Key Definitions and Documents associated with the DTC process
Brokerage Agreement: Agreement between the issuer and the individual Brokerage Firm.
Terms Agreement: The details of the CD terms agreed to by ICD and you, the issuer. You will need to execute a terms letter for each DTC CD issued. The details outlined in this document are as follows:
- Dollar Amount: Amount to be funded.
- Settlement date: The day the CD will settle and the day you will receive the funds.
- All-in rate: The total cost to your institution.
- Coupon: The rate you will pay on the CD. This rate is determined by subtracting the brokerage fee from the All-in rate.
- Maturity Date: The date the CD will mature .
- Payment Frequency: The interest can be paid out monthly, quarterly or semi-annually. For issues with maturities of 1 year or less, the payment frequency can be set up to be paid at maturity.
Please note that once this document is received back signed, the offering is then put into motion. Once confirmed, your institution must accept the funds.
- Best Efforts: A best efforts offering means that no specific dollar amount is assured to be delivered by ICD. Only the amount sold will be settled. This type of offering is most commonly used and it is the most cost effective for the issuing bank which can result typically in a savings between 5 to 10 basis points.
Letter of Representation: A one time document that is signed by your institution and forwarded directly to DTC. This document must be executed prior to your first DTC issuance and is a DTC standard agreement. For more information please visit www.dtcc.com.
Negotiable Master Certificate: The actual negotiable certificate of deposit that your institution will set up on its books. All the Certificates that are issued through the DTC market are set up under “Cede & Co., as nominee of the Depository Trust Corporation.” There is one Master Certificate per each issued CUSIP ID number. The CUSIP ID number is issued by Standard & Poors to identify each individual offering.
Certificate of Deposit Disclosure Agreement: This document is presented to the beneficiary owner from the selling dealer.
Selling Group Agreement: This document is executed between the underwriter and its selling group members.