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Corporate Actions Systems Benchmarked by CityCompass

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Think your corporate actions service is good enough? Try putting it through the paces of the CityCompass benchmarking process. Those systems and information service providers brave enough to do so and that passed the tough criteria were rewarded for their efforts with the new B.I.S.S. Gold Label accreditation.

The benchmarking process, now in its second year, evaluated seven systems vendors (Information Mosaic were new this year) for their capabilities across three industry sectors: asset management, broker/dealers and custodians. It also added a new category of measuring information services – indeed only FT Interactive Data and the U.S. Depository Trust and Clearing Corp. (DTCC) were brave enough to participate in this section.

The overall findings for systems providers were of a maturing market servicing the global investment banks and custodians, while the broker/dealer segment trailed behind.

This is mainly due to the participating vendors’ backgrounds and the segments in which they have existing live clients, but also possibly attributed in part to requirement complexities in this sector, where many firms see corporate actions as a profit centre rather than a cost centre.

The overall benchmark percentage for systems vendors was 61.9%. Within this rating, 68% was awarded for technical functionality, 66.4% for system maturity, but a disappointing 49.8% for meeting actual business requirements.

Those vendors achieving CityCompass’ set level by industry sector were awarded the Gold Label accreditation (Table 1 below). The benchmark scores across the vendors by category, as well as the full responses by each vendor to the RFI are available in CityCompass’ report (contact details at the end of this story).

Each of the systems providers were measured for a range of criteria, such as implementation process, support and training, pricing, geographical coverage, corporate events supported, markets supported, ISO 15022 compliance, Swift messages supported, web capabilities, straight through processing, workflow, entitlement processing and several aspects of data capture, among others.

As can be seen from Table 1, Information Mosaic, who scored highest overall, and XcitekSolutionsPlus fared well across all three industry sectors. Specifically in the categories, XcitekSolutionsPlus gained top ranking for its data capture services, attributed to its background of 10 years as a corporate actions data provider before launching its management system in 1997. The vendor interfaces to over 30 different types of data vendors.

Regarding implementations, Tata Consultancy Services was highlighted for having a “very mature system that has clearly benefited from its many large scale implementations (…within) bank’s custody businesses”. Vermeg were also noted for having an impressive record, and Information Mosaic apparently have a “striking implementation methodology”, although what that could be is not clear.

Support and training received a mixed set of results, with Information Mosaic, Tata Consultancy Services and XcitekSolutionsPlus scoring above average. Pricing appears to have been a difficult category to judge given the vendors’ reluctance to publish details. The overall score for geographical coverage was ‘disappointing’ but Information Mosaic and Vermeg still scored well. Tata Consultancy Services and Vermeg also scored well in the markets supported category.

It should be noted that ADP Wilco, which currently operates an outsourced or bureau-based service, is now working on its first client-site implementation at a large global broker dealer and until this is live, the provider could not be analysed by the same criteria.

Key factors for customers in evaluating the design of corporate actions systems, according to the report, are: the data model, where the initial design must be structured to be scalable and anticipate any changes or growth to prevent later complex restructuring; and the templates, which lie “at the heart of any rules-based workflow engine” and contain the real intellectual property rights (IPR) of any system.

The ISO 15022 standard, used within Swift’s MT564 notification message, defines only 66 different types of corporate event, which was deemed insufficient by all vendors who also said that the OTHR category has been overused as a result. As such “most of the system vendors have divided these into a few super-sets and have defined their own sub-sets to create approximately 100 different corporate event templates.” The report suggests that an estimated 2,500 template configurations would be needed to cover the full range of global corporate events.

The Data Vendors

Or are they data vendors? According to the report there is increasing blurring of the line where data vendors are adding services to their data feeds that can overlap with systems vendors.

The report says, “All information services collect data from a myriad of sources and any time a process is applied to convert, translate or capture the data, there is a chance of error or misinterpretation. Add to this each market’s own peculiar way of dealing with elements such as board lots, rounding and auction terms… There is a constant need for reconciliation between disparate sources and manual intervention.”

The two vendors taking part are in nature very different and so cannot be compared directly. FT Interactive Data, the only traditional data vendor to participate, scored above the benchmark level of 65% overall. The DTCC with its not-for-profit subsidiary Global Asset Solutions put its Global Corporate Action (GCA) Validation Service (which is actually based on XcitekSolutionsPlus’ XSP software) up for testing and received gold accreditation for a score above the benchmark level of 70%. The full results by criteria for each of these providers are available in the full report from CityCompass. One key area of difference noted, however, was that where FTID do not provide any guarantee or insurance for the quality of their data, the DTCC is one of the few suppliers that does, albeit limited in the amount that can be claimed.

As well as these various findings, the report provides an in-depth analysis of each of the systems and data vendor participants across each category, the full responses by vendor to the RFI, a useful overview of the current technology terms and issues, and suggests ways that corporate actions processing can be improved.

The business benchmarking concept was the brainchild of CityCompass MD Gary Wright, and was conducted and written by Andrew Chilcott, an analyst for Bloor Research, a CityCompass partner. Scoring was based on responses to 61 questions, providing a total of over 20,000 scores. Of these questions, 19 were marked solely on business requirements satisfied, seven on technical functionality and system maturity and the remaining 35 on all three criteria. An expert panel of seven senior industry participants marked the completed questionnaires.

The research culminated in a fullday CityCompass event focusing on corporate actions in London earlier this month. The report is available for £675. For more information about how to obtain the full report, contact admin@citycompass.org.

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