GlobeTax and DTCC Discuss ISO 20022-Driven Relief at Source Processing


Patrick Barthel, DTCC’s Director of Product Management in the Asset Services Group, and Brett Lewis, GlobeTax’s Chief Information Officer and Managing Director of Product and IT, sat down to discuss how the firms have partnered to incorporate ISO 20022 messaging into withholding tax relief. The newly “straight through” process offers increases efficiency for mutual clients while reducing risk and cost, and helps investors maximize portfolio performance by rapidly securing tax entitlements.


The interview has been condensed and edited.



Patrick, can you provide an overview of DTCC’s Corporate Actions Transformation Initiative? What is the goal and what has the project accomplished?


Patrick Barthel: Our Transformation Initiative describes DTCC’s multi-year effort to modernize the way we communicate corporate actions to clients. The project had two high-level goals: first, to replace our legacy PTS/PBS functionality with CA Web, our new web-based user interface, and second, to transition from proprietary files to ISO 20022 messaging. By adopting this flexible data model and embracing global messaging standards, we laid the groundwork that will allow DTCC, our clients and their service facilitators to automate processes much further and faster than was ever before possible, reducing risk, driving efficiencies and minimizing processing costs.


Brett, has GlobeTax similarly pursued modernization and standardization? 


Brett Lewis: GlobeTax’s vision is that No Investor Overpays Withholding Tax. We’ve long recognized that achieving this vision means going beyond filing reclaims. Because tax recovery involves transferring data and documentation across the global custody chain, we participate in working groups of financial institutions and market infrastructures that focus on standardizing technology and policy frameworks. In the United States, we are active in ISITC and SIFMA. In the European Union, we participated in discussions around the OECD’s TRACE (Treaty Relief and Compliance Enhancement) project and the EU’s TBAG (Tax Barriers Advisory Group). Members of the GlobeTax team have also consulted with the XBRL, SWIFT, and ISO governing bodies to help market participants understand the nuances surrounding withholding tax processing.


Patrick, what is your ultimate vision for how you will interact with participants and service facilitators through ISO 20022 messages? 


PB: We aim to build products that accommodate the needs of all DTCC clients. Because we service the entire U.S. market, our clients are diverse –– they vary by size, region and their overall business model.  From a technology standpoint, our clients also have diverse needs, so DTCC is looking to provide flexibility for firms looking to automate their processes.


The modernized ISO 20022 data model allows DTCC the ability to provide this automation through the global standard while also looking towards new technologies such as APIs.


Brett, what inspired GlobeTax to apply ISO 20022 messages to CA Web Elections for relief at source? What issue were you trying to address?


BL: Although we submitted tax elections through DTCC on behalf of clients for many years, the process was manual and resource intensive. We would log onto DTCC’s system, pull event data on client positions, import that data into our system, run validations and processing logic, and finally, following much reconciliation, instruct clients how to manually elect within DTCC’s portal.


A few years ago, an employee learned about DTCC’s budding ISO 20022 capabilities during an industry conference. We then brainstormed about our STP “nirvana” and reached out to colleagues at DTCC to discuss how we could leverage ISO 20022 messaging to automate our processes from event notification to election instruction.


Though the vision took several years to fully implement, we are grateful that the team at DTCC was with us every step of the way. Thanks to their willingness to partner on creative solutions, we became the first partner to provide ISO 20022-driven CA Web elections on a non-U.S. tax event.


Patrick, were you eager to partner with GlobeTax on ISO 20022 integration? 


PB: We are always enthusiastic to strengthen partnerships with service facilitators, as they represent our mutual clients. Having someone like GlobeTax subscribing to our services gives us the ability to reach multiple clients with one connection. Onboarding individual subscribers and testing new offerings / enhancements can be time consuming and a drain on resources, but partnering helps us achieve economies of scale and efficiencies.


What are the main benefits that GlobeTax and DTCC are realizing from incorporating ISO 20022 into relief at source processing?


BL: Since implementing ISO 20022, we can process more volume more quickly than we ever have before. There’s no manual intervention, transposition of numbers, or other transcription of data, so it’s a much more efficient process with far less risk. As a result, we can service more DTCC clients and secure tax entitlements for more investors.


PB: We are doing more together than we could do by ourselves to help mutual clients make their processes more efficient. With GlobeTax adopting DTCC’s ISO messaging service, we can reach more clients in an automated way, providing a tax relief at source process that is more efficient and less risky.


What next steps can industry participants expect?


BL: We want to continue working with DTCC to fully utilize capabilities available through ISO. We aspire to expand to markets that don’t yet have election processes. When we began the partnership, we could automate around 50% of CA Web elections. After working with DTCC to identify obstacles to automating 100% of elections, we launched initiatives to address the impediments and believe we will be fully STP by November.


PB: As processes, tax treaties and regulations evolve, we are looking at ways to continue evolving our products. We will continue partnering with groups like ISITC and SMPG (Securities Market Practice Group) to stay on top of industry needs and add data elements that allow for greater automation.


Patrick, what lessons can you take away from the experience as you continue partnering with service providers to incorporate ISO 20022 messaging into more asset services?


PB: A good relationship with the partner is key. We always look to build relationships where there is mutual benefit. DTCC and GlobeTax have always had strong ties –– both at the senior level and at functional levels –– but this initiative took the relationship between the firms to the next level. A good relationship creates a solid foundation of trust and allows the organizations to rapidly and consistently bring new innovations to the marketplace.