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Brown Brothers Harriman Works with DTCC to Reduce Risk in Corporate Actions

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Brown Brothers Harriman (BBH) has gone live with DTCC’s standards-based corporate actions real-time messaging and expects the solution to provide both operational efficiencies and reduced operational risk.

The solution is part of a multi-year corporate actions reengineering project at DTCC that will replace 60 legacy systems by 2015 with a single platform that is compliant with ISO 20022 messaging and will provide clients with a single source of corporate actions data. The ISO 20022 standard is a progression from ISO 15022 and increases messages from five to 13 to deliver more transparency and granularity. It also underpins development of a full lifecycle for automated corporate actions processing.

BBH is a pilot member of DTCC’s development programme and has initially implemented reorganisation announcements ahead of the next phases of the development that will deliver data including entitlement, confirmation and election status messages in 2013 and redemption and voluntary election processing through 2014 and 2015.

Cira Neira, senior vice president and head of corporate actions at BBH, explains: “We chose to pilot with DTCC as we were looking for solutions in the ISO regime that would solve corporate actions pain points in the US market. ISO 20022 provides a solution to improving transparency and granularity.”

Before moving to the new DTCC solution, BBH worked with DTCC data feed files based on proprietary technology and delivered in batch format. The company had to pull down the data from multiple sources within DTCC’s infrastructure and enter it into internal applications.

“ISO 20022 allows real-time messages rather than proprietary batch messaging, which will improve operational efficiencies,” says Neira. “Its automated messaging format also means we can consume the data in a single-threaded fashion through the Swift network. This will reduce manual rekeying and the interpretational risks associated with it by integrating multiple sources of data seamlessly and correctly. We will receive more detailed event notices and be able to give our clients more timely and accurate data.”

Dan Thieke, managing director of asset services at DTCC, added: “This demonstrates our dedication to fostering increased automation and transparency for US corporate actions announcements. By moving to one global messaging standard, BBH will process corporate actions more efficiently for clients by using its existing infrastructure investments in DTCC and Swift.”

BBH leveraged its Infomediary product for the DTCC corporate actions workflow as it already supports ISO 20022 messages in the funds space and can provide translation and enrichment to messaging flows. The company then tested the new and legacy DTCC solutions in parallel before cutting over to the ISO 20022 messaging service on 19 May. “We see this as a time for financial institutions to adopt ISO universal standards. ISO 20022 is a building block and foundation for scale. Once efficiencies have been realised, we expect to see more adoption of the standard outside the US.”

Addressing the needs of BBH’s clients, Erica Choinski, vice president and manager of the company’s Infomediary group, says: “Our strategic approach is that we can market both ISO 20022 and ISO 15022 translation solutions to investment managers through our Infomediary product as we have both standards built for use internally. We recognise that the industry will have a co-existence period and, like BBH, our clients can benefit from the additional granularity and data quality in ISO 20022 messaging.” While BBH leads the early adopters of ISO 20022, Choinski expects vendors of corporate actions data and solutions to follow suit and suggests some are already working towards this.

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