editing and Resolve Internal Account Number Discrepancies in ID Sell Transactions e Correspondent Syndicate Member s ID Broker Dealer number e Executing Broker s Internal Account BIA number e ID Agent ID number Refer to DO or NDOM for information on Deliver Orders and IDTI for information on ID deliveries When delivering to other Banks i e Bank to Bank deliveries the Clearing Bank enters its own Internal Account number for its customer The receiving Bank s database is populated with a customer number matching its own Participant number The receiving Bank may maintain its own Participant number as its account number for this customer or may adjust the number to the actual customer number When subsequently delivering the shares the Bank must use the account number on the database at the time of the delivery As with any Clearing Bank s delivery Free shares will be moved first then if nee
188. s may be reprocessed for up to 21 days You may resolve Internal Account number discrepancies in the following ways e Have the Custodian update the Internal Account number in the IPO database to match the number on the ID transaction by performing an IPO customer level adjustment Refer to Update Customer Level Detail in this chapter e Cancel the ID transaction and re enter it in the ID system as per the Custodian s instructions Refer to Distribute Shares via ID in this chapter e Have the Custodian except the ID transaction from automated settlement and enter a DO with the AIA number as it appears in the IPO database Withdrawals by Transfer WTs If certificate denominations are available Withdrawals by Transfers WTs of tracked issues are permitted starting on closing day via the PTS functions NWT1 Night Withdrawal by Transfer and RWT1 Rush Withdrawal by Transfer as well as via CCF and CCFII WTs are noted as separate line items on tracking reports 1 Requests for WTs must include customer level detail 2 The IPO database must be populated with the customer level detail prior to requesting a WT 1 Enter information in the following fields of the Night W T Data Collection Screen or the Rush Withdrawal Transfer System Add Function Screen e Int Cust enter the AIA number of the customer for whom shares are being withdrawn e AgtID enter the ID Agent number optional 2 Refer to NWT1 and RWT1 for additional WT field and pr
189. s will not be processed and will pend Deposits Deposits are chilled for tracked issues for the duration of the tracking period DWAC Deposit Withdrawal at Custodian activity is permitted on a very limited basis during the tracking period and only with consent of the Lead Underwriter Certificates On Demand CODs CODs are chilled for tracked issues for the duration of the tracking period Collateralization of IPO Shares Shares in the IPO Control Account will be considered collateral NA only on the day they are received into the account and only if received for value Shares received into the IPO control account without value will follow the normal accounting updating rules and will be considered NA or MA depending on the SDFS Account Coding Instructions Shares in the IPO Control Account will not be considered collateral after the first day they are received MA NA intra day moves will not be permitted Shares in the Free Account are subject to normal collateralization rules Reconcile Customer Level Detail with Internal Records You should reconcile the Customer Level Detail in the IPO database with your internal records daily using an POCLD machine readable file This file contains the Agent Bank or Prime Broker s Internal Account numbers of all your customers on file as well as the Executing Broker s Internal Account numbers for those customers Contact DTC s Participant Interface Planning Department or your Relationship Ma
190. sed Free shares are returned to the Free Account first up to the quantity of Free Account shares pledged The balance of the shares return to the IPO Control Account If released after tracking has ended all Pledge shares are delivered to the Free Account regardless of what their account of origin Reclaims Reclaim Deliveries DTC will automatically process a matched reclamation based on the DO transaction number and other transaction information provided until one day after settlement You can enter Matched Reclaims via the PTS functions ART and DO NDOM and via CCF CCFII and MDH When you reclaim a delivery the reclaimed DO will be matched to the original delivery and the information in the IPO database will be reversed Note Partial reclaims are not permitted Matched Reclaim Deliveries via ART Matched Reclaims can be made on settlement date and the day after These reclaims can not be reclaimed by the original deliverer and are not subject to risk management controls 1 Enter R to the left of the item to be reclaimed on the ATP Activity Summary Screen 2 Refer to the Settlement Service Guide for additional ART field and processing information Matched Reclaim Deliveries via DO or NDOM Matched Reclaims can be made on settlement date and the day after These reclaims can not be reclaimed by the original deliverer and are not subject to risk management controls 1 Enter information in the following fields of the SDFS Automat
191. shares including releasing shares to their Free Accounts canceling pending transactions moving shares from the Free Account to the IPO Control Account for Oversubscriptions customer account transfers adding customer level details adjusting customer level details adjusting Corresp Positions releasing IPO shares for stock lending and accessing the Inquiry IPO function Lead Manager The firm that organizes and leads a syndicate of underwriters in the act of purchasing and distributing the shares of an initial public offering to investors Matched Reclaim Return of a delivery made no later than the day after settlement date that DTC matches to the original delivery Memo Segregation Control mechanism that prevents securities residing in either the Participant s IPO Control Account or its Free Account that have been fully paid for by the Participant s customer from being accessed for normal activity Only certain types of activities may reduce this position Oversubscription Lead Manager commits to selling more shares than have been issued and must purchase or borrow shares in the Secondary Market to fulfill its Syndicate Takedown and Initial Distribution obligations Oversubscription Directed Concession Lead Manager delivers oversubscribed shares directly to a Syndicate Member s Institutional customer delivery is to the customer s Agent Bank or Prime Brok
192. shares they retain to their Correspondent Syndicate Member s Retail customers IPOU option 2 allows Clearing Banks to populate the IPO database by adding their Correspondent Syndicate Members customer level details and share allocations Note Banks cannot allocate shares to Institutional customers 1 On the IPO Tracking System Main Menu select option 2 Add Customer Level Detail 2 Enter information in the following required fields on the IPO Add Customer Level Detail screen e Corresp Account enter the Correspondent Syndicate Member s ID Broker Dealer number e Internal Customer enter the Internal Account number of the customer e Share Quantity enter the number of whole shares up to 13 positions e Sign enter to indicate the shares should be increased Update Customer Level Detail IPOU option 5 allows Clearing Banks to change their Correspondent Syndicate Members customers Internal Account numbers and reallocate a share quantity from one customer to another 1 On the IPO Tracking System Main Menu screen select option 5 Customer Level Adjustment 2 Enter information in the following required fields of the IPO Customer Level Adjustment screen e Corresp Account enter the Correspondent Syndicate Member s ID Broker Dealer number e From Internal Customer enter the existing AIA number for the customer Note If a match is not found for the From Internal Customer field AlA number the transaction is rejected F
193. sition in the IPO database an immediate release is processed If your or the customer does not have position refer to the following sections Pending Releases You and the customer must have position in the IPO database in order for a release to be processed If you or the customer does not have position the release will pend hold for up to 3 days after Trade Date If you and the customer do have position but not enough to cover the entire release DTC will release shares from the your account and pend the balance of the release request partial hold Participants that do not populate the IPO database with customer level detail can use an omnibus or dummy account number This allows for partial releases of their position as shares are sold Cancel Pending Releases You can cancel pending releases via the PTS function I POU 1 On the IPO Tracking System Main Menu Screen select Option 7 IPO Pending Transaction Cancel 2 Enter information in the following fields of the IPO Pending Transaction Screen e CUSIP enter the issue s CUSIP number e Date enter a date range From and To in YYMMDD format The default is the current date 3 Press the ENTER key Result A list of pending transactions is displayed 4 Enter S to the left of the selected transaction to view details 5 Enter C cancel to the left of the selected transaction Result The message PRESS PF1 13 TO CONFIRM CANCEL appears 6 Press the PF1 13 key
194. ssage PRESS PF1 13 TO CONFIRM CANCEL appears 6 Press the PF1 13 key Result The transaction is canceled 7 Refer to Appendix D for additional information Secondary Market Deliveries Secondary Market deliveries are performed using the same procedures currently used for deliveries of non tracked issues Note The ID Agent number must be included for Secondary Market DO deliveries to Prime Brokers and Banks When delivering to a Bank the ID Agent number will default to the receiving Bank s Participant number Resolve Internal Account Number Discrepancies in ID Sell Transactions When the AIA number on the sale transaction does not match an AIA number in the IPO Tracking database the system generates a warning message Error 91 Error 91 flags an unmatched Internal Account number three times e ID Confirmation e ID Affirmation e Authorization and Exception ANE Error 91 also appears on machine readable output If the Internal Account number is still unmatched when validation occurs at Authorization and Exception ANE time ANE will not reject the transaction because the system assumes the delivery will use Secondary Market shares However an automated release will not be generated and the delivery will pend Unmatched AIA numbers can be corrected in the IPO database prior to the settlement date cutoffs of 10 00 a m EST for Global processing and 2 30 p m for Trade for Trade processing This allows the ID trade to be authori
195. st be entered correctly in order to ensure accurate processing of the transaction If either is missing or entered incorrectly an error code of 91 will appear on the Confirmation and Affirmation tickets Refer to Resolve Internal Account Number Discrepancies for information on how to correct the Agent Internal Account number 2 Refer to IDTI for additional ID field and processing information Distribute Directed Concession Shares via DO or NDOM 1 Enter the information in the following fields of the Initial Public Offering Deliver Orders Screen e Recv Pt enter the Agent Bank or Prime Broker s Participant number REAS enter Reason Code 530 Int Acct enter the Agent Bank or Prime Broker s Internal Account number for the customer e Bkr Acct enter the Executing Broker s Internal Account BIA number for the customer Note The Internal Account numbers must be entered to ensure accurate processing of the transaction DTC rejects Initial Distribution deliveries in which either number is missing Result The system captures the Agent Bank Prime Broker Internal Account number along with the BIA number and the associated Syndicate Member and populates the IPO database with this information 2 Refer to DO or NDOM for additional Deliver Order field and processing information Distribute Shares for Oversubscriptions When you have fewer shares than needed to makethe Initial Distribution deliveries you can purchase or borrow shares from the S
196. t Broker Internal Account Executing Broker s Internal Account optional Prime Brokers via DO NDOM Recv Pt Prime Broker s Part Activity Code 47 REAS Reason Code 530 Reason Code 530 Int Acct Prime Broker s Internal Account Bkr Acct Executing Broker s Internal Account optional Oversubscriptions To Syndicate Members via DO NDOM Recv Pt Syndicate Activity Member Part Code 49 REAS Reason Code 540 Reason Code 540 Corr Acct Syndicate Member Part Clearing Banks of Correspondent Syndicate Members via DO NDOM Recv Pt Clearing Bank s Part Activity Code 26 REAS Reason Code 540 Reason Code 540 Corr Acct Correspondent Syndicate Member s FINS Clearing Brokers of Correspondent Syndicate Members via DO NDOM Recv Pt Clearing Broker s Part Activity Code 49 REAS Reason Code 540 Reason Code 540 Corr Acct Correspondent Syndicate Member s FINS Market Code Market Code 52 Agent Banks via ID Activity Code 26 Agent Internal Account Reason Agent Bank s Internal Code Account 549 Broker Internal Account Executing Broker s Internal TASK FIELD INFORMATION DTC REQUI RED OUTPUT Po ccount t Agent Banks via DO NDOM Prime Brokers via ID Prime Brokers via DO NDOM Recv Pt Agent Bank s Part
197. t Activity Sale of Initial Distribution Shares via ID Implemented by Executing Broker Sale of Initial Distribution shares via DO NDOM Release of IPO shares to Free Account via IPOU Option 3 Withdrawals by Transfer via NWT1 RWT1 Stock Loan via DO NDOM Stock Loan Return via DO NDOM Broker Internal Account Executing Broker s Internal Account Agent I nternal Account Agent Bank Prime Broker s Customer Internal Account Agent Bank ID Agent Trade Date Trade Date Int Acct Agent Bank Prime Broker s Customer Internal Account Trade Date Trade Date Net Amt Price Internal Customer Internal Account Trade Date Trade date Contract Price Contract price Int Cust Internal Account Agt ID ID Agent optional REAS Reason Code 10 REAS Reason Code 20 Activity Code 19 PDQ 26 Next day Activity Code 26 Activity Code 46 Activity Code 48 Reason Code 10 Activity Code 49 Reason Bote 20 Account Transfer to Broker via IPOU Option 4 Account Transfer to Bank via IPOU Option 4 Reports From Internal Customer Current Internal Account To Participant Receiving Broker s Part To Internal Customer New Internal Account Share Quantity Number of whole shares being transferred Settlement Amount Settlement amount optional To Participant Receiving Bank s Part From Internal Customer Current Internal Account To Internal Cus
198. t value Use of this Reason Code will not reduce memo segregation if the account transfer is for value Reason Code 95 this Reason Code will reduce the delivering Participant s memo segregation position by the account transfer quantity regardless of whether the account transfer is valued or free of value Reason Code 97 this Reason Code will reduce the delivering Participant s memo segregation position by the account transfer quantity regardless of whether the account transfer is valued as free of value Reason Code 98 this Reason Code will not reduce the delivering Participant s memo segregation position to transact the account transfer regardless of value Note Account transfers of IPO and Free secondary market shares to a broker Participant will result in two DOs generated Share Movement for Customer Account Transfers Deliveries When a Clearing Bank transfers a Correspondent Syndicate Member s customer s position to another Participant DTC moves the shares in one of the following ways Transfer position to a Bank All shares move to the receiving Bank s Free Account in ART Shares marked as IPO shares in the IPO database for the Clearing Bank are marked as IPO shares in the IPO database for the receiving Bank and credited to the receiving Bank s general free account Shares marked as Secondary Market shares in the IPO database for the delivering Bank are marked as Secondary market shares in the IPO database for the receiving Bank and
199. t DTC to process a Stock Loan Release to release IPO shares from its IPO Control account to its Free account for the balance DTC distinguishes between stock loan releases and regular releases and reports each type as separate line items on Lead Underwriter and Syndicate Member Flipping Activity Reports All stock loan releases are categorized according to Participant type of lender and borrower To dissuade Participants from using the stock loan release facility for regular releases DTC monitors the quantity of IPO shares moved to the Participant s Free account via stock loan releases versus the quantity of shares loaned by the Participant on the same day and reports discrepancies to the Lead Underwriter and appropriate Syndicate Members All stock loans are made on an omnibus basis No customer account numbers are tagged to stock loans An AlA number entered in a stock loan delivery is ignored by DTC however the exception to this is for stock loans to banks in which case the Participant number of the receiving bank must be entered as the AIA number in order to allow the receiving bank the ability to deliver borrowed shares Stock Loan Receipts DTC delivers all Stock Loans to the Borrower s Free Account Stock Loan Returns You can process Stock Loan Returns by using the appropriate Reason Codes via the PTS functions DO or NDOM All stock loan returns are delivered from the borrower s Free account 1 Enter Reason Code 20 in the REAS field of
200. te Member is reported for these loans since it is the Syndicate Member that originally delivered the IPO shares to the lending custodian e SL SM Borrows only reported when a Syndicate Member long in IPO shares nonetheless borrows shares in the tracked CUSIP Free or IPO from another Participant The quantity reported is the entire quantity of shares borrowed e SL SM IPO To Free Realloc the quantity reported is the Syndicate Member s portion of IPO shares distributed to a custodian used to replace free secondary market shares previously loaned out by the bank but which the bank instead needs to satisfy a customer s delivery transaction This reported quantity reflects an increase in the number of the Syndicate Member s IPO shares issued by custodians e SL SM Free To IPO Realloc Free shares used to replace IPO shares of a loan because the IPO shares are needed for a delivery transaction The quantity reflects the Syndicate Member s portion of the IPO shares originally reported as a stock loan flip by a custodian but which have been reallocated to satisfy the Syndicate Member s custodian s customer s delivery transaction a regular flip Since the customer s flip will be reported under the Flipped category this SLSM Free To IPO Realloc quantity should be subtracted from one of the quantities reported as IPO shares loaned by custodians SL Custodian To Lead or SL Custodian To Other categories in order to avoid double counting e SL Flip to IPO Re
201. ter R to the left of the item to be reclaimed on the ATP Activity Summary screen e Refer to ART for additional field and processing information Matched Reclaims Deliveries Via DO or NDOM Matched Reclaims can be made on settlement date and the day after These reclaims cannot be reclaimed by the original deliverer e g the Lead Manager and are not subject to Risk Management Controls e Enter information in the following fields of SDFS Automatic Reclaim Deliver Orders screen e Trans enter the transaction number of the transaction being reclaimed e Reas Code enter the appropriate Reason Code Refer to Codes in this manual for Reclaim Reason Codes e Orig Date Ind enter T to reclaim a DO entered today or P to reclaim a DO entered on the previous business day e Refer to DO or NDOM for additional information Note If made during the Matched Reclaims time frame DTC will also match Freeform Reclaims provided the appropriate DO Reason Code and correct information is entered Unmatched Freeform Reclaim Deliveries Reclaims must be entered Freeform via CCF CCFI MDH or the PTS functions DO NDOM if e The reclaim transaction number cannot be matched to an original delivery e The reclaim occurs after the Matched Reclaim deadline has passed Clearing Banks must input transaction details in freeform including the appropriate Deliver Order Reclaim Reason Code DTC treats these Reclaim transactions as original deliveries which in turn ca
202. that do not populate the IPO database with customer level detail can use an omnibus or dummy account number This allows for partial releases of their position as shares are sold Cancel Pending Releases You can cancel pending releases via the POU function 1 On the IPO Tracking System Main Menu Screen select Option 7 IPO Pending Transaction Cancel 2 Enter information in the following fields of the IPO Pending Transaction Screen e CUSIP enter the issue s CUSIP number e Date enter a date range From and To in YYMMDD format The default is the current date 3 Press the ENTER key A list of pending transactions is displayed 4 Enter S to the left of the selected transaction to view details 5 Enter C cancel to the left of the selected transaction The message PRESS PF1 13 TO CONFIRM CANCEL appears 6 Press the PF1 13 key The transaction is canceled 7 Refer to Appendix D for additional information Secondary Market Deliveries Secondary Market deliveries are performed using the same procedures currently used for deliveries of non tracked issues Note The ID Agent number must be included for Secondary Market DO deliveries to Prime Brokers and Banks When delivering to a Bank the ID Agent number will default to the receiving Bank s Participant number About Internal Account Number Discrepancies in ID Sell Transactions When the AIA number on the sale transaction does not match an AIA number in the IPO Tracking
203. the maximum is 90 calendar days Requests for tracking will not be honored after the S 2 cutoff time Result The Tracking Indicator is turned on for the PTS function GWIZ and the CCF file ELISCA C as soon as DTC makes the CUSIP eligible Note The length of tracking can be modified at any time during the tracking period by written request from the Lead Manager 5 Deliver the certificates to DTC or the Custodian Bank no later than one day prior to the distribution date Result DTC will examine the certificates prior to the distribution date to ensure they are in good form and to ascertain that the agreed upon specifications have been met 6 Provide pricing information to DTC Receive Shares from DTC Control Account for Syndicate Takedown and Initial Distribution Prior to 1 15 p m on closing date you and the Issuer or Issuer s Agent notify DTC that the deal has closed and the shares can be released to you DTC moves the shares from its Control Account 2153 to your IPO Control Account e Prior to the closing you should set up deliveries for your Institutional customers as well as to your Syndicate Members These will pend until the issue closes e Shares remain in your IPO Control Account for the duration of the tracking period unless they are released transferred or distributed to Syndicate Members or Institutional customers at Agent Banks or Prime Brokers Syndicate Takedowns Prior to receiving shares in your IPO Control Acc
204. ticipant is adjusting the share quantity Note Because the system overlays the share quantity information you must input exactly the total number of shares the customer should have If you are not sure of the exact total the customer should have refer to the following section 3 Refer to Appendix D for additional field and processing information Update Customer Level Detail Using the Add Customer Level Detail Function IPOU Option 2 Add Customer Level Detail provides an easy way for Brokers to adjust share quantities for their customers without knowing the total number of shares each customer should have This method can also be used to eliminate an old Internal Account number from the IPO database and add a new one 1 On the IPO Tracking system Main Menu Screen select Option 2 Add Customer Level Detail 2 Enter Information in the following required fields e Corresp Account enter the Correspondent Syndicate Member s ID Broker Dealer number Internal Customer enter the Internal Account number of the customer Share Quantity enter the number of whole shares up to 13 positions you wish to increase decrease the account by e Sign enter to indicate shares should be increased or to indicate the shares should be decreased Result The system adds subtracts the share quantities for the account and updates them accordingly If the share quantity for an Account number is reduced to zero the system drops that number from t
205. tion Update Customer Level Detail IPOU Option 5 allows you to correct or update your customer Internal Account numbers and adjust the share quantities allocated to your customers 1 On the IPO Tracking System Main Menu Screen select Option 5 Customer Level Adjustment 2 Enter information in the following required fields of the IPO Customer Level Adjustment screen e From Internal Customer enter the existing AlA number of the customer From BIA enter the existing BIA number for the customer optional To Internal Customer enter the new AIA number of the customer required if the Participant wants to change the existing number to a new one e Reallocated Share Quantity enter the number of whole shares being adjusted up to 13 positions required if the Participant is adjusting a share quantity from existing customers to the new customer Note Because the system overlays the share quantity information you must input exactly the total number of shares the To Internal Customer should have If you are not sure of the exact total the customer should have refer to the following section 3 Refer to Appendix D for additional field and processing information Update Customer Level Detail Using the Add Customer Level Detail Function IPOU Option 2 Add Customer Level Detail provides a way for you to adjust share quantities for their customers without knowing the total number of shares each customer should have This method can also be us
206. tion via IPOU Customer level detail in the IPO database can be added and or updated via the PTS function POU The following sections describe some of the activities a Lead Manager can perform via I POU Note If customer level detail has been added for any of your customers it must be added for all your customers or you will not be able to perform subsequent transactions e g WTs customer account transfers for those customers Allocate Shares to Retail Customers Add Customer Level Detail After delivering Initial Distribution shares to Institutional customers Prime Brokers Agent Banks you can allocate the shares you retain to your Retail customers IPOU Option 2 allows you to populate the IPO database by adding their Retail clients customer level details and share allocations Note Participants cannot allocate shares to Institutional customers 1 On the IPO Tracking System Main Menu Screen select Option 2 Add Customer Level Detail 2 Enter information in the following required fields of the IPO Add Customer Level Detail Screen e Internal Customer enter the Internal Account number of the customer e Share Quantity enter the whole number quantity up to 13 positions e Sign enter to increase shares 3 Refer to Appendix D for additional processing information Update Customer Level Detail IPOU Option 5 allows you to correct or update your customer Internal Account numbers and adjust the share quantities allocate
207. tional Deliver Order field and processing information Distribute Shares for Broker Custody Trades For trades where the Executing Broker and Custodian are the same entity Broker Custody you deliver shares to your own account via DTC s ID system 1 Follow the Initial Distribution procedures described in Distribute Shares via ID entering your own Participant number as both the Executing Broker and the Custodian of the transaction 2 Because there is no actual movement of shares the IPO database is populated with customer level detail and the associated Syndicate Member upon Confirmation of Broker Custody trades Update Customer Level Information via IPOU Customer level detail in the IPO database can be added and or updated via the PTS function POU The following sections describe some of the activities you can perform via POU Warning If customer level detail has been added for any of your customers it must be added for all your customers or you will not be able to perform subsequent transactions e g WTs customer account transfers for those customers Refer to Appendix D for additional information POU procedures Allocate Shares to Retail Customers Add Customer Level Detail After delivering Initial Distribution shares to Institutional customers Prime Brokers Agent Banks you can allocate the shares you retain to your Retail customers IPOU Option 2 allows you to populate the IPO database by adding their Retail cli
208. tlement Amount Deliver Shares for Broker Custody Trades For trades where the Executing Broker and Custodian are the same entity Broker Custody the Prime Broker delivers shares to its own account via DTC s ID system 1 Follow procedures described in Deliver Shares via ID entering your own Participant number as both the Executing Broker and the Custodian of the transaction 2 Refer to IDTI for additional ID field and processing information Resolve Internal Account Number Discrepancies in ID Sell Transactions When the Internal Account number on a sale transaction is missing or does not match the Internal Account number in the IPO Tracking database a warning message Error 91 appears Error 91 flags an unmatched Internal Account number three times e ID Confirmation e ID Affirmation e Authorization and Exception ANE Error 91 also appears on machine readable output When validation occurs at Authorization and Exception ANE time ANE will not reject the transaction if the Internal Account number is still unmatched but a release will not be generated Hold releases will recycle for up to three days after trade date Refer to Pending Releases in this chapter Unmatched Internal Account numbers can be corrected in the IPO database prior to the settlement day cutoffs of 10 00 a m EST for Global processing and 2 30 p m EST for Trade for Trade processing This will allow the ID trade to be authorized and settle that day throu
209. to DO or NDOM for additional Deliver Order field and processing information Distributing Shares for Oversubscriptions When you have fewer shares than you need to make your Syndicate Takedown deliveries you can borrow or purchase shares from the Secondary Market Shares borrowed or purchased in the Secondary Market for Oversubscription Distribution will reside in your Free Account You have two options for delivering Oversubscribed shares e Move the shares back to your IPO Control Account via the PTS function IPOU Option 6 and perform a Syndicate Takedown DO NDOM delivery e Deliver the shares directly from your Free Account using the appropriate ID or DO NDOM codes Move Shares from the Free Account to the IPO Control Account 1 For Oversubscriptions on the IPO Tracking System Main Menu Screen select Option 6 Oversubscription for Lead Underwriter 2 Enter information in the following fields of the IPO Oversubscription for Lead Underwriter Screen e CUSIP enter the issue s CUSIP number e Share Quantity enter the number of Free shares being transferred to the IPO Control Account 3 Press the ENTER key 4 Refer to Appendix D POU for additional field and processing information Result Two one sided next day DO journals are generated one to decrease Free Account shares and another to increase shares in the IPO Control Account 5 Perform a Syndicate Takedown DO or NDOM delivery Distribute Oversubscribed Shares to Synd
210. tomer New Internal Account Share Quantity Number of whole shares being transferred Settlement Amount Settlement amount optional Activity Code IPO shares 47 Free shares 26 Reason Code 40 Activity Code IPO shares 48 Free shares 26 Reason Code 40 Cumulative IPO Tracking reports for Lead Managers and Syndicate Members are issued daily in hard copy format and are distributed via DTC s DD Boxes or Interface Department The reports are also available in machine readable format from approximately 4 00 a m to 5 00 p m EST on the same day IPO Tracking Preliminary Report Lead Manager The IPO Preliminary Report of Flipping Activity for Lead Underwriter is issued to the Lead Manager and to Co Managers The report identifies the Syndicate Members including Co Managers and Co Reporters whose customers potentially flipped IPO shares It also identifies Clearing Agents and Correspondent accounts Trades made on the same day at the same price by customers of the same Syndicate Member are aggregated The report is cumulative Note In a Co Reporting relationship the Lead Manager uses two Participant numbers for distribution of an IPO one for domestic distribution and one for international distribution The primary in the relationship receives the report This report does not include customer level detail To find out which of their customers have potentially flipped Lead Managers and Co Managers
211. tomer do not have position the release will pend hold for up to three days after Trade Date If you and your customer do have position but not enough to cover the entire release DTC will perform a partial release from the customer s account and pend the balance of the release request partial hold Cancel Pending Releases You can cancel pending releases via the PTS function POU 1 On the IPO Tracking System Main Menu Screen select Option 7 IPO Pending Transaction Cancel 2 Enter information in the following fields of the IPO Pending Transaction Screen e CUSIP enter the issue s CUSIP number e Date enter a date range From and To in YYMMDD format The default is the current date 3 Press the ENTER key Result A list of pending transactions is displayed 4 Enter S to the left of the selected transaction to view details 5 Enter C cancel to the left of the selected transaction Result The message PRESS PF1 13 TO CONFIRM CANCEL appears 6 Press the PF1 13 key Result The transaction is canceled 7 Refer to Appendix D for additional field and processing information Secondary Market Deliveries You can deliver shares for Secondary Market sales by using the PTS functions DO or NDOM or by having the Executing Broker input the trade via DTC s ID system Note Customer level detail must be included for ID DO or NDOM deliveries in order for a release to be generated Deliver Shares via ID Prime Brokers
212. tomer on the release instruction or on the Syndicate Member level Releases performed on the Syndicate Member level are reported on that level The Syndicate Member s report displays the message Customer level Information is Unavailable along with the potentially flipped shares For Banks flips are captured when shares marked as IPO Initial Distribution shares are delivered to satisfy Secondary Market sells Note Shares potentially flipped on the same day at the same price by the same customer are aggregated e Withdrawal lists the shares used to satisfy WTs by the Syndicate Member s customers e SL Firm To Lead stock loans in which the Syndicate Member was the lender and the Lead Underwriter was the borrower e SL Firm To Other stock loans in which the Syndicate Member was the lender and a Participant other than the Lead Underwriter was the borrower e SL Custodian To Lead stock loans in which custodians whether an original custodian or one receiving shares as a result of an account transfer were the lender and the Lead Underwriter was the borrower The Syndicate Member is reported for these loans since it is the Syndicate Member that originally delivered the IPO shares to the lending custodian e SL Custodian To Other stock loans in which custodians whether an original custodian or one receiving shares as a result of an account transfer were the lenders and Participants other than the Lead Underwriter were the borrower The Syndica
213. trol Account for Secondary Market Sales All Secondary Market sell transactions settle from the Free Account In order to deliver shares sold by your customers in the Secondary Market those shares must first be released from your IPO Control Account to the Free Account using the POU function Failure to release shares to the Free Account could result in a CNS short or DOs for Secondary Market sales dropping in ART Releases can be performed on the individual customer level by including the AIA number of the customer on the release or on the Lead Manager Syndicate Member level Doing releases on the individual customer level allows DTC to provide a more detailed report of flipping activity by your customers Release Shares From the IPO Control Account Releases can be submitted as early as 6 00 a m Eastern Standard Time EST trade date through the Settlement of the trade Note Releases from the IPO Control Account cannot be reversed and will be recorded as potential flips regardless of whether delivery is made 1 On the IPO Tracking System Main Menu Screen select Option 3 Release IPO Shares To The Free Account 2 Enter information in the following required fields of the IPO Release IPO Shares To The Free Account Screen e Internal Customer enter the AIA number of the customer if already identified in the IPO database e The Internal Customer field AIA number is required for all customer transactions if customer level detail
214. trol and Free Account shares move to the receiving Bank s Free Account in ART The IPO database marks the shares delivered from your IPO Control Account as IPO shares and delivered from your Free Account are marked as Secondary Market shares in the IPO database Transfer position to a Broker Shares delivered from your IPO Control Account move to the receiving Broker s IPO Control Account in ART and are marked as IPO shares in the IPO database Shares delivered from your Free Account move to the receiving Broker s Free Account in ART These Free Account shares are not captured in the IPO database Share Movement for Customer Account Transfers Receipts You will receive a customer s position from another Participant in one of the following ways Receive position from a Bank Shares marked as IPO shares in the Bank s Free Account move to your IPO Control Account in ART and are marked as IPO shares in the IPO database Shares marked as Secondary Market shares in the Bank s Free Account move to your Free Account in ART These Free Account shares are not captured in the IPO database Receive position from a Broker Shares from the delivering Broker s IPO Control Account move to your IPO Control Account in ART and are marked as IPO shares in the IPO database Shares from the delivering Broker s Free Account move to your Free Account in ART These Free Account shares are not captured in the IPO database Secondary Market Release Shares From the IPO Con
215. tructions for tracked issues using the same procedures currently used for non tracked issues Memo Segregation bridges the IPO Control and Free Accounts Refer to the Settlement Service Guide for information on Memo Segregation instruction processing The share quantity in the Memo Segregation instruction will be subtracted from the combined share total in the IPO Control and Free Accounts The resulting share total must be greater than the quantity of any Deliver Orders entered If the quantity is less the Deliver Orders will not be processed and will pend Deposits Deposits are chilled for tracked issues for the duration of the tracking period DWAC Deposit Withdrawal at Custodian activity is permitted on a very limited basis during the tracking period and only with consent of the Lead Underwriter Certificates On Demand CODs CODs are chilled for tracked issues for the duration of the tracking period Collateralization of IPO Shares Shares in the IPO Control Account will be considered collateral NA only on the day they are received into the account and only if received for value Shares received into the IPO control account without value will follow the normal accounting updating rules and will be considered NA or MA depending on the SDFS Account Coding Instructions Shares in the IPO Control Account will not be considered collateral after the first day they are received MA NA intra day moves will not be permitted Shares in
216. ttle on the same day the issue closes possibly before the IPO database has been populated Relaxed editing allows Custodian Banks to process Secondary Market sell transactions on settlement date without a match of the AIA number or share quantity to the IPO database As long as the Custodian Bank itself has received sufficient shares to cover deliveries the Custodian Bank can process sales of Initial Distribution shares on settlement date without matching customer level detail As soon as the Custodian Bank receives the Initial Distribution shares e D deliveries that were set up by the Custodian Bank s customers between trade date and the day before settlement date S 1 are delivered regardless of unmatched AIA numbers or share quantities e DO NDOM deliveries set up by customers of the Custodian Bank are made until 3 00 p m EST on settlement day regardless of unmatched AIA numbers or share quantities After the trade settles Banks can update the unmatched AIA number to the correct Internal Account number via the POU PTS function Refer to Update Customer Level Information via POU in this chapter Each night during the relaxed editing period DTC attempts to reconcile the AIA numbers of unmatched deliveries not adjusted during the processing day After DTC s cutoff time for deliveries and prior to cutoff time for the machine readable customer level detail files the system automatically attempts to match the AIA numbers of made unmat
217. ult The AIA number BIA number and associated Syndicate Member are extracted from ID trades upon authorization On closing date the IPO database is populated 2 Refer to IDTI for additional ID field and processing information Distribute Unaffirmed ID Trade Shares via DO or NDOM When a trade is unaffirmed excepted or rejected from the ID system you can settle that trade via the PTS functions DO Option 4 or NDOM Option 6 1 Enter the information in the following fields of the Initial Public Offering Deliver Orders Screen Recv Pt enter the Agent Bank or Prime Broker s Participant number REAS enter Reason Code 50 e Int Acct enter the Agent Bank or Prime Broker s Internal Account number for the customer Note The Internal Account numbers must be entered correctly to ensure accurate processing of the transaction DTC rejects Initial Distribution deliveries in which either number is missing e Bkr Acct enter the Executing Broker s Internal Account BIA number for the customer Result The system captures the Agent Bank Prime Broker Internal Account number along with the BIA number and the associated Syndicate Member and populates the IPO database 2 Refer to DO or NDOM for additional Deliver Order field and processing information Distribute Shares for Broker Custody Trades For trades where the Executing Broker and Custodian are the same entity Broker Custody the Lead Manager delivers shares to its own account
218. urns Grand Total Withdrawal the grand total of IPO shares used to satisfy WTs for the CUSIP Number of Shares the number of shares loaned withdrawn by transfer CNS short or potentially flipped IPO Tracking Preliminary Report Syndicate Member An IPO Preliminary Report of Flipping Activity for Syndicate Member is issued daily to each Syndicate Member The cumulative report identifies the Secondary Market transactions for each of the Syndicate Member s Institutional and Retail customers and includes any available customer level detail Clearing Agents receive separate Syndicate Member reports for each of their Correspondent Syndicate Members Lead Managers and Co Managers also receive a Syndicate Member report detailing their customers potential flipping activities In a Co Reporting relationship the Lead Manager uses two Participant numbers for distribution of an IPO i e one for domestic distribution and one for international distribution the primary in the relationship receives the report The activity of a Co Reporter is reported like that of a Syndicate Member on the Lead Manager s Report Fields CUSIP the CUSIP number of the tracked issue Description the name of the tracked issue Lead Underwriter the Participant number of the Lead Manager of the tracked issue Name the name of the Lead Manager of the tracked issue Tracking Period Start Date the start of tracking closing date of the issue Tracking Period E
219. value of the Prime Broker Indicator Refer to Automatic vs Manual Release Releases can be submitted as early as 6 00 a m Eastern Standard Time EST trade date through settlement of the trade Note Releases from the IPO Control Account cannot be reversed and are recorded as potential flips regardless of whether or not delivery is made Automatic vs Manual Release The release is generated automatically if e The Prime Broker Release Indicator is turned on and e The Internal Account number of the customer in the sale transaction matches the Internal Account number of the customer in the IPO database and you and your customer have sufficient shares Note If the Internal Account number does not match an Internal Account number in the IPO database or if there are insufficient shares to cover the release the release will be put on Hold Releases on hold will be periodically checked to see if they can be fully or partially staged Refer to Pending Releases The release must be performed manually by the Prime Broker via the PTS function POU if e The Prime Broker Indicator is turned off or e The Prime Broker Indicator is turned on and the Customer Internal Account number in the IPO database does not match the Customer Internal Account number in the sale transaction Manual Releases of Shares from IPO Control Account Releases can be submitted as early as 6 00 a m EST on trade date Prime Broker releases must be made on
220. vel detail and associated share allocations Information may be submitted on a daily basis and DTC accepts these files regardless of whether or not the issue is being tracked On closing day DTC purges the IPO database of all information pertaining to non tracked issues After the closing date DTC ignores customer level detail input for non tracked issues but continues to accept customer level detail for tracked issues Note Once customer level detail has been entered for one customer in the Participant s database it must be entered for all of that Participant s customers in order to perform subsequent transactions Setting Up an Issue for Tracking Lead Managers Co Managers Co Reporters Syndicate Members and Clearing Brokers can all make preparations for an IPO tracked issue before the issue closes Lead Manager Lead Managers should notify DTC as early as possible that an IPO issue is to be tracked but must notify it in writing no later than 3 00 p m EST two days before the issue closes S 2 DTC s Security Master File includes a tracking indicator which must be on for tracking to take place The indicator defaults to on for all IPO CUSIPs but will be turned off if DTC is not notified in writing by 3 00 p m EST S 2 of the Lead Manager s intention to track Tracking information is available over CCF CCFII Eligibility files ELISC A and the PTS GWIZ and IPOI Option 1 List of Tracked Issues functions Refer to Lead Manager for spe
221. via DTC s ID system 1 Follow the Initial Distribution procedures described in Distribute Shares via ID entering your own Participant number as both the Executing Broker and the Custodian of the transaction Result Because there is no actual movement of shares the IPO database is populated with customer level detail and the associated Syndicate Member upon Confirmation of Broker Custody trades Update Customer Level Information via IPOU Customer level detail in the IPO database can be added and or updated via the PTS function POU The following sections depict some of the activities a Clearing Broker can perform on behalf of its Correspondent Syndicate Members via I POU Warning If customer level detail has been added for any of the Correspondent Syndicate Member s customers it must be added for all its customers or you will not be able to perform subsequent transactions e g WTs customer account transfers for those customers Refer to Appendix D for additional information regarding POU Allocate Shares to Retail Customers Add Customer Level Detail After delivering Initial Distribution shares to their Institutional customers Prime Brokers Agent Banks you can allocate the shares they retain to your Correspondent Syndicate Members retail customers IPOU Option 2 allows you to populate the IPO database by adding your Correspondent Syndicate Member s customer level details and share allocations Note You cannot allocat
222. y identified in the IPO database 1 The Internal Customer field AIA number is required for all customer transactions if customer level detail has been added for any of your customers 2 If an incorrect AIA number is entered the shares will not be released and the subsequent Deliver Order may pend e Trade Date enter a valid business date in MMDDYY format Note DTC edits to ensure that the trade date entered is no earlier than four days prior to the issue s closing in DTC and no later than the current date Dates entered on a release instruction that fall outside these parameters result in DTC rejecting the release instruction e Contract Price enter a price greater than zero in 9999999 99 format e Share Quantity enter the number of whole shares up to 13 positions 3 Refer to Appendix D for additional field and processing information Result If you and your customer have position in the IPO database an immediate release is processed If you and your customer do not have position refer to the following sections Pending Releases You and your customer must have position in the IPO database in order for a release to be processed If the customer Co Manager does not have position the release will pend hold for up to 3 days after Trade Date or for up to 30 calendar days depending on the recycle option selected by the Participant If you and your customer do have position but not enough to satisfy the entire release DTC will rel
223. zed and settle that day through the automated settlement feature of the ID system Note The ANE inquiry function and T 3 hard copy report will display a code of F in the status field to indicate an Initial Distribution trade that has been rejected from settlement and an I to indicate a Secondary Market trade that has been rejected The F and I codes will be displayed in cases where the Internal Account number on an IPO trade does not match the Internal Account number as stored on the IPO database These transactions may be reprocessed for up to 21 days You may resolve Internal Account number discrepancies in the following ways e Have the Custodian update the Internal Account number in the IPO database to match the number on the ID transaction by performing an IPO customer level adjustment Refer to Update Customer Level Detail e Cancel the ID transaction and re enter it in the ID system as per the Custodian s instructions Refer to Distribute Shares via D e Have the Custodian except the ID transaction from automated settlement and enter a DO with the AIA number as it appears in the IPO database Withdrawals by Transfer WTs If certificate denominations are available Withdrawals by Transfers WTs of tracked issues are permitted starting on closing day via the PTS functions NWT1 Night Withdrawal by Transfer and RWT1 Rush Withdrawal by Transfer as well as via CCF and CCFII WTs are noted as separate line items on tracking r

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