Position Movement

You may protect securities on deposit at DTC by moving them from your general free account to your segregated account. The securities remain segregated and unavailable for any transactions until you authorize DTC to release them and return them to your general free account. Shares that are in your segregated account will not be used for the following DTCC services:

• Transfers,
• Deliver Orders,
• Withdrawals, and
• Pledges.

Other types of position movement available include a Segregation 100 Account, Memo Segregation, Investment ID, and Collateral Moves.

Seg 100 Account

You may deposit certain foreign-owned shares of communications, maritime, and specialized ownership issues, as specified in the Corporate Eligible Securities Book, into a special account at DTC identified as segregation account#100 (seg-100). You can move securities back and forth between your general free account and your seg-100 account, as appropriate, to reflect changes in the amount of certain foreign-owned and specialized ownership issues on deposit at DTC.

Important: These shares must be deposited and maintained in the seg-100 account until acquired by a U. S. citizen.

Example:

 A client performs a segregation of maritime issues by establishing a Seg 100 account.

Segregation

The Sub-Accounting “Segregation” Service allows you to protect securities on deposit at DTC by moving them from your general free account to your segregated account. The securities remain segregated and unavailable for any transactions until you authorize DTC to release them and return them to your general free account.

Example:

A client sets up a regular segregation for an amount up to the portion of the position they have in their general free account at DTC to protect their fully paid for customer securities. For instance, if the client had 1,000 shares of IBM, they could seg any portion up to 1,000 shares.

Memo Segregation

Clients can protect fully-paid-for customer securities using the Memo Segregation function. Memo Segregation is similar to the Segregation function, which allows a client to protect fully-paid-for customer securities by moving them from a free position to a protected (segregated) position. However, whereas Segregation allows a client to move only existing positions, Memo Segregation allows the client to create memo-segregated positions within its free positions, thus allowing the client to protect anticipated, fully-paid-for customer securities.

Example:

A client would utilize memo seg when they want to seg more than the true position that they are holding at DTC. Memo seq is not considered true position because a client could set up a memo seg for any amount. For instance, if a client had 1,000 shares in its account at DTC, the client could memo seq for less or more than the amount of position they are holding.

Investment ID

Investment Identification segregates securities for the account of a firm, partner, or business into an Investment ID account, and is used for reporting information to the IRS about securities purchased for investment purposes. Investment ID transactions physically segregate securities into your Investment ID account until instructions are received to release either all or a portion of the segregated securities. This release instruction swings back the securities indicated, making this position now available for other activities.

Shares that are in your Investment ID account will not be used for the following DTCC services:

• Transfers,
• Deliver Orders,
• Withdrawals,
• and Pledges.

Example:

A firm needs to report to the IRS about securities purchased as investments.

Collateral Moves

The Collateral Moves MA/NA option allows you to control your securities designated as collateral by reclassifying specific quantities of an issue as either Minimum Amount (MA; non-collateral) or Net Additions (NA; collateral). This can occur either intraday or during night cycle processing and may include IPO issues.

Before processing a transaction, DTC verifies that the deliverers and receivers’ collateral monitors will not become negative as a result of the transactions completion. If the transaction would cause either party to have a negative collateral monitor and thereby be under collateralized, the transaction will “pend” for a deficiency in that party's collateral monitor.

Example:

A client is insufficient in their collateral monitor and moves position from the Minimum Amount (MA; non-collateral) to the Net Additions (NA; collateral account) to increase their cash in the collateral monitor which will allow the receive vs payment (RVP) to complete.

For more information:

• The Settlement Web Help. Refer to the Position Movement section.
• The Settlement Service Guide