The Bombay Stock Exchange (BSE) has rolled out Swift’s corporate actions service to provide custodians in the Indian and international market with automated data on Indian corporate actions events. Standard Chartered Bank, Deutsche Bank, Citibank and HSBC have thus far signed up for the service, which went live in May, and a number of other domestic custodians are currently testing, says Madhu Kannan, managing director and CEO of the exchange.
The focus is on providing high quality data to those interested in the country’s corporate actions market, explains Kannan: “There is a lot of interest in the international arena for corporate actions data from India, and I believe the potential for this tie up is quite high.”
The BSE certainly has enough corporate actions data to contend with: around 4,900 companies are listed on the exchange, making it one of the largest in the world in terms of issuers. The Swift rollout was therefore to improve the method of providing Indian data to the domestic market via automation but also to provide access to domestic data for international firms. Moreover, although only custodians have signed up so far, the service is available to other industry participants on the Swift network and BSE is hopeful others, such as brokers or investment managers, will sign up soon.
The service currently covers three events types: stock splits, dividends and bonus, but this will be extended to meetings and rights by the end of this month, according to the BSE. The service is based on the global ISO 15022 standards but the messaging formats been adapted for the Indian market by the BSE in cooperation with the four custodians currently using the service and Swift.
The BSE is hopeful that the move from the previously manually intensive corporate actions process to a more automated environment will bring down both costs and risks, thus making the domestic more attractive to the wider global community.
Adam Wilson, head of Securities Markets for Swift Asia Pacific, elaborates on the benefits he thinks the service will provide to the market: “This improvement to the speed, accuracy and automation of corporate information to the end investor means global and domestic investors will have better information about the Indian market. This is particularly important to global investors, which are increasingly interested in corporate event information from India and in participating in this dynamic market.”
As noted at a conference earlier this year by Nicholas Bone, director of transaction banking sales for investors and intermediaries at Standard Chartered, and Justin Chapman, global head of strategic implementation for Asset Servicing at Northern Trust, the Asian markets are keeping a close eye on corporate actions standardisation progress being made in Europe. Chapman noted that the region as a whole may be “lagging behind” the rest of the world at the moment but it is poised to learn from other countries’ missteps.
The move to adopt the Swift service should help in the challenge that Bone identified as the lack of a standardised process for the announcement of corporate actions. He noted that up until now, the custodian community has been forced to manually process a lot of data and sometimes scour the press and websites for the relevant issuer data.
Rajiv Relhan, regional head of Securities Services for South Asia, Middle East and Africa at Standard Chartered Bank, reckons the service will represent “a big market enabler” for the domestic Indian market. “This development has come as an operational relief for market participants and to custodians like us and will further improve our service standards with our clients,” he says.
Ranjan Bhattacharya, head of Custody and Clearing India for HSBC, adds: “We believe our investment in this solution will bring about significant benefits to our clients as well as drive best practice in the Indian market.”
India is also obviously one of Swift’s key targets stemming from its Swift 2010 initiatives: BRIC+. The governance structure of Swift was restructured back in 2008 to reflect its equal weighting of its four main geographical focuses, one of which was Asia Pacific, and it has been stepping up its efforts to get closer to these markets in line with its strategic push.
As noted by Chris Church, head of Swift’s securities division, when speaking to sister publication ATiQ earlier this year, the industry owned network will continue to focus on these markets going forward. “We are also looking to get closer to local markets – we have already had much success in the cross border space and now want to get closer to domestic markets, especially in the BRIC+ regions,” he said.
Sibos will likely provide more of an opportunity for firms to see where exactly BRIC+ sits within the overall 2015 framework. Check back in October for the details…