Accounting and Inventory Management



Inventory Management

IMS is a single point of entry for all trade-related input into the settlement system from customers, central matching utilities such as Omgeo, service bureaus, including trade related net settlements from CNS.

IMS allows profiles to be set to either active or passive.

Without IMS, participants may have to internally withhold some or all deliveries from the processing system and release them to DTC in the desired order they wish.

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Sub Accounting – Segregation of Securities

The Sub-Accounting 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.

On payment day, DTC will automatically allocate cash merger and mandatory put payments as well as municipal and corporate redemption payments for securities segregated on DTC's books. In addition, DTC will allocate property and rights such as interest payments, dividend distributions and voting rights for segregated securities. Segregation transactions are subject to your collateral monitor control, and do not recycle for position or insufficient collateral.

These allocations were previously based on a position capture done the prior night. Now, DTC will perform a real time position capture immediately prior to the allocation to account for any adjustments Participants made prior to allocation. You should release on or before the payment date certain segregated positions for securities being reorganized. If you fail to release these positions, they will be automatically decremented to avoid driving your general free accounts into short (negative) positions when proceeds are allocated. You can avoid this automatic decrease of your segregated position by releasing the segregated securities on or before the payment date.

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.

Use Segregation/Release in PBS to segregate and release foreign-owned or specialized ownership issues. When you enter F in the Serial Number field for these securities on your Participant Daily Activity Statement, these securities will appear with the serial number "100." You can process these transactions exactly as you would any other transaction for segregated securities.

DTC will report to the transfer agents (TAs) for communications, maritime and specialized ownership issues the holdings in each participant's seg-100 accounts for each security, and the TAs will note their records accordingly. In the rare instance in which total alien holdings in an issue may exceed statutory limitations, and the increase in foreign-owned shares registered in the name of Cede &Co. caused the statutory limitation to be exceeded, a TA will advise DTC of the amount by which those foreign-owned shares must be reduced.

According to the seg-100 procedures, you are required to immediately withdraw from your general free account any foreign-owned shares that cannot be credited to your seg-100 account because of foreign ownership limitations. DTC will cooperate with the issuer and its TA to facilitate the withdrawal and will disclose to the issuer your name and the number of shares to be withdrawn. You should be aware that issuers may place restrictions on such shares.

At the request of the issuer or its TA, DTC provides periodic reports that list individual participant names and their positions that are segregated in the seg-100 account.




Investment Identification


Memo Segregation

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

Note- See Memo Segregation DO Reason Codes for descriptions of the codes referenced in this section.

A Participant can have its Memo Segregation counter automatically increased upon receipt of certain transactions. The Participant can also allow positions resulting from certain transactions to be available for redelivery (turnaround) regardless of Memo Segregation constraints. DTC gives the Participant two options for creating Memo Segregation positions:

  1. Provide DTC with specific Memo Segregation transactions using the Memo Segregation function, instructing DTC to establish or adjust Memo Segregation positions.
  2. Provide DTC with standing instructions to have certain types of transactions automatically increase Memo Segregation positions, and ignore Memo Segregation positions in order to allow redeliveries (turnarounds) to complete.

 

To provide DTC with standing instructions, submit a Memo Segregation Request form. To get a copy of this form a Participant should contact its Relationship Manager.



Independently of the preceding options, the following transactions always reduce a Participant’s Memo Segregation position:

  • Withdrawals-by-transfer (WTs) Certificates-on-demand (CODs)

  • Free deliver orders (DO), except those processed with reason codes 10-29, 98, 100, 220, 260-268, 270-278, 280-288, 290-291, 396, 600-619, 704-708, and CNS short covers

  • Deliveries processed with reason codes 95, 97, 630, 640 and reclaim codes 197, 631, and 641 (free and valued).

 

When one of these transaction types is processed against a Participant’s account with a Memo Segregation position, the system checks the Participant’s free account. If sufficient shares exist, both the free position and the Memo Segregation position are reduced by the amount of the transaction.

Note -

If the free position is greater than the Memo Segregation position, and the transaction is for the entire free amount, the Memo Segregation position is reduced to zero; it does not become a negative value.

 

A Participant can activate any of five Memo Segregation indicators by providing DTC with a standing Memo Segregation instruction. When the Participant activates a Memo Segregation indicator, the Participant’s free position and Memo Segregation position are automatically updated according to the indicators that the Participant has elected.

Activate Indicator

To

1 Automatically increase the Participant’s Memo Segregation counter upon the receipt of:
  • Free and valued DOs with reason codes 40, 99, 330, & 340
  • DRS-related Deliveries with reason codes 390 and 391
  • WT reversals
  • Positions resulting from voluntary and mandatory reorganizations.
2 Automatically increase the Participant’s Memo Segregation counter upon receipt of transactions with reason codes 41-48, 331-338, and 341-348.
3 Automatically increase the Participant’s Memo Segregation counter upon the receipt of CNS receives from the Fully-Paid-For Securities or "E" account.
4 Turnaround securities positions, regardless of Memo Segregation constraints, for positions received from DOs with reason codes 10 ,30, and 600, except those with reason codes 10, 20, 260, 270, 280, or 290.
5 Turnaround securities positions, regardless of Memo Segregation constraints, for positions received from:

All DOs, except those with reason codes 20-29, 40 - 48, 99, 261-268, 270-278, 290, 291, 330-338, 340-348, 390, 610-619, 705-707 and CNS receives from the “C” and “E” accounts except if the turnaround is a reason code 10, 20, 260, 270, 280, or 290.

 6  A Participant may elect to increase automatically its Memo Segregation counter by the units of securities credited to the Participant’s account in any ACATS transfer to that account.

 

Memo Segregation indicators 4 and 5 control the capability that allows certain positions to be used for turnarounds up to the amount of the received position, regardless of Memo Segregation constraints.

Even if the Participant has no pending deliveries at the time a position is received from a DO with reason code 10 or 30, DTC retains, throughout that day's processing cycle, a notation of the number of shares received from such deliveries. DTC also processes any deliveries regardless of when they are submitted that day, up to that number, regardless of the Participant’s Memo Segregation position.



The following is a listing of descriptions of the reason codes referred to in the “Memo Segregation” section above.

  • 10 (Stock Loan)
  • 11 (Stock Loan Reclaim-DK)
  • 12 (Stock Loan Reclaim-Wrong Quantity)
  • 13 (Stock Loan Reclaim-Wrong Security)
  • 14 (Stock Loan Reclaim-Wrong Money)
  • 15 (Stock Loan Reclaim-Partial)
  • 16 (Stock Loan Reclaim-Needs Account Information)
  • 17 (Stock Loan Reclaim-Needs Due Bill)
  • 18 (Stock Loan Partial Reclaim/Partial Return)
  • 19 (Stock Loan Recall)
  • 20 (Stock Loan Return)
  • 21 (Stock Loan Reclaim-DK)
  • 22 (Stock Loan Return Reclaim-DK)
  • 23 (Stock Loan Return Reclaim-Wrong Security)
  • 24 (Stock Loan Return Reclaim-Wrong Money)
  • 25 (Stock Loan Return Reclaim-Partial)
  • 26 (Stock Loan Return Reclaim-Needs Account Information)
  • 27 (Stock Loan Return Reclaim-Needs Due Bill)
  • 28 (Stock Loan Return Partial Reclaim-Partial Return)
  • 29 (Stock Loan Recall Reclaim)
  • 30 (Delivery Versus Payment)
  • 40 (Transfer of Customer Document)
  • 41 (Transfer Customer Account Reclaim-DK)
  • 42 (Transfer Customer Account Reclaim-Wrong Quantity)
  • 43 (Transfer Customer Account Reclaim-Wrong Security)
  • 44 (Transfer Customer Account Reclaim-Wrong Money)
  • 45 (Transfer Customer Account Reclaim-Partial)
  • 46 (Transfer Customer Account Reclaim-Needs Account Information)
  • 47 (Transfer Customer Account Reclaim-Due Bill)
  • 48 (Transfer Customer Account-Partial Reclaim/Partial Return)
  • 90 (ADR Stock Loan Return-Untracked)
  • 95 (ACATS Value With Memo Seg)
  • 97 (Delivery Versus Payment With Memo Seg)
  • 98 (Transfer of Account Without Memo Seg)
  • 99 (Bulk Transfer of Account)
  • 100 (Account Transfer Without Memo Seg Reclaim)
  • 197 (Account Transfer With Memo Seg Reclaim)
  • 220 (Repo Tracking)
  • 260 (OCC Stock Loan)
  • 261 (OCC Stock Loan Reclaim-DK)
  • 262 (OCC Stock Loan Reclaim-Wrong Quantity)
  • 263 (OCC Stock Loan Reclaim-Wrong Security)
  • 264 (OCC Stock Loan Reclaim-Wrong Money)
  • 265 (OCC Stock Loan Reclaim -Partial)
  • 266 (OCC Stock Loan Reclaim-Needs Account Information)
  • 267 (OCC Stock Loan Return-Untracked)
  • 268 (OCC Stock Loan- Partial Reclaim/Partial Return)
  • 270 (OCC Stock Loan Return)
  • 271 (OCC Stock Loan Return Reclaim-DK)
  • 272 (OCC Stock Loan Return Reclaim-Wrong Quantity)
  • 273 (OCC Stock Loan Return Reclaim-Wrong Security)
  • 274 (OCC Stock Loan Return Reclaim-Wrong Money)
  • 275 (OCC Stock Loan Return Reclaim-Partial)
  • 276 (OCC Stock Loan Return Reclaim-Missing Account Information)
  • 277 (OCC Stock Loan Return-Untracked)
  • 278 (OCC Stock Loan Return-Partial Reclaim/Partial Return)
  • 280 (ADR Stock Loan-Untracked)
  • 281 (ADR Stock Loan Reclaim-DK)
  • 282 (ADR Stock Loan Reclaim-Wrong Quantity)
  • 283 (ADR Stock Loan Reclaim-Wrong Security)
  • 284 (ADR Stock Loan Reclaim-Wrong Money)
  • 285 (ADR Stock Loan Reclaim-Partial)
  • 286 (ADR Stock Loan Reclaim-Needs Account Information)
  • 287 (ADR Stock Loan Reclaim (Needs Due Bill)
  • 288 (ADR Stock Loan Partial Reclaim/Partial Return)
  • 290 (ADR Stock Loan Return-Untracked)
  • 291 (ADR Stock Loan Return Reclaim-DK)
  • 330 (Direct Rollover to IRA)
  • 331 (Direct Rollover to IRA Reclaim-DK)
  • 332 (Direct Rollover to IRA Reclaim-Wrong Quantity)
  • 333 (Direct Rollover to IRA Reclaim-Wrong Security)
  • 334 (Direct Rollover to IRA Reclaim-Wrong Money)
  • 335 (Direct Rollover to IRA Reclaim-Partial)
  • 336 (Direct Rollover to IRA Reclaim-Needs Account Information)
  • 337 (Direct Rollover to IRA Reclaim-Needs Due Bill)
  • 338 (Direct Rollover to IRA Partial Reclaim/Partial Return)
  • 340 (Direct Rollover to Qualified Plan)
  • 341 (Direct Rollover to Qualified Plan Reclaim-DK)
  • 342 (Direct Rollover to Qualified Plan Reclaim-Wrong Quantity)
  • 343 (Direct Rollover to Qualified Plan Reclaim-Wrong Security)
  • 344 (Direct Rollover to Qualified Plan Reclaim-Wrong Money)
  • 345 (Direct Rollover to Qualified Plan Reclaim-Partial)
  • 346 (Direct Rollover to Qualified Plan Reclaim-Needs Account Information)
  • 347 (Direct Rollover to Qualified Plan Reclaim-Needs Due Bill)
  • 348 (Direct Roller to Qualified Plan Partial Reclaim/Partial Return)
  • 390 (Direct Registration Transfer)
  • 391 (Direct Registration Reversal)
  • 396 (Direct Registration Reclaim DK-Without Memo Seg)
  • 600 (Collateral DO Return)
  • 601 (Collateral DO Reclaim-DK)
  • 602 (Collateral DO Reclaim-Wrong Quantity)
  • 603 (Collateral DO Reclaim-Wrong Security)
  • 605 (Collateral DO Reclaim-Partial)
  • 606 (Collateral DO Reclaim-Needs Account Information)
  • 607 (Collateral DO Reclaim-Needs Due Bill)
  • 608 (Collateral DO-Partial Reclaim/Partial Return)
  • 609 (Collateral DO Recall)
  • 610 (Collateral DO Return)
  • 611 (Collateral DO Return Reclaim-DK)
  • 612 (Collateral DO Return Reclaim-Wrong Quantity)
  • 613 (Collateral DO Return Reclaim-Wrong Security)
  • 615 (Collateral DO Return Reclaim-Partial)
  • 616 (Collateral DO Return Reclaim-Needs Account Information)
  • 617 (Collateral DO Return Reclaim-Needs Due Bill)
  • 618 (Collateral DO Return-Partial/Reclaim-Partial Return)
  • 619 (Collateral DO Recall Reclaim)
  • 630 (Repo With Memo Decrease)
  • 631 (Repo Reclaim With Memo Decrease)
  • 640 (Repo Return With Memo Decrease)
  • 641 (Repo Return Reclaim With Memo Decrease)
  • 704 (OCC Stock Loan-Untracked)
  • 705 (OCC Stock Loan Reclaim-Untracked)
  • 706 (OCC Stock Loan Return-Untracked)
  • 707 (OCC Stock Loan Return RCL-Untracked)
  • 708 (EuroCCP Net Obligation)

Security Holder Tracking Service