ISO 15022 and the DTCC Settlement Chain

The settlement chain concept defines the use of parties and the accounts that relate to those parties. The parties in the chain vary depending on the client type.

  • Broker/dealers—A broker/dealer typically maintains direct relationships with a local market agent (also called, simply, an agent).

  • Investment managers—An investment manager typically employs a global custodian who, in turn, employs a local-agent network (also called local agents). The investment manager has an account at the global custodian, and the global custodian has an account at the local agent.

    In some instances, the settlement chain may be extended, with the global custodian using a correspondent (also known as an intermediary) to reach a local agent. Examples of this include US Banks who private-label the services of a major global player, using the latter’s global network of local agents.

Figure 1 shows these relationships.

Figure 1 Settlement chains
Settlement chains.

In ALERT terms, broker/dealers maintain data in the A/C# @ Global Custodian field and the A/C# @ Depository fields.

  • A/C# @ Global Custodian contains the broker’s account number at the local-agent.
  • AC#@ Depository (formerly, ID1) or Local Agent BIC represents the sub-agent’s account at the local/international central securities depository (CSD/ICSD).

For investment manager settlement purposes, the main data value typically required is the global custodian’s account at the local agent. However, there has been inconsistency as to where this data item value has been populated within ALERT. It has appeared in the A/C# @ Global Custodian field or A/C# @ Local Agent or both, depending on the investment manager, its broker/dealer, and its global custodian.