Underwriters and syndicates for issues of municipal securities must apply for new issue eligibility with the DTC no later than one business day after they are formally awarded the securities or, with a negotiated sale, after a written award such as a bond purchase agreement has been signed.
Once the written award is signed by both parties, CUSIP numbers can be ordered and the DTC can be informed of the issuance. When all of the documents have been submitted and approved, the DTC adds the CUSIP numbers to its master file, and the securities become eligible for DTC services. The issue is then ready to be packaged and sold.
Bonds registered with the DTC can then be traded between two parties in a timely manner.
All bond issues are registered with the DTC so that they can be part of the New Issue Information Dissemination Service (NIIDS). This is an electronic system operated by the Depository Trust and Clearing Corporation (DTCC), of which the DTC is a subsidiary.
The NIIDS system accepts new issue information and distributes it to vendors, dealers, and others in the market so that broker-dealers confirm and settle transactions in a timely manner. Clearing agencies receive information necessary to provide all comparison, clearance, and depository services for new issues.