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MMI Acronym Payment Failure processing is designed to protect DTC and notify Participants if there is no timely MMI Funding Acknowledgment from the IPA(s) for an Acronym for which presentments are due on that day and/or DTC is aware that the issuer of an Acronym is insolvent and therefore payments due to Participants relating to presentments for that Acronym will not be funded by IPA(s) through DTC settlement (“Acronym Payment Failure”). Using the IPA Decision Making Application or automated messaging, IPAs can notify DTC that they refuse to pay for Presentments for an MMI Acronym. An IPA must inform DTC of its refusal to pay in accordance with the timeframe set forth in the Settlement Processing Schedule above. After DTC verifies the default it begins MMI Issuer Failure procedures.

In the event that an IPA does not fund, then the rights of the IPA as a Participant and all Participants that are party to the subject MMI transactions shall be resolved outside of DTC.


How the Process Works

If there is an Acronym Payment Failure, DTC will initiate the following process, pursuant to which DTC:

  • Prevents further issuance and maturity activity at DTC for that Acronym.
  • All CUSIPs under the failed Acronym are blocked so that no Participant may instruct any delivery of such Acronym on that Business Day. The block will be lifted the following Business Day.
  • Devalues all of the Issuer's MMIs for collateral monitor calculations.
  • Notifies Participants of the event

Notwithstanding the occurrence of an Acronym Payment Failure, the IPA shall remain liable for funding pursuant to any MMI Funding Acknowledgment.

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