Navigating the Street Name System to Find Investors

Always worth remembering:  Navigating the Street Name System is painful. This simple graphic shows why.

On the left, messages sent via the Street Name System go one-way, slowly, through multiple layers of bureaucracy. Every step is a point of failure and there is no interactivity. On the right, DealVector solves these problems with one-click technology.

An owner of a bond, fund or other asset that wants to send a message through the Street Name System is out of luck. Only issuers can send. So investor-to-investor communication is impractical.

But even an issuer can’t “just send a message”. There are hoops to jump through. He or she first requests an SPR (Securities Position Report) from DTC (usually via the Trustee). This SPR will detail the custodial institutions that have holders within their network. There are upwards of 900 such institutions, and the message sent will need to work its way through all of them.

In many cases, the custodial institution itself will need to send the message on to another bank within its system.

Once at the correct entity, the message must be processed by the back office and will typically be routed to the financial representative of the beneficial owner. This advisor may or may not have a discussion with the client with respect to the merits of the message.

Having received the message, the ultimate beneficial owner is not in a position to get more details without revealing his or her identity. A process that started as much as 20 days before may therefore wither on the vine.

By contrast, on DealVector an issuer or investor can send a message directly to holders. Such messages are received and can be responded to in an identity-protected manner with one click. So communication is encouraged. More business can get done.