Interactive Data is migrating its corporate actions data services to the Apex XML-based reference data delivery platform it introduced in October with a view to meeting growing market demand for automated solutions and emerging demand for corporate actions information not only in the back-office, but also in front-office trading and risk management applications.
The company’s extension of corporate actions to the Apex platform is designed to service a complete spectrum of customers from those beginning to automate corporate actions to those considering adopting the latest messaging standard, ISO 20022. While Apex adds flexibility to data delivery and is seen by Interactive Data as the way forward for data distribution, users of its proprietary corporate actions services will not be forced to migrate as these existing services will continue to be provided.
Paul Kennedy, business manager for reference data at Interactive Data, which recently published a market insight paper titled ‘Increasing Corporate Actions Workflow Efficiency Across the Enterprise,’ explains: “Most financial firms need to know more than they did 18 months ago to meet regulatory requirements. They need a joined up approach to reporting and a more holistic view of the operational aspects of the business. Traditionally, corporate actions has been seen as a back-office operational function, but it is now making an impact elsewhere in the business. Corporate actions processing has also been manual. This is changing with vendor engines from the likes of XSP and SmartStream, but they still need high quality corporate actions data. This is where Interactive Data comes in. We are continually extending our corporate actions services and have increased the flexibility of how we can deliver them with the Apex platform.”
Considering the move of corporate actions from the back-office to the front-office, Kennedy adds: “In operational terms, corporate actions are usually processed in overnight batch files, but regulatory demands include issues such as real-time risk management, which means there is a need to be aware of any changes if something happens to a security. In this instance, firms need to consume corporate actions data not just once in the operational group, but also in the front-office risk management function.”
Responding to the need for different timing dynamics for corporate actions processing, Interactive Data has built up a number of customer options. A ‘fast market regional close’ service gathers corporate actions data during the hour after a regional market closes and distributes it in near real time. Another initiative covers 71 markets worldwide and reports on corporate actions on an intra-day basis with an option on hourly updates. “This allows users to manage information earlier and more effectively. Many of our clients are large global companies, so getting data every hour can help them spread the load of processing corporate actions through the day,” comments Kennedy. A well as the fast market close and intra-day services, Interactive Data continues to offer batch and end-of-day services.
The company also offers a range of formats for corporate actions data consumption. Kennedy acknowledges the Thomson Reuters paper published in October 2012 that questions how the problem of two coexisting industry standards for corporate actions can be resolved, but notes that while Interactive Data is ready to support the more recent ISO 20022 standard, clients are not yet asking for services based on this standard and continue to prefer products conforming to ISO 15022 corporate actions financial messaging.
He says: “ISO 15022 is the standard in the market at the moment. It has been adopted in Europe and Asia, but less so in the US where organisations including DTCC have decided to leapfrog ISO 15022 and move to ISO 20022 by 2015.” Kennedy does expect to see a cutover between the two standards at some point in future, but does not see a quick end to the conundrum. “There are three camps in the market: one is not interested in standards and is still working with manual or proprietary systems; another is committed to ISO 15022; and yet another is beginning to move to ISO 20022. We provide ISO 15022 services to many of our clients in equity markets and are also moving further into fixed income markets with corporate actions services based on the standard.”
Fulfilling the needs of clients that want to use ISO 15022 services, but have additional requirements, Interactive Data builds on the edge of the standard to deliver solutions such as the suppression of meaningless zero payment dividend announcements that are made by many Japanese companies.
While ISO 15022 has a rigid coded infrastructure, ISO 20022 is based on an XML schema, making it more flexible and extendable. Kennedy describes the standard as a sophisticated and robust messaging system, but remains neutral on the benefits of each system, taking the view that the company will deliver whatever its clients want. With an XML-based delivery platform in Apex, Interactive Data is ready to provide ISO 20022 services when the time comes and is, meantime, delivering an open XML corporate actions component that does not meet the standard, but is proving popular. Both this option and the ISO 15022 based service are available immediately as part of the Apex data delivery structure. The company’s other corporate actions products are expected to be available via Apex in the first quarter of next year.
“Right now, we will back every horse in the race. Going forward we will meet market demand for corporate actions solutions and continue to expand our services to include a larger number of events, more intra-day services and coverage of more asset classes,” concludes Kennedy.
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