VERSION 2: SHORTENED SETTLEMENT (T+2) DTC, NSCC AND OMGEO FUNCTIONAL CHANGES

OCTOBER 2016

A WHITE PAPER TO THE INDUSTRY

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TABLE OF CONTENTS

Introduction .....................................................................................................................3

1. Trade Affirmation – Omgeo ............................................................................................4

2. Trade Capture – NSCC ...................................................................................................5

Universal Trade Capture (UTC) Input Processing .............................................................5

ETF Creation & Redemption Processing ..........................................................................6

CMU – Real Time Trade Matching (RTTM) ......................................................................7

3. Clearing Services – NSCC ..............................................................................................8

ID Net .........................................................................................................................8

Consolidated Trade Summary (CTS) ...............................................................................9

Current CNS Projection Report/File .............................................................................10

New CNS Midday Projection File ..................................................................................11

4. Asset Servicing – NSCC’s Continuous Net Settlement (CNS) and DTC ..............................12

Ex-Date Calculation for Regular Way Dividend Processing ...............................................12

Ex-Date Calculation for Irregular Way Dividend Processing ..............................................12

DTC Investor Voluntary Redemptions System (IVORS) Settlement Date Changes ...............12

Voluntary Corporate Action Processing .........................................................................13

DTC Underwriting Services ..........................................................................................13

5. Wealth Management - Mutual Fund Services – NSCC .....................................................14

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INTRODUCTION

The financial services industry, in coordination with its regulators, is planning to shorten the settlement cycle for equities, corporate bonds, municipal bonds, unit investment trusts, and financial instruments comprised of these security types (e.g. ADRs, ETFs), from the current cycle of trade date plus three business days (T+3) to trade date plus two business days (T+2). The changes are expected to be effective effective on the trade date of September 5, 2017.

This document outlines the systems and processing changes required to move to a two-day settlement cycle for DTCC subsidiaries — Omgeo, NSCC and DTC. Clients and participants of these entities are requested to review this document to determine any impact to their respective systems and operational processing.

A copy of this document can be obtained from the DTCC web site at http://www.dtcc.com as well as on the industry’s T+2 web site, http://www.UST2.com.

DTCC welcomes client feedback on this document. Please contact us with questions and comments at ust2@dtcc.com, or contact your DTCC Relationship Manager.

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1. TRADE AFFIRMATION – OMGEO

Omgeo will not make any systematic change to the institutional trade affirmation process (Prime Broker, ID Net and Non-ID Net/PDQ institutional trades) as part of the migration to a T+2 settlement cycle. However, the cutoff time for having affirmed institutional trades automatically introduced into NSCC and DTC for processing will be changed.

The cutoff time for having affirmed institutional trades automatically introduced into NSCC and DTC is based on the settlement date (SD) of the trade.

This cutoff time in a T+3 environment is currently noon, SD-1. In T+2, although this will remain on SD-1, the cutoff time will move from 12:00 ET to approximately 11:30 ET; only trades that are affirmed by 11:30 ET1 on SD-1 will benefit from automatic introduction into NSCC and DTC. This time change will align the Omgeo affirma-tion cutoff time to the NSCC Consolidated Trade Summary (CTS) Cycle 3 cutoff time, which will be updated to report one day settling trades2. This will ensure all prime broker trades affirmed prior to the cut-off on SD-1(or T+1) are reported on the CTS Cycle 3, which is distributed at approximately 12:00 ET.

The trade affirmation cut-off for ID-Net eligible trades will change from the current 21:00 ET on SD-2 in a T+3 settlement cycle to 11:30 ET on SD-1 in a T+2 settlement cycle, and will be aligned with the affirmation cut-off for other institutional trades automatically introduced to DTC and NSCC for settlement. This will not impact Omgeo’s and DTC’s systems, nor trade processing. However, it will require NSCC to update the cut-off time in the Continuous Net Settlement (CNS) system with respect to these trades, which is outlined later in this document in Section 3 – Clearing Services – NSCC.

1 The Omgeo affirmation cutoff time listed in previously published T+2 documentation suggested a T+2 affirmation cutoff time of 12:00 SD-1. However, after industry consultation, a decision was made to move this cutoff to 11:30 SD-1 to better align the affirmation process with NSCC output.

2 These changes are being made as part of NSCC’s Consolidated Trade Summary (CTS) rewrite project, and are scheduled to be implemented in 2Q 2017, prior to the industry’s move to T+2 on September 5, 2017.

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2. TRADE CAPTURE - NSCC

NSCC will implement coding changes to its Universal Trade Capture (UTC) system and its Exchange Traded Funds (ETF) creation and redemption system to update the rules these systems use to assign the settlement date to transactions.

Coding changes will be made in both applications to assign a settlement date on regular way transactions and ETF creation and redemption instructions to be two business days after trade date. Today, regular way settlement is defined as T+3. These changes will not impact the processes and formats Members currently utilize to submit transactions to NSCC.

UNIVERSAL TRADE CAPTURE (UTC) INPUT PROCESSINGThe following changes will apply to all marketplaces and Members that submit trades through NSCC’s UTC interface. These changes will also be reflected in the UTC output distributed to Members.

■■ A value of 0 = Regular in the Settlement Type field (Tag No. 63) will result in the assignment of a settlement date two business days after the trade date.

■■ Transactions with a value of 6=Seller’s Option in the Settlement Type field (Tag No. 63) will continue to require the number of business days until settlement between 003 and 180 in the Settlement Days field (Tag No. 829). The Settlement Days field provides UTC with information to calculate the settlement date based on the trade date and the number of days assigned in this field. UTC will accept a value of 003 (which is currently rejected by UTC) and reject a value of 002 (which is currently accepted). The latter will be rejected because a value of 002 days will become a regular way settling trade upon T+2 implementation.

■■ Values of 1=Cash, 2=Next Day, 7=When Issued will remain unchanged in the Settlement Type field (Tag No. 63) and will be accepted by UTC accordingly.

■■ In the initial period following T+2 implementation, NSCC will apply a conversion processing code to support “as of” trades received during the conversion process. NSCC will update the UTC processing rules based on the submitted trade date, which are as follows:

■» “As of” regular way trades received on September 5, 2017 or after with a Trade Date (T) = September 1, 2017 or earlier, will be assigned settlement date with the pre-conversion rules where settlement date will be three business days after the submitted trade date. UTC will only apply post conversion date settlement assignment rules (specified above) for trades with a T = September 5, 2017 and later. The chart below further summarizes these changes:

DATE UTC RECEIVES TRADE

T INPUT PRE/POST CONVERSION

RULES

SETTLEMENT TYPE INPUT

SETTLEMENT DAYS INPUT

UTC ASSIGNED SETTLEMENT

DATE

09/01/2017 09/01/2017 Pre 0=Regular N/A 09/07/2017

09/01/2017 09/01/2017 Pre 6=Seller’s Opt 2 09/06/2017

09/01/2017 09/01/2017 Pre 6=Seller’s Opt 3 UTC Rejected

09/05/2017 09/01/2017 Pre 0=Regular N/A 09/07/2017

09/05/2017 09/01/2017 Pre 6=Seller’s Opt 2 09/06/2017

09/05/2017 09/01/2017 Pre 6=Seller’s Opt 3 UTC Rejected

09/05/2017 09/05/2017 Post 0=Regular N/A 09/07/2017

09/05/2017 09/05/2017 Post 6=Seller’s Opt 3 09/08/2017

09/05/2017 09/05/2017 Post 6=Seller’s Opt 2 UTC Rejected

09/06/2017 09/06/2017 Post 0=Regular N/A 09/08/2017

09/06/2017 09/05/2017 Post 0=Regular N/A 09/07/2017

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■■ Also during the conversion period, which will begin on September 5, 2017, the industry is advised that September 7, 2017 will be a double settlement day. Settlement on this day will include pre-conversion regular way trades received on September 1, 2017 (settling T+3) and post conversion regular way trades received on September 5, 2017 (settling T+2).

ETF CREATION & REDEMPTION PROCESSINGThe following changes will apply to all trades submitted for the ETF Creation & Redemption process using the Enhanced ETF Create and Redeem Instruction Data Input File - Datatrak input 11300. Members are reminded that these changes will also be reflected in any ETF output that is distributed to them.

■■ Transactions with spaces submitted in the Shortened Settlement Code field (Position 58) of the Datatrak 11300 layout will be updated to be assigned a regular way settlement date of two business days after trade date.

■■ Transactions submitted with a value of 2 = Two Day Settlement in the Shortened Settlement Code field (Position 58) will be rejected because this will now become a regular way settling trade upon effective date.

■■ Transactions with a value of 1 = Next Day Settlement will remain unchanged in the Shortened Settlement Code field (Position 58) and will be accepted accordingly.

■■ Similar to UTC processing of “as of” regular way trades as described above, ETF Creation & Redemption process will have rules to support the conversion process based on the submitted trade date. For “as of” trades received on September 5, 2017 or later with a T = September 1, 2017 or earlier, NSCC internal code will assign regular way settlement with the pre-conversion rules where settlement date will be three business days after the submitted trade date. The internal code will only apply post conversion date settlement assign-ment rules (specified above) for trades with a T = September 5, 2017 and later.

DATE ETF RECEIVES C/R

TRADE DATE INPUT PRE/POST CONVERSION RULES

SHORTENED SETTLEMENT CODE

ETF ASSIGNED SETTLEMENT DATE

09/01/2017 09/01/2017 Pre Space=Regular 09/07/2017

09/01/2017 09/01/2017 Pre 2=2-Day Settlement 09/06/2017

09/01/2017 09/01/2017 Pre 1=1-Day Settlement 09/05/2017

09/05/2017 09/01/2017 Pre Space=Regular 09/07/2017

09/05/2017 09/01/2017 Pre 2=2-Day Settlement 09/06/2017

09/05/2017 09/01/2017 Pre 1=1-Day Settlement 09/05/2017

09/05/2017 09/05/2017 Post Space=Regular 09/07/2017

09/05/2017 09/05/2017 Post 2=2-Day Settlement ETF Rejected

09/05/2017 09/05/2017 Post 1=1-Day Settlement 09/06/2017

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CMU – REAL TIME TRADE MATCHING (RTTM)In order to be assigned a T+2 Settlement Date (SD), Members are reminded that they must match Corporate Bonds, Municipal Bonds and Unit Investment Trust (CMU) trades in RTTM by 11:30 ET on T+2. Additionally for municipal bond new issuances, Members are advised of the following:

■■ Municipal bond trades in new issues with a “T” for Issue Date (ID) -2, submitted before ID, and settling after ID will need to be submitted with Extended Settlement Day(s) and will be treated as When Issued. For example, a Municipal bond trade in a new issue where T = 09/12/17, ID = 09/14/17 and Settlement Date (SD) = 09/15/17 will need to be submitted with Extended Settlement Day(s) = 1.

Municipal bond new issue trades executed on ID-2 and settling after Issue Date are expected to be rare in a T+2 settlement environment.

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3. CLEARING SERVICES – NSCC

ID NETT+2 settlement cycle will not require any change to NSCC’s CNS core processing (i.e. netting, allotting and settlement). NSCC will update the cut-off times within the CNS system to allow additional trades to settle via the ID Net Process.

As previously noted, the cutoff time for institutional trades to be affirmed in Omgeo and eligible for the ID Net process is currently 21:00 ET on T+1 (or SD-2). These trades, which are reported to DTC’s Inventory Management System (IMS), are sent to CNS and reported in the miscellaneous column on the CNS Projection Report/File which is issued the next business day at approximately 00:30 ET.

As part of the move to T+2, the cutoff time for Omgeo (or other future Institutional Matching providers) trade affirmation will be changed to approximately 11:30 ET on T+1 (or SD-1). CNS will make modifications to accept trades from DTC’s IMS system until that cutoff time.

The new process will be as follows:

■■ ID Net trades affirmed by 24:00 ET on trade date that are received by IMS will be sent to CNS.

■» These transactions will be included in the miscellaneous column of the CNS Projection Report/File issued the next morning at 00:30 ET on trade date +1.

■■ ID Net trades affirmed after 24:00 on trade date but before11:30 ET on trade date +1 that are received by IMS will also be sent to CNS.

■» These transactions WILL NOT be included in the miscellaneous column of the CNS projection report/file issued at approximately 00:30 ET on trade date +1.

■» However as further described below, these transactions will be reported in the miscellaneous column of the new CNS Midday Projection File.

■■ The types of securities eligible for the ID Net process will not change. Additionally all existing processing rules will continue to apply, unchanged. For example, the current rule that securities undergoing a corporate action or having an outstanding buy-in in CNS are not eligible for ID Net processing will continue to apply.

The change in the ID Net cut-off will not impact DTC’s systems and trade processing.

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CONSOLIDATED TRADE SUMMARY (CTS)3 The new format of the redesigned Consolidated Trade Summary (CTS) is expected to be implemented in Q2 2017, prior to implementation of T+2 on September 5, 2017. When T+2 is implemented, NSCC will continue to distribute three cycles of the CTS.

Details of the CTS cycle distribution are as follows:

CTS CYCLE APPROXIMATE DISTRIBUTION REPORTS TRADES RECEIVED FOR SETTLEMENT IN:

1 21:00 ET Two business days and one business day

2 24:00 ET Two business days and one business day

3 12:00 ET One business day or the same business day

The CTS Cycle 3 (which currently only reports same day settling trades received by 11:30 ET) will be enhanced to include one day settling trades. This update will provide Members with settlement information as soon as possible.

A regular way trade received by UTC on trade date will now be reported on the CTS on trade date (as opposed to T+1 today). This requirement will also be effective for bank holiday processing and in applicable cases when there is an unexpected bank closure where both the markets and NSCC are open4

Most regular way trades will appear on the CTS earlier in the trade life cycle. However, regular way settling stock options and futures trades received from the Options Clearing Corporation (including those from option expiration weekend) will be reported on the CTS Cycle 3 as next day settling trades provided they are received by NSCC by 11:30 ET on T+1 and the NSCC Member’s Clearing Fund required Deposit has been paid.

Below is a chart showing when trades received by UTC will be reported on the CTS:

CTS CYCLE APPROXIMATE DISTRIBUTION

TIMEFRAME

TRADE ACTIVITY OUTPUT REPORTED: AUTOROUTE# 02043339 (MRO) AND

# 02042340 (.CSV)

EXAMPLES OF DOMESTIC TRADES:

Cycle 1 Daily – 21:00 ET Trades received by UTC settling in two business days

Will generally include:

» Regular way settling trades received on Trade Date (T)

» When Issued (WI) or Seller’s Options trades that settle in two business days

For CTS created on Tuesday for Cycle 1, this will include trades for SD Thursday such as:

» Regular way settling trades (excluding OCC stock option trades) received on Tuesday (Trade Date T Tuesday)

» WI or Seller’s option trades (from any prior T) with an assigned settlement date of Thursday

3 Additional information about the Consolidated Trade Summary (CTS) rewrite is available at https://dtcclearning.com/learning/clearance/topics/consolidated-trade-summary-cts.html

4Since the bank holiday is not a settlement date, the CTS issued on the day prior to the bank holiday and on the bank holiday will both include regular way trades settling two business days after the bank holiday

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CTS CYCLE APPROXIMATE DISTRIBUTION

TIMEFRAME

TRADE ACTIVITY OUTPUT REPORTED: AUTOROUTE# 02043339 (MRO) AND

# 02042340 (.CSV)

EXAMPLES OF DOMESTIC TRADES:

Trades received by UTC between Cycle 3 and CTS Cycle 1 settling the next business day5.

Will generally include:

» “As of” regular way settling trades received on T+1

» Next day settling trades received on T » Same day settling trades received

after CTS Cycle 3 where UTC assigned the next available settlement date

For CTS created on Tuesday for Cycle 1, this will include trades received on Tuesday between CTS Cycle 3 and Cycle 1 for SD Wednesday such as:

» “As of” regular way settling trades including OCC stock option and future trades (T Monday)

» Next day settling trades » Same day settling trades received

on Tuesday after CTS Cycle 3 where UTC assigned Wednesday as the next available settlement date

Cycle 2 Daily- 24:00 ET Trades received by UTC between Cycle 1 and Cycle 2 settling in two business days6.

Will generally include:

» Regular way settling trades (exclud-ing OCC stock option trades)

» Trades received by UTC between Cycle 1 and Cycle 2 settling tomorrow7

» Generally will include: » All “as of” trades

For CTS created on Tuesday at 24:00 ET, this will include trades received on Tuesday between CTS Cycle 1 and Cycle 2 for SD Thursday such as:

» Regular way settling trades exclud-ing OCC stock option and future trades (T Tuesday)

Cycle 3 Daily- 12:00 ET Trades received by UTC between CTS Cycle 2 and Cycle 3 for the next business day’s settlement

Generally will include:

» “As of” regular way settling trades received on T+18

» Next day settling trades

For CTS created on Wednesday at 12:00 ET, this will include trades received between CTS Cycle 2 and Cycle 3 for SD Thursday such as:

» “As of” regular way trades (T Tuesday) » OCC regular way stock option and

futures trades (T Tuesday) where NSCC has collected clearing fund

» Next Day settling trades (T Wednesday)

Trades received by UTC between CTS Cycle 2 and Cycle 3 for the current business day’s settlement

Generally will include:

» Cash trades » All “as of” trades

For CTS created on Wednesday at 12:00 ET, this will include trades received between CTS Cycle 2 and Cycle 3 for SD Wednesday such as:

» Cash Trades (T Wednesday) » “As of” regular way settling trades

(T Tuesday or prior) » “As of” next day settling trades

(T Tuesday)

5 One day settling CNS eligible trades in this CTS Cycle 1 output distribution will be updated in the Member’s CNS position for settlement in the current night cycle which has begun for the next business day’s settlement.

6 Cycle 2 output distribution will be included in the CNS Projection File/Report issued at 00:30 ET along with the two day settling CNS eligible trades from CTS Cycle 1 for settlement in the next business day’s night cycle.

7 One day settling CNS eligible trades in this CTS Cycle 2 output distribution will be updated in the Member’s CNS position for settlement for the day cycle, as the night cycle would have already completed for the current business day’s settlement. The position would be updated to the “Today’s Current Position” field on the CNS Projection File/Report issued at 00:30 ET.

8 This includes OCC regular way settling stock options and futures trades and “as of” trades received on T+1, such as prime broker trades affirmed through Omgeo or other future Institutional Matching Providers by approximately 11:30 ET for settlement the next business day.

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The example below further outlines how trades will be reported on the CTS for both standard (regular way), as-of and non-standard trades during a bank holiday. Since the bank holiday is not a settlement date, the CTS issued on the day prior to the bank holiday and on the bank holiday will both include regular way trades settling two business days after the bank holiday.

EXAMPLE: COLUMBUS DAY = MONDAY 10/9/2017

TRADE SETTLEMENT SCHEDULE

Trade Date (T) T+1 T+2 Settlement

Thursday 10/5 Friday 10/6 Tuesday 10/10

Friday 10/6 Tuesday 10/10 Wednesday 10/11*

Monday 10/9 Tuesday 10/10 Wednesday 10/11*

Tuesday 10/10 Wednesday 10/11 Thursday 10/12

*Double Settlement Day

CTS Cycle Approximate Distribution Timeframe

Trade Activity Output Reported: AutoRoute# 02043339 (MRO) and

# 02042340 (.CSV)

Day Prior to Columbus Day (Friday, 10/6/2017)

CTS Cycle 1 Daily – 21:00 ET

¤ Trades received by UTC settling in two business daysWill generally include:

» Regular way trades with T=Friday, SD=Wednesday » As of trades with SD=Tuesday » Next day trades with T=Friday, SD=Tuesday

CTS Cycle 2 Daily- 24:00 ET Same as Cycle 1 above for those trades received on Friday after Cycle 1 is distributed

CNS Night Cycle No CNS Files/Reports issued (i.e., Projection) No CNS Night Cycle

Columbus Day (Monday, 10/9/2017)

CTS Cycle 3 Daily- 12:00 ETWill primarily include:

» Next day trades with T=Monday, SD=Tuesday » As of trades with SD= Tuesday

CNS Day Cycle No CNS Day Cycle No CNS Reports/Files issued (i.e., Mid-Day Projection, Ac-counting Summary)

CTS Cycle 1 Daily- 21:00 ET

Will primarily include: » Regular way trades with T=Monday, SD=Wednesday » As of trades with SD=Tuesday » Next day trades with T=Monday, SD=Tuesday

CTS Cycle 2 Daily- 24:00 ET Same as Cycle 1 above for those trades received on Monday after Cycle 1 is distributed

CNS Night Cycle CNS Night Cycle runs for Tuesday Settlement

CNS Reports/Files issued (i.e., Projection) - On the Projection File/Report issued Tuesday morning at 00:30 ET, the settling trades column will include all positions for that Member from each CTS issued that has a settlement date of Wednesday

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CURRENT CNS PROJECTION REPORT/FILE The current CNS Projection Report/File provides Members with their CNS projected position settling the next business day after the night cycle has completed for the current settlement date.

Following T+2 implementation, the distribution of the current CNS Projection Report/File will not change. However, the majority of settling trades reported on this projection report/file will be regular way settling trades that were reported on trade date.

■■ The following two fields on the CNS Projection File (AutoRoute# 02042022) will become obsolete by the move to T+2. These fields are:

■» Following Day’s Settling Trades (Detail Record, Position 64-72)

■» Following Days Settle Trades Sign (Detail Record, Position 73).

Following T+2 implementation, these fields will have no data to report and will become filler in the record layout.

■■ Additionally, the following two fields in the trailer record will also become obsolete and will be replaced as filler:

■» Net Total Following Day’s Pending Trades (Trailer Record, Position 26-36)

■» Net Following Day’s Pending Trades Sign (Trailer Record, Position 37)

■■ Members should continue to use the current CNS Projection Report/File to determine their regular exemptions for CNS positions settling the next business day. A Member’s CNS One Day Settling (ODS) exemption will be applicable to any new short position or increased short position from trades that were not reported on this CNS Projection Report/File.

NEW CNS MIDDAY PROJECTION FILEAt the request of some Members, NSCC will create a new Midday CNS Projection File that will be distributed after the CTS Cycle 3 distribution. This new Midday Projection File, which will be optional for Members, will include an updated projection of CNS settling positions for the next business day. The updated projection will include current position, one day settling trades received between CTS Cycle 2 and Cycle 3 and miscellaneous activity (i.e., ID Net trades received between 00:00 and 11:30 ET on SD-1).

Members are reminded that the new mid-day CNS Projection File should not be used for exemption processing purposes and Members should continue to utilize the current CNS Projection Report/File (listed above) for exemp-tion processing purposes.

Other details regarding the new CNS Midday Projection File are as follows:

■■ The new CNS Midday Projection File will be distributed as both Machine Readable Output (MRO) and Comma Separated Value (.CSV) file. The latter can be downloaded to Excel to create a report version. The AutoRoute Numbers for the new files are as follows:

CNS MIDDAY PROJECTION PRODUCTION TEST (PSE)

MRO 02042358 02982358

CSV 02042366 02982366

■■ A copy of the MRO record layout and a sample copy of the .CSV file can be found on DTCC’s corporate website at: http://www.dtcc.com/clearing-services/equities-clearing-services/user-documentation/client-center-formats/file-formats. Please look under the CNS/Non CNS Settlement Account section.

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4. ASSET SERVICING - NSCC’S CONTINUOUS NET SETTLEMENT (CNS) AND DTC

EX-DATE CALCULATION FOR REGULAR WAY DIVIDEND PROCESSINGEx-Date Calculation for regular way dividend processing will shift from two days prior to the record date in a T+3 settlement cycle to one business day prior to record day in a T+2 settlement cycle.

■■ DTC Distribution Processing

DTC will not require any systematic updates to accommodate the shift in ex-date in a T+2 settlement cycle since ex-date is generally provided to DTC by the exchanges or FINRA. DTC is working with the organized securities exchanges and FINRA to determine when the first ex-dates will be ruled. An ex-date conversion table will be distributed in 2017 at a time which is to be determined, but well in advance of the conversion to a T+2 settlement cycle. This change should have no impact on DTC Corporate Action reporting to clients.

■■ CNS Dividend Processing

CNS calculates the ex-date based upon the record date supplied from DTC. The number of days between ex- date and record date for CNS dividends will decrease. CNS will change its calculation of ex-date on a declared dividend to one business day prior to record date. This change will align with the industry’s new calculation of ex-date. This change should have no impact on reporting to Members as NSCC does not populate ex-date on any of its dividend output file or report distributions.

EX-DATE CALCULATION FOR IRREGULAR WAY DIVIDEND PROCESSING■■ DTC Distribution Processing

DTC will change its systematic calculation of the Distribution Settlement Date for “irregular way” dividend or “late” calculations. The settlement date, which DTC uses to determine Participant entitlements, (also known as the last date to track due bills) will be changes to one business day after the ex-date on the dividend distribution event, which is currently ex-date plus two business days in a T+3 settlement cycle. This change should have no impact on DTC Corporate Action reporting to clients.

■■ CNS Dividend Processing

CNS will update the ex-date calculation on a dividend that carries a due bill to one business day prior to due bill redemption date. As noted above this change should have no impact on Members as NSCC does not populate ex-date on any of its dividend output file or report distributions.

DTC INVESTOR VOLUNTARY REDEMPTIONS SYSTEM (IVORS) SETTLEMENT DATE CHANGESThe IVORS service provides DTC Participants with the ability to redeem or rollover their UITs to the UIT Sponsor or Trustee. DTC Participants wishing to redeem their UITs to the Sponsor or Trustee use the IVOR function via the Participant Terminal System (PTS) or the IVORS Instruction Submissions via the Participant Browser System (PBS).

DTC will update the IVOR function to systematically set the Settlement Date of a UIT redemption to Transaction Date plus two business days to account for the T+2 settlement cycle.

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VOLUNTARY CORPORATE ACTION PROCESSING Guaranteed Delivery or Cover/Protect period on a Voluntary Corporate Action is generally established by the issuer, or its agent, and is passed to DTC for processing. It is anticipated that the Guaranteed Delivery or Cover/Protect period will be calculated as expiration date plus two days in a T+2 settlement cycle, versus expiration plus three days in the current T+3 environment.

■■ DTC Voluntary Corporate Action Processing

DTC will not have any coding changes with regards to the shortened protect period where a guaranty of delivery feature is provided on certain voluntary reorganization events. DTC will continue to use the dates provided in the events’ offering materials. There will be no changes to any reorganization announcement outputs.

■■ CNS Voluntary Corporate Action Processing

CNS receives voluntary corporate action information from DTC. Currently, CNS voluntary corporate action processing for events such as tender offers or exchange offers with a protect period of three days are pro-cessed in the same way as events with a protect period of greater than three days.

After T+2 implementation, CNS will process events with a protect period of two days in the same way it will process events with a protect period of greater than two days8. The timing period of handling a voluntary offer with a protect period of two business days or greater is illustrated further in the table below.

In addition, as agreed upon with the industry “as of” regular way trades received on T+1 between CTS Cycle 2 and CTS Cycle 3 in a security undergoing a voluntary corporate action supported by CNS will be processed as multilaterally netted balance orders. This will reduce the number of settlement obligations for Members and the trades will remain guaranteed by NSCC instead of the current practice of settling such transactions “trade-for-trade. “As of” regular way trades received after CTS Cycle 3 on T+1, will be processed by NSCC as trade-for-trade balance orders.

Members are advised there will be no coding changes required as voluntary corporate action processing is done via SMART/Track for Corporate Actions.

Date short Member notified of Potential Liability

Date long position member must instruct NSCC to move position to Reorg. Sub- Acct. (Standard Date)

Cutoff is 18:00 ET

Date long Member notified of Potential Protection

Last date long Member may submit Delete instructions

Cutoff is 12:00 ET

Last date long Member may submit Add or Adjust Instructions (same Day Add or Adjustment)

Cutoff is 12:00 ET

Date long position moved to Reorg. Sub-Account

Date long Member notified of Final Protection and short Member notified of Final Liability

Short position marked to tender offer price

2 Day Protect or greater

E+1 E+1 E+2 E+2 E+2 E+2 E+2E+3 or

thereafter

DTC UNDERWRITING SERVICESDTC will not require any Underwriting related systematic changes to accommodate the shift to T+2. However, partici-pants should note that DTC requires certain Underwriting information (e.g. new issue eligibility documentation, NIIDs data, IPO tracking) to be provided in a timely manner and should plan accordingly to ensure all information continues to be supplied to DTCC within the prescribed time frames.

8 Allocations for a voluntary offer with a protect period greater than two days would then occur on E+3 through the last day of the cover protect as defined by that offer.

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5. WEALTH MANAGEMENT - MUTUAL FUND SERVICES – NSCC

Effective upon the move to T+2 (September 5, 2017) NSCC Wealth Management Services plans to update all domestic Security Issue IDs on the Fund/SERV platform with T+3 settlement date to T+2. NSCC is taking this systemic approach to avoid significant client impact.

Fund clients that do not want NSCC to modify their Security Issue ID settlement dates from T+3 to T+2 will have the opportunity to contact NSCC Mutual Fund Services prior to the effective date of the change. Contact information and further details will be provided in a future Important Notice.

The update to T+2 will also include any Security Issue IDs with a T+3 alternate settlement cycle that Fund clients may have established with a specific firm. After a Security Issue ID’s settlement has been changed from T+3 to T+2, Fund clients will have the option to change the date back to T+3 through the Fund/SERV Security Issue ID Form.

The Fund/SERV Underwriting/Tender Offer logic currently does not allow settlement to occur earlier than three business days after the date NSCC receives notice of the settlement date. The Fund/SERV Underwriting /Tender Offer logic will be modified to a T+2 settlement date.

Wealth Management Services will issue an Important Notice prior to the industry target date of September 5, 2017 providing more details on the systemic updates to Security Issue IDs from a T+3 to T+2 settlement date.