Bank of N.Y. cashes in on shift to global investing.

"In each of the last 10 years, there' s been a great shift in all portfolios to having a larger percentage invested internationally," says Kenneth A. Lopian, senior vice president in charge of Bank of New York' s ADR unit. In addition to being a well-oiled, highly efficient processing machine, it is a window on world investments.

One reason for investor enthusiasm for ADRs, Mr. Lopian adds, is that the stock is issued from countries whose economies are growing faster than the United States.

"The supply of these issues is being well received," Mr. Lopian says. "Last year was a record year in terms of ADR dollar volume, and the number of new issues in the U.S. market in 1994 should match, if not exceed, those levels." Demand has so far matched the supply as foreign governments and corporations tum more and more to developed economies, particularly the U.S., to raise capital.

Bank of New York handles more than 60% of all public depositary receipt programs and issues the ADRs for more than 700 companies from 38 countries. It provides services to brokers trading between their home markets where the stock originates and the U.S. market where the ADRs are sold. The bank also provides custody and clearance services and acts as a transfer agent or registrar responsible for registration, transfer, dividend distribution, proxy, and tax reporting.

The challenge for the bank was to support the business with automation that could be expanded globally as volume continued to grow. So it decided to build a proprietary system four years ago after its merger with Irving Trust. The system, which rans on a Digital Equipment Corp. VAX system using a relational data base, tracks assets in more than 30 countries within a network of 65 subcustodial banks. It tracks stock movements, price changes, and investor interest, and produces standard reports and records related to stock transfers, settlement, and related transactions.

"Timeliness of information is the critical factor because we are operatingin multiple time zones," says Richard Pace, executive vice president of the New York bank's technology sector.

"We have the ability to operate in a real-time fashion to support ADR programs as far away as the Far East and as near as Europe and Mexico."

A competitive edge claimed by the bank is the link between ADR processing and the corporate trust shareholder recordkeeping system.

"The two are highly integrated," Mr. Pace says, "which reduces the amount of system-to-system reconcilement."

How the system works outside the U.S. is also an important factor.

"To respond to the globalization of the securities market, we have selectively developed our offshore capabilities," Mr. Lopian says. For example, the system that supports ADR services in the U.S. has been duplicated for the London market, where the bank settles and confirms trades.

"We have the identical system operating in New York to satisfy a London-based broker, and we're able to meet their needs in the time zone they operate in," Mr. Lopian says.

Plans are in place to expand the ADR system to other markets as they develop, such as Turkey, India, Hong Kong, and China.

"China long term will offer us the most potential of any market in the world," Mr. Lopian adds. "Because of our ability to use our existing technology, we can more than meet the needs of any particular market at this stage."

One key component of the technology is a network of customer workstations, which are personal computers tied together by valueadded networks. Bank of New York recently enhanced this service by offering shareholder identification reports to issuers who want more information about their investors.

The shareholder identification program is a response to frequent demands from customers, Mr. Lopian says. The reports are culled from SEC filings gathered by a third-party vendor, which transmits the information directly to the bank's computers.

The information is then reformatted and sorted into various reports highlighting details such as the names of individual investors, institutional ownership, changes in ownership and contact information, such as addresses and telephone numbers. Historical data are also available for up to 14 quarters. Reports are available in hard copy, by fax, modem, or on disk.

"This is helpful for the issuer's corporate communications strategy," Mr. Lopian says. They can now better manage their investor relations as well as offer better service to their investors.

"Knowing the identity of their largest shareholder, for example, ensures that rnmmgement will make sure that investors are kept abreast of recent developments in that country."

Mr. Lopian adds that the service can also identify shareholders of competing issues. Knowing who is buying what security can help issuers market their own stock better and aim for wider share ownership.

For foreign issuers the reports are somewhat of an anomaly, since in most countries, a shareholder's identity can be a closely guarded secret.

"When clients come in to us in the U.S., they are very keen to know," Mr. Lopian says.

Customer workstations are also in line for another upgrade because they will operate in Microsoft Corp.' s Wmdows environment.

This will make it easier to transfer downloaded data to other programs such as spreadsheets.

In general, Bank of New York's ADR system has had numerous chances to prove its worth. Last year the bank added 91 new ADR programs, both public and private, the same number as the year before. "We will be dose to or exceeding that number in 1994, which translates to greater processing voltunes," Mr. Lopian says. He adds that international trading volume has grown 25% to 30% annually for the last 10 years.

He proudly notes that such growth has been managed successfully by the four-year-old ADR system, without the need for additional staff.

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