VOLUME 22 – BULLETIN #184 ACTTM Initiate and Accept Profile Feature

The upgrade of the Allocate and Claim Transaction System (ACT) to version 2.3 will be implemented in two phases. The first phase, which will enable ‘Initiate’ and ‘Accept’ profile functionality, will be implemented on Monday, October 14th, 2002. This enhancement will give back offices the ability to set up instructions that will automatically allocate and claim give-up, EFP, and transfer transactions processed through ACT. Firms can use this enhancement as their primary interface with the ACT System to allocate and claim transactions or to complement and back-up their current API based front-end system. The first phase also includes extensive performance enhancements to the application that are designed to improve ACT screen response. The second phase, scheduled to take place approximately three weeks later, will migrate all Give-up processing from OTIS to the ACT System. This two-phase installation approach will give firms the opportunity to set up initiate and accept profiles prior to migration of give-up functionality to the ACT System. Additionally, because system responsiveness is a top priority due to the amount of give-up volume that exists today, this two-phase approach will also allow the Clearing Corporation time to monitor the extensive performance enhancements that are being introduced with this implementation of ACT 2.3.

Back offices will be able to set up initiate instructions by executing account and transaction type. When a record containing account and transaction type information is submitted to ACT that matches an existing profile’s executing account and transaction type, the instructions for that profile will be executed automatically to allocate the transaction. See attached “Initiate Profile Instruction Criteria” for additional details.

Back offices will be able to set up accept instructions by claiming account and transaction type. When a record containing account and transaction type information is submitted to ACT that matches an existing profile’s claiming account and transaction type, the instructions for that profile will be executed automatically to claim the transaction. Furthermore, claiming firms can set up instructions to give-up a claimed give-up to a specific firm and account. See attached “Accept Profile Instruction Criteria” for additional details.

When setting up Initiate and Accept profile instructions, users have the option of using three sensitivity levels:

• ‘No Intervention Unless Problem’ – The profile system will automatically allocate or claim a transaction if the instructions set up by the back office can be equitably applied. However, if the profile system cannot equitably apply instructions, a status of ‘P’ (pending) will appear next to a transaction on the ‘Initiate’ or ‘Accept’ Summary screens. The status of ‘P’ is a prompt to the user that intervention is required in order to complete or update applied profile instructions before the transaction can be successfully processed.

• ‘Intervention Always’ - The profile system will automatically apply instructions to allocate or claim a transaction but user intervention will be required in order to complete the allocation or claiming process. The status of ‘P’ will appear next to each transaction on the ‘Initiate’ or ‘Accept’ Summary screens. Using this level of sensitivity will allow users to verify that a new profile has been properly set-up. After the user has verified that profile instructions are being applied correctly, the user has the option to change the sensitivity level. Additionally, firms can choose to enter a partial set of instructions with the intention completing the remaining instructions at a later time. Once the remaining instructions have been received, the user can access the ‘Pending’ transaction and complete the instructions to allocate or claim the transaction.

Back offices will have the ability to set up instructions that will multi-allocate or multi-claim a transaction. When setting up a profile, users can establish a list of accounts as well as the percentage of contracts that each account will be assigned from a transaction. When a user sets up a percentage as part of allocation or accept instructions, the profile system will multiply the percentage established for each account by the transaction contract total. If the contract total does not equate to a whole number, the contract total will be rounded down to the nearest whole number and assigned to each account. Remaining contracts that have not been assigned will be multiplied once again by the account percentage, than rounded up. Remaining contracts will be assigned to accounts by rank until no contacts are left to assign.

Example A details how profiles will breakdown a 200-contract transaction to four accounts that receive 25% of each transaction. (200 contracts X 25% = 50)

Example B details how profiles will breakdown a 250-contract transaction to four accounts that receive 25% of each transaction. (250 contracts X 25% = 62.25, 62.25 is rounded down to 62, Remainder of 2 x 25% = .5, rounded up to 1, accounts ranked one and two will be assigned 1 each, accounts ranked three and four receive none.)

It is recommended that firms using profiles to multi-allocate or multi-claim transactions use the sensitivity level of ‘Intervention Always’ or ‘No Intervention Unless Problem’. The first level will always leave a transaction in a ‘Pending’ status, the latter will leave a transaction in a ‘Pending Status’ if the profile system cannot equitably allocate or claim a transaction, as is the case with Example B. By leaving multi-allocations or claims in a ‘Pending’ status, firm users have the opportunity to review and update the results of applied profile instructions prior to final submission of an allocation or claim.

Firm users will have the option to enable or disable profiles. If a profile is disabled, its instructions will not execute until it has been enabled. Profiles can be enabled or disabled individually, all at once, or several at a time by using a simple search query. This feature may allow firms to enhance or back up their current API based front-end system. Firms that are planning to use profiles as an enhancement or as their primary interface must be prepared to receive API duplicate messages via MQM. Firms planning to use profiles for back-up or disaster recovery purposes should be prepared to receive API duplicate messages via MQM, portable media, or through File Transfer (FT) via the web. Refer to Volume 22 bulletins #135 and #136.

Should you have any questions, please call or e-mail one of the following Client Services and Support Representatives: