About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Myners’ Voting Rights Proposals Could Pose Significant Data Challenges

Subscribe to our newsletter

The UK’s Financial Services Secretary Paul Myners’ proposals to establish a two tier shareholder register could add another layer of data complexity for financial institutions operating in the market. The proposals are aimed at ensuring longstanding institutional investors receive greater voting clout than short term investors and preventing the increase in what Myners calls “ownerless corporations”.

Myners this week elaborated on the rationale behind differential voting rights thusly: “We need to look at ways in which we can offer a carrot to some financial institutions to take the issue of ownership more seriously. In many cases hedge funds might only be shareholders for a few weeks. Should they be treated in the same way as a long term shareholder or should we be doing more to reward and engage the long term shareholder?”

The impact of introducing a two tier system, similar to that of France or Sweden, would be to fundamentally alter the current ‘one share, one vote’ principle for shareholders in the UK. This in turn, would significantly impact the way that corporate actions data is weighted and processed, as if any more complexity was needed in this particularly tricky area of the market!

As well as recording when shareholders vote, third party data providers and custodians would be required to weight these votes subject to the different classes of investor. Myners has not yet elaborated on what a long term investor would look like – how long is long term? Industry standard classifications would therefore need to be defined first for these categories, before any of this work could begin.

Obviously data providers and vendors active in markets with multi-tiered voting rights would be at an advantage over those focused solely on markets such as the UK. But it would likely pose a data challenge for custodians’ internal data departments: to add another data attribute to monitor on top of those that already need to be captured in the corporate actions process.

However, the proposals may not get very far, as they have provoked a significant backlash from the institutional investment market, which is wary of a two tier system. David Paterson, head of corporate governance at the National Association of Pension Funds (NAPF), says: “It fails to take into account the need for managers to buy or sell shares based on external factors. What is needed is better dialogue between companies and shareholders.”

The Investment Management Association is also up in arms about the idea and contends that the government should not be in a position to mandate the best way for firms to manage money. Multi-tiered voting rights would potentially expose firms to be subject to the whim of a small group of investors, the industry group argues.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Best practices for data lineage and metadata management to support evolving data operations

Data lineage is key to tracking data from source to consumption and any changes to the data along the way. Metadata management provides governance and control, ensuring high quality, consistent and accurate data across a financial institution. It can be used at all levels of an organisation from the C-suite to data stewards, analysts and...

BLOG

DTCC Partners Snowflake to Improve Data Access, Sharing and Usage Across Services

The Depository Trust & Clearing Corporation (DTCC) is partnering Snowflake to improve how data is accessed, shared and leveraged across a number of its services. Long term, using the Snowflake Data Cloud, DTCC aims to expand market transparency, reduce risk, and provide greater operational efficiency. The partnership extends an existing relationship between the companies and...

EVENT

RegTech Summit APAC

Now in its 2nd year, the RegTech Summit APAC will bring together the regtech ecosystem to explore how capital markets in the APAC region can leverage technology to drive innovation, cut costs and support regulatory change. With more opportunities than ever before for RegTech to add value, now is the time to invest for the future. Join us to hear from leading RegTech practitioners and innovators who will share insights into how they are tackling the challenges of adopting and implementing regtech and how to advance your RegTech strategy.

GUIDE

Regulatory Data Handbook 2022/2023 – Tenth Edition

Welcome to the tenth edition of A-Team Group’s Regulatory Data Handbook, a publication that has tracked new regulations, amendments, implementation and data management requirements as regulatory change has impacted global capital markets participants over the past 10 years. This edition of the handbook includes new regulations and highlights some of the major regulatory interventions challenging...