DTCC Releases More Metrics for Asset Services
DTCC has published a new set of “performance metrics” for its Asset Services business, building on an initiative that began with the release of a “report card” for structured securities, which includes Six Sigma measures by agent, in March of this year.
The goal of publishing these metrics is to leverage DTCC’s Six Sigma experience with customers, agents and their service providers in order to strengthen end-to-end shared processes. The numbers are updated monthly.
Drivers of efficiency
The Asset Services metrics report accuracy and timeliness trends, on an industry-wide basis, for all Asset Services products offered by The Depository Trust Company (DTC).
“In asset servicing, the accuracy and timeliness of DTC’s processes are critical drivers of the industry’s overall efficiency,” said John Colangelo, DTCC managing director, Operations and Business Reengineering. “These new Sigma levels reflect how the overall process performance is influenced internally by DTC as well as externally by the agents and their service providers.”
A Sigma level reflects the number of defects for a given volume level. The higher the defect rate, the lower the Sigma number. An example of an internal defect would be if DTC were to allocate funds to the wrong account; an external defect would be if an agent were to submit incorrect information to DTC, such as an interest rate or a CUSIP number.
Given the interdependencies in this area of the industry, all parties stand to benefit by monitoring and improving the processing cycles, which is why DTC is publishing the metrics. “Our goal in providing greater transparency on DTC’s overall performance is to promote closer collaboration with the underwriters, agents and other parties that are involved in – and have a stake in – the various asset services processes,” Colangelo said.
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This is one of the trend charts DTCC now publishes to provide "performance metrics" for its Asset Services business.
Trickling down
The performance metrics are designed to improve end-to-end processing by identifying patterns and problem areas. For example, take the trickle-down effect when erroneous interest rate information makes it way into DTC’s systems.
If a data provider sends its agent an incorrect rate on an issue and the agent sends DTC this information, DTC would announce an incorrect rate, resulting in an incorrect allocation to customers, cust-omer inquiries and additional research. When the data provider corrects the mistake, then the agent, DTC and its customers have to revisit the entire process.
“This type of error creates inefficiency and risk, and could incur additional costs, depending on how the market has moved in the interim,” said Colangelo. “It also highlights the need for collaboration between DTC, agents and their data providers.”
Virtuous cycle
Feedback is positive on the detailed metrics that DTCC now publishes for agents that handle the highest volumes of structured securities. According to Peter Gleeson, DTCC vice president, Asset Services, the report cards have dramatically improved communication between DTC and the agent community.
The result is a virtuous cycle. Prior to publishing the report cards, DTC gives the information along with the backup detail to agents in order to ensure the reports are accurate. “Verifying the accuracy of the data keeps us in constant dialogue with the agents,” said Gleeson. “And as a result of the improved communication, we are now receiving a higher percentage of accurate rate data from them on a timelier basis, which allows us to improve the quality and timing of the rate information we give our customers, so everybody wins.” @
[To see the report cards, visit DTCC’s corporate website at www.dtcc.com and click the Asset Services or Quality links. For questions or comments, contact Karim Houry, DTCC vice president, Business Reengineering and Quality, at khoury@dtcc.com or 212.855.5134.]