The Collateral Loan Program allows you to pledge securities from your general free account as collateral for a loan or for other purposes (such as Letters of Credit) to a pledgee participating in the program. You can also request the pledgee to release pledge securities back to your general free account. These pledges and releases can be free (when money proceeds are handled outside DTC) or valued (when money proceeds are applied as debits and credits to the pledgee's and pledgor's money settlement accounts). A Pledgee may, but need not be, a Participant. Only a Pledgee which is a Participant may receive valued pledges.
How the Product Works
The guidelines for using the Collateral Loan Program are as follows:
- You can use the Collateral Loan Service function, the Computer-to-Computer Facility (CCF), or Message Queuing (MQ) to submit collateral loan pledges and release requests to DTC. Release returns are also available through CCF and MQ. However, release approval is available only through the Settlement User Interface.
- You must ensure that the securities you are pledging are available in your general free account.
- When a stock distribution requiring due bills is declared on securities pledged as collateral, the distribution automatically becomes additional collateral.
- In the instance of a substantial cash distribution, for which an exchange or similar securities organization would require due bills to accompany stock certificates, for the amount of cash accruing on pledged shares, the Pledgee may direct DTC to pay such funds directly to it as partial repayment of the loan. Otherwise, such funds will be paid by DTC to the Participant.
- At any time, the pledgee can direct DTC to deliver pledged securities (demand of collateral).
- Voting rights are assigned to you for pledged securities.
A demand of collateral takes securities that you pledged to a pledgee and places them in the general free account of a DTC Participant designated by the pledgee. Pledgees can enter demand of collateral instructions by using the Demand of Collateral function or by making special arrangements with DTC's Settlement Department. A pledgee that is a DTC Participant can move securities to its DTC Participant account.
Pledges to Federal Reserve Banks
If you are a depository institution maintaining a deposit account at a Federal Reserve Bank (FRB), you can make free pledges and release requests to the FRB. You must use the COLL function to pledge and release pledges to FRBs. FRBs have special requirements and procedural modifications to which DTC has agreed. DTC or an FRB may change these operating procedures no later than one day following receipt of written consent from the other. DTC or the FRB will notify DTC Participants in writing at least 10 business days before such changes become effective. However, if DTC consents to the FRB's request that such changes become effective immediately (according to DTC's Rules and applicable law), Participants will receive immediate notification in writing from the FRB of changes taking effect immediately.
Note- Pledges to FRBs are free of value.
Pledgor Eligibility: All DTC bank Participants that are members of the Federal Reserve are automatically eligible to pledge securities to FRBs that are DTC pledgee banks using the Participant/non-participant pledge facility.
Non-Participant Eligibility: DTC allows non-participants to pledge collateral to FRBs through DTC bank Participants. Bank Participants and non-participants must provide their American Banking Association (ABA) number and the purpose of the loan.
Any securities you pledge to the FRB through the Collateral Loan Program are deemed pledged to the FRB (as fiscal agents of the United States for its principal, the Treasury Department) when pledged for:
- Treasury Tax and Loan: Collateral for Treasury Tax and Loan account balances under 31 C. F. R. Part 203 (Treasury Circular No. 92)
- Public Purposes: Collateral for deposits of public money under 31 C. F. R. Part 202 (Treasury Circular No. 176).
Any securities you pledge to the FRB through the Collateral Loan Program are deemed pledged to the FRB as principal, as Collateral when pledged for:
- (i) discount window advances under 12 C. F. R. Part 201 (Regulation A of the Board of Governors of the Federal Reserve System) (“Discount”) or
- (ii) daylight (funds) overdrafts on the books of the FRB (“Daylight Overdraft”)
Collateral pledged for either purpose may be credited to a single Pledgee Account of the FRB.
Note- An indication that a security is pledged for Discount, or Daylight Overdrafts is made when collateral is initially or primarily used for either purposes. However, in accordance with FRB agreements and operating circulars, such collateral so designated, regardless of such designation, shall serve as security for any obligation of the pledgor to the FRB.
DTC-eligible securities are generally good for all services provided by DTC. However, the FRB must approve securities pledged to FRBs under the subheading Pledging Purposes. You should contact the appropriate FRB to determine whether the securities pledged are accepted and to inquire about particular instructions for indicating the purpose of the pledge.
The FRB may not permit the pledging of certain securities that might be DTC-eligible. If a pledge is made in an issue not accepted by the FRB, the FRB will initiate the release of the pledge after receiving pledge notification.
Pledgors can monitor all pledges, releases (Participant and non-participant) and current collateral loan inquiries intraday using the Activity Inquiry functions.
Pledges to OCC
A Participant writing an option on any options exchange may fully collateralize that option by pledging the underlying securities by book-entry through DTC to the Options Clearing Corporation (OCC). If the option is called (exercised), the securities may be released and delivered to the holder of the call. If the option contract is not exercised, OCC validates a release of the pledged securities, which are then returned to the Participant's general free account.
After an option contract has expired, the option writer may rollover or continue to use the original collateral for subsequent contracts. By following an OCC procedure, you may rollover the collateral without preparing a Release of Collateral form and a new Options Depository Receipt form. Contact OCC for information about this procedure.
You can deposit securities at DTC between 8:30 a.m. and 1:00 p.m. eastern time for same-day deposit credit. You can then pledge your free position by book-entry to the OCC as follows:
- Segregate underlying securities supporting put and call options
- Pledge U. S. government securities to satisfy OCC put and call margin requirements
- Pledge U. S. government securities to meet clearing fund obligations
- Pledge U. S. government securities of sufficient value to cover the exercise price of put and call option contracts.
OCC automatically releases securities deposited with it to cover margin requirements on an option contract when the option contract expires. The securities are then allocated to your general free account. Notification of the released securities is received via the Collateral Loan Services functionality in the Settlement User Interface or automated output.
Note- OCC will begin releasing expired options at the close of business on the Friday following the expiration weekend. On the following Monday, OCC will release the deposits on expired options to DTC.
You can deposit U. S. government securities at DTC to be pledged by book-entry to OCC to meet clearing fund requirements.
The term "U. S. government securities" refers to securities issued or guaranteed by the United States government and having a maturity of 5 years or less from the date of issuance.
- Short-term government securities: Securities maturing less than one year from the date of deposit.
- Long-term government securities: Securities maturing one to five years from the date of deposit.
U. S. government securities are valued for clearing fund purposes as follows:
- Short-term government securities: Securities valued at the lesser of par value or 100 percent of their current market value.
- Long-term government securities: Securities valued at the lesser of par value or 95 percent of their current market value.
OCC determines the current market value of U. S. government securities at any given time on the basis of the quoted ask price supplied by the Federal Reserve Bank of New York (FRBNY) on the last day of the preceding month, or such later date as its Margin Committee designates.
Option Exercise and Assignment Loan Program
Under this program, a Participant may use securities pledged at The Depository Trust Company (DTC) to meet the Options Clearing Corporation (OCC) margin requirement on these positions as collateral for a loan from an approved lender. The cash proceeds of this loan will then be credited to the Participant’s settlement account at the National Securities Clearing Corporation (NSCC).
OCC, DTC, and NSCC have jointly created the loan program to minimize the collateral and financing requirements of common OCC and NSCC member firms by synchronizing the release of OCC’s guarantee obligation with satisfaction of the member’s obligation to NSCC.
The Options Clearing Corporation Disbursement (OCCD) function has been developed by DTC and OCC to allow Participants to negotiate loans with pledgee Participants using securities pledged to OCC for margin purposes as collateral. The OCCD function allows Participants to submit collateralization requests that require approval from the pledgee and OCC. The OCCD function allows pledgee Participants to review Participants’ collateralization requests and either approve or reject them. Only pledgee-approved collateralization requests appear on OCC’s approval screen in the OCCD function. Pledgee approved collateralization requests can then be approved or rejected by OCC. Only collateralization requests approved by both the pledgee and OCC are processed by DTC.
An OCC approved collateralization request generates a Demand of Collateral (DCL) transaction (activity code 58) that moves the securities from the requesting Participant’s pledge account (014) to an OCC control account. Once the DCL transaction completes, a valued pledge (activity code 54) will be processed from the OCC control account to the pledgee designated by the Participant in the collateralization request. The valued pledge credit received into the OCC control account is then applied to the Participant’s NSCC balance. Participants will see these credits as activity code 35 (OCC Collateral Money) in NSCC’s settlement system.
Note - Although Participants will see the DCL transaction from their pledge account to the OCC control account in DTC’s Activity Inquiry function, they will not be able to view the valued pledge from the OCC control account to their pledgee in the Activity Inquiry function. However, Participants can determine if the valued pledge portion of the collateralization request has been completed in DTC’s system by viewing the status of the collateralization request in the Browse option of OCCD. A “Made” status indicates that the valued pledge has completed in DTC’s system. In addition, Participants will see the credits from the valued pledges in their NSCC balances after 2:30 p.m. eastern time.
Once DTC settlement is final (all net-net debits have been received) and DTC releases its risk management controls, the securities are moved from the OCC control account’s pledge position to the Participant’s pledge position (14 account). The Participant and the pledgee will see this movement as a Participant Swing (activity code 7) in the Activity Inquiry function.
DTC will charge the same fee for processed OCC collateralization requests as it does for valued pledges.
In the event that a valued pledge from an OCC control account recycles to the pledgee and does not complete (drops) by DTC’s valued recycle cutoff at approximately 3:10 p.m. eastern time, DTC will reverse the associated demand of collateral transaction. The demand of collateral reversal will, in effect, “repledge” the Participant’s securities back to OCC. The demand of collateral reversal will appear as an adjustment in the Activity Inquiry function.
Pledgees should be aware that pledge returns of valued pledges from OCC control accounts will not be permitted systemically. Requests for pledge returns to OCC control accounts should be directed to DTC’s Settlement Department. However, pledgees will be permitted to process pledge returns using the normal pledge return process once the securities are swung from the OCC control account to the Participant after DTC releases its risk management controls at approximately 5:00 p.m. eastern time.
Participants wishing to utilize the OCC Collateralization procedures must first contact a representative from OCC’s Risk Management Department. In addition to contacting OCC, interested Participants must contact their DTC Relationship Manager and request access to the OCCD function and the OCCA sub-function. Pledgees planning to accept OCC collateralization requests must also contact their Relationship Managers and request access to the OCCD function and the OCCP sub-function.
Participants and pledgees interested in participating in OCC’s Collateralization service should request eligibility for their respective OCCD functions and sub-functions with their Relationship Managers at least two days prior to the actual day they anticipate using the service.
Note- All collateralization requests by Participants must be approved by OCC. Therefore, OCC must be contacted before a request is submitted through the OCCD function.
Eligible Participants are permitted to submit OCC collateralization requests until 11:00 a.m. eastern time. Eligible pledgees are permitted to approve or reject OCC collateralization requests until 1:00 p.m. eastern time, and OCC will be permitted to approve or reject pledgee-approved OCC collateralization requests until 2:00 p.m. eastern time.
Participants and pledgees should refer to the OCCD function for detailed instructions on how to use this function.
Repo accounts enable Participants to distinguish repurchase transactions or other types of financing transactions processed through the mechanism of the Collateral Loan Program from pledges of collateral. A Participant engaging in a repurchase transaction or other type of financing transaction is able to transfer securities to a Repo account of the receiving party instead of a pledgee account of the receiving party. Whenever a Participant instructs DTC to transfer securities to a Repo account, the Participant will be deemed to instruct DTC to transfer to the receiving party the entire interest in the securities, not a security interest or other limited interest.
Previously, procedures in the Collateral Loan Program did not permit Participants to differentiate between a pledge of securities, which involves the transfer of a security interest or other limited interest in the securities, and a sale, which involves the transfer of the entire interest in the securities.
Effective September 2, 1997, DTC implemented procedures to specifically provide Participants with the capability to process repurchase transactions or other types of financing transactions through the mechanism of DTC’s Collateral Loan Program.
Repo accounts and pledge accounts are individually identified in DTC’s Reference Directory. Organizations interested in establishing a repo account should contact their Relationship Manager.
The repo account procedures listed below should be used in conjunction with DTC’s existing Collateral Loan Program procedures.
The procedures listed below are an addition to DTC’s Procedures for Pledgees.
- Any organization (a ‘Receiver’) that is eligible to establish a pledgee account at DTC may establish a repo account at DTC. A repo account is available to effect repurchase transactions or other types of financing transactions through use of the procedures in DTC’s Collateral Loan Program where the parties wish to distinguish transactions from pledges of collateral. A repo account is identified with a separate account number from any pledgee account of the Receiver, and the repo accounts of Receivers are separately identified in all listings of accounts made available by DTC. Except as modified by these Procedures, all DTC procedures applicable to pledgee accounts are applicable to repo accounts.
- Whenever a Participant instructs DTC to deliver securities from the account of the Participant to a repo account of a Receiver, the Participant will be deemed to instruct DTC to transfer to the Receiver the entire interest in the securities which are the subject of the instruction, not a security interest or other limited interest in such securities. The terms of the transaction between the Participant and the Receiver (which may be a repurchase transaction or other type of financing transaction) are determined by agreement of the parties to the transaction.
- The operation of a repo account at DTC is identical to the operation of a pledgee account. As with a pledgee account, voting rights on securities credited to a repo account are assigned to the Participant which delivered the securities to the repo account. Cash dividend and interest payments and other cash distributions on such securities are credited to the account of the Participant. Distributions of securities for which the ex-distribution date is on or prior to the payable date, or in which the distribution is payable in a different security, are also credited to the account of the Participant. Any stock splits or other distributions of the same securities for which the ex-distribution date is after the payable date are credited to the repo account of the Receiver.
- The instructions for a delivery of securities to a repo account at DTC use the same data fields as the instructions for a pledge to a pledgee account. Those data fields include a mandatory hypothecation code field. A Participant delivering securities to a repo account must enter the number 7, 8 or 9 in the hypothecation code field. The entry of the number 7, 8, or 9 in the hypothecation code field of instructions for a delivery to a repo account does not constitute a notice or representation as to any matter by the delivering Participant. The entry of the number 7, 8 or 9 in the hypothecation code field of such instructions is merely an action needed to effect the delivery through DTC’s facilities. A Participant pledging securities to a pledgee account must continue to enter the number 1, 2 or 3, whichever is applicable, in the hypothecation code field. Participants are responsible for entering the appropriate number in the hypothecation code field for all transactions.
- The DTC reports and statements to the Participant and the Receiver for a transaction involving a repo account are the same as the reports and statements for a transaction involving a pledgee account. If the account number indicated in a DTC report or statement is the account number of a repo account, the information in the report or statement does not represent a pledge of, or other transfer of a limited interest in, the securities credited to the repo account but instead represents a transfer by the Participant to the Receiver of the entire interest in such securities.
- DTC will accept instructions solely from the Receiver with respect to the disposition of securities credited to the Receiver’s repo account. The Receiver may redeliver the securities to the Participant which delivered them to the Receiver’s repo account. The Receiver may instruct DTC to deliver securities credited to the Receiver’s repo account to the Receiver's DTC Participant account, if the Receiver is also a Participant, or to any other DTC Participant account. DTC has no duty to inquire whether any instruction to DTC from the Receiver is permitted by any agreement among the parties to the transaction. If a Receiver is unable to submit instructions to DTC by automated means, the Receiver may submit instructions by contacting DTC’s Settlement Department. Any Receiver that instructs DTC to deliver securities credited to the Receiver’s repo account to the Receiver or to a DTC Participant designated by it shall:
- be deemed to represent and warrant to DTC that (i) the Receiver has the right to have the securities specified in such instruction delivered to the Receiver or to a DTC Participant designated by it and (ii) DTC’s compliance with such instruction will not violate any notice of levy, seizure or similar notice, or order or judgment, issued or directed by a government agency or court, or officer thereof, and
- indemnify, hold harmless and agree, on demand, to reimburse DTC, its stockholders, officers, directors and employees from and against and for any and all claims, liabilities, obligations damages, actions, penalties, losses, costs, expenses and disbursements, including, without limitation, attorneys’ fees and disbursements (“Claims”), which they may sustain by reason of DTC’s compliance with such instruction except for any Claims which result from the gross negligence or willful misconduct of the person asserting a right to indemnification.
Shared Control Accounts
Shared control accounts are available as an alternative to “agreement to pledge” arrangements.
When a Participant pledges securities to the pledgee account of a pledge at DTC (sometimes called a “hard pledge”), the securities are under the sole control of the pledgee. Only the pledgee can redeliver or release the securities. Pledgee accounts continue to be available at DTC.
Shared control accounts are available at DTC as an alternative to agreement to pledge (sometimes called “agreement to deliver”) arrangements. A pledgee has control over securities delivered by a Participant to the Participant’s shared control account at DTC since the pledge has the ability to redeliver the securities without further consent by the Participant. Until the pledgee redelivers the securities, the Participant has the flexibility to redeliver or make substitutions for the securities without obtaining the pledgee’s release of the securities.
Shared controls are separately identified in DTC’s Reference Directory. Participants interested in establishing a shared control account should contact their Relationship Manager.
The following procedures are an addition to DTC’s Procedures for Pledgees.
- Any Participant may establish a shared control account at DTC and may designate any DTC pledgee to be the pledgee for that shared control account. A Participant may deliver securities (or other financial assets) by a free pledge from any of its DTC accounts (the “original account”) to its shared control account in order to grant a security interest or other interest in the securities to the pledgee. The shared control account is an account of the Participant and is identified with a separate account number from any other account of the Participant. A Participant may establish multiple shared control accounts, but only one pledge can be designated for each shared control account.
- Except as modified by these procedures, the operation of a shared control account is identical to the operation of a DTC pledge account and all DTC procedures applicable to pledge accounts are applicable to shared control accounts. No deliveries vs. payment, pledges vs. payment, or physical deposits can be made to a shared control account and no deliveries vs. payment, pledges vs. payment, or physical withdrawals can be made from a shared control account. A Participant should not deliver securities to another Participant’s shared control account. In the instructions for a delivery of securities to a shared control account, the mandatory hypothecation code field should be completed in the same manner as it is for a delivery to a pledge account. The DTC fees and charges for a transaction involving a shared control account are the same as the fees and charges for a transaction involving a pledge account. The DTC monthly account usage charges applicable to a shared control account are charged to the Participant. The DTC reports and statements to the Participant and the pledge for a transaction involving a shared control account are the same as the reports and statements for a transaction involving a pledge account.
- As with a pledge account, voting rights on the securities credited to a shared control account are assigned to the Participant. Cash dividend and interest payments and other cash distributions on such securities are credited to the original account. Distribution of securities for which the ex-distribution date is on or prior to the payable date or in which the distribution is payable in a different security are also credited to the original account. Any stock splits or other distributions of the same securities for which the ex-distribution date is after the payable date are credited to the shared control account.
- The securities credited to a shared control account cannot be designated as or included in the collateral for any obligation of the Participant or the pledgee to DTC. DTC has no lien or other interest in any securities credited to a shared control account.
Honest Broker is a procedure to facilitate the liquidation of security positions that have been pledged by book entry in DTC. It is exercised only in extraordinary circumstances, for example, when a pledgee is unwilling to release securities to a pledgor (typically, a broker under financial stress).
A pledgor may request that DTC perform as an honest broker for the pledgor's pledged securities.
DTC's Honest Broker procedure will be activated when requested by a pledgor when pledgees are unwilling to return pledged securities directly to a pledgor, but only at DTC's option after consultations with concerned parties indicate that such action is appropriate.
If the Honest Broker procedure is activated, DTC will notify pledgees and Participants of its activation and will advise them of the possibility that deliveries in settlement of their transactions with the pledgor may be received from the DTC HB Account rather than from the pledgor's DTC Participant account. In performing the role of honest broker, DTC will act as agent for the pledgee and will undertake no risk other than that arising from its own gross negligence.
As the pledgor, DTC's Director of Compliance will notify you that the Honest Broker procedure will be made available. After you are notified, you must
- Identify the affected pledgees to DTC and
- Notify the affected pledgees of your intent to use the Honest Broker procedure.
DTC will grant you access to the Honest Broker functions, which consist of various options that allow you to execute and cancel deliver order (DO) transactions and to maintain the Pledgee-CUSIP Assignment List and enter CNS deliver orders.
Via the Honest Broker function, you must specify which CUSIP numbers affect each pledgee participating in the Honest Broker procedure. For each CUSIP number for which you have initiated a DO, you must type the corresponding pledgee Participant number.
Note- The pledgee-CUSIP assignments specified using this option will remain in effect from one day to the next, unless you cancel them.
DTC will provide you with output via the Settlement User Interface detailing complete and incomplete honest broker DOs, as well as honest broker DOs that identify the pledgees whose shares were used to complete the DOs.
Via the Honest Broker function, you can enter DO instructions for trades that you want to complete using securities pledged to the pledgees.
Note- DTC will not allow any repurchase (repo) transactions (reason code 81) or due bill deliveries in the Honest Broker function.
You can also use the Honest Broker Function to
- Browse previously input DO transactions in the Honest Broker Control Account for transactions input on the same day.
- Cancel transactions in the queue. Canceling a transaction requires a reason for the cancel, and the item must be canceled on the same day that it was entered.
Once the Honest Broker procedure has been made available to the pledgor, as the pledgee, you must:
- Receive notification from the pledgor that the Honest Broker procedure will be used.
- Confirm this understanding with DTC by calling DTC's Settlement Hotline at 212-855-5800.
If you elect to participate in the Honest Broker processing, you must notify DTC of your intent to do so.
Participating pledgees must identify the corresponding pledgee Participant number (for pledgees with multiple Participant account numbers) that they will use to deliver positions to the DTC HB Account.
Note- If you are not a Participant, you must request that DTC establish a Participant account number to use in Honest Broker processing.
DTC's Director of Compliance will notify you that the Honest Broker procedure will be made available. DTC will provide access to the Honest Broker function using your designated Participant account. Access to this function allows you to
- Browse the Honest Broker DOs input by the pledgor and
- Deliver previously demanded pledged securities to the HB Account for use in completing the Honest Broker DOs.
On settlement date, you will be able to review the details of the Honest Broker DOs via the Honest Broker function.
You can remove securities from the pledgor's account by using the Demand of Collateral function (DCL). Via DCL, you can move the pledged securities from the pledged account of the pledgor to your unpledged (free) account or any other Participant account you designate, including the DTC HB Account.
If you have previously demanded securities you are able to move, via the Honest Broker function, the demanded securities to the DTC HB Account for redelivery. You will be required to enter the CUSIP number and quantity of shares for each previously pledged security you want to surrender to the Honest Broker facility for redelivery.
At the end of the processing day, if you have delivered pledged securities (which DTC will operate, acting exclusively as agent for the pledgee delivery securities to the account) to the DTC HB Account, you will receive from DTC your pro rata share of
- Proceeds received by DTC for redeliveries made in such issue and
- Securities that had not been redelivered.
Your pro rata share of settlement proceeds will be credited to your Participant settlement account.
Note- For pledgees with multiple Participant accounts, this credit will be applied to the account previously designated.
The crediting of these proceeds, which will be applied as code 78 adjustments, will occur just before DTC's final settlement figures are produced.
Transactions in Honest Broker processing will be included on the regular daily activity and settlement reports. The Settlement Department can also provide individual reports upon request.
Following is an outline of the Honest Broker procedure.
- DTC will activate its Honest Broker procedure only upon a pledgor's request when pledgees are unwilling to return pledged securities directly to a pledgor and only after it consults with the concerned parties to determine that taking this action is appropriate. DTC may also activate the procedures in case of a pledgor's extended operational outage. DTC will notify pledgees and DTC Participants when the Honest Broker procedures are activated. DTC will advise Participants of the possibility that deliveries in settlement of their transactions with the pledgor, if any, may be received from the DTC Honest Broker Participant Account (DTC HB Account).
Note- In performing the role of honest broker, DTC will undertake no risk other than that arising from its own gross negligence.
- DTC will establish a DTC HB Account for the receipt and redelivery of the pledged securities.
- In operating the DTC HB Account, DTC will act exclusively as agent for the pledgees delivering securities to the DTC HB Account.
- Each pledgee must notify DTC of its intent to use the Honest Broker procedure and will use DTC's Demand of Collateral procedure (see Collateral Loan Program for more information) for pledged positions that the pledgee intends to deliver to the DTC HB Account. Pledgees can enter demand of collateral instructions by using the Demand for Collateral function (DCL).
Note- Using DTC's Demand of Collateral procedure a pledgee can move securities from its DTC pledge account to the general account of any DTC Participant (other than the pledgor), including its own Participant account or the DTC HB account.
- In accordance with the function cutoff times, the pledgor will provide the following information via the Honest Broker function to each affected pledgee, and to DTC:
- The identity of each issue for which the pledgee is requested to deliver shares to the DTC HB Account.
- For each issue, information on the pledgor's transactions proposed to be settled that day by redelivery of the pledged positions). This information will be in standard deliver order (DO) format for each delivery and will include quantity, price, and settlement amount.
- The DTC HB Account number to which each redelivery is to be made.
Note- Pledgees will be able to view this information using the Honest Broker functionality.
- On settlement date, DTC will provide to the pledgees
- Pricing information on short positions in National Securities Clearing Corporation's (NSCC's) Continuous Net Settlement (CNS) system; and
- The aggregate delivery price for each issue (assuming that all of the shares are delivered).
- The pledgee can decide whether to deliver pledged positions to the DTC HB Account using the Honest Broker function.
- The pledgor will advise the DTC Participants that their expected deliveries will be made from the HB account rather than from the pledgor's own account. Provided that no bankruptcy ruling or court-imposed stay has occurred, shares will then be delivered from the DTC HB Account with deliveries made in descending price-per-share order (other than deliveries to settle open NSCC CNS short positions, which will be affected first).
Note- DTC will not process free deliveries. All settlement credits will be made to the DTC HB Accounts. DTC will make special arrangements with NSCC for related money credits for CNS short positions.
- For each issue, DTC will allocate on a pro rata basis to any pledgee that had delivered pledged securities to the DTC HB Account
- Proceeds received from the redeliveries and
- Securities remaining in the account (including deliveries that were reclaimed or otherwise not completed).