The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

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

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.

Related content

WEBINAR

Recorded Webinar: Adverse media screening – how to cut exposure to criminal activity, from money laundering to human trafficking

Screening for adverse media coverage of counterparties presents an incredible opportunity for financial institutions to limit risk exposures and identify bad actors early. It is required by regulations such as the EU’s sixth Anti-Money Laundering Directive (AML 6), and is one of the most effective ways to steer clear of potential connections with sanctioned activity...

BLOG

Euromoney TRADEDATA Integrates EDI DerivActions to Offer Futures and Options Corporate Actions Service

Euromoney TRADEDATA has integrated Exchange Data International’s (EDI) DerivActions feed into its ViewXone service to provide a futures and options corporate actions solution. The integration extends a long-running collaboration between EDI and Euromoney TRADEDATA, and provides, according to Euromoney TRADEDATA managing director Mark Woolfenden, ‘an important part of the trade workflow that has been underserved...

EVENT

Data Management Summit USA Virtual

Now in its 11th year, the Data Management Summit USA Virtual explores the shift to the new world where data is redefining the operating model and firms are seeking to unlock value via data transformation projects for enterprise gain and competitive edge.

GUIDE

Entity Data Management Handbook – Seventh Edition

Sourcing entity data and ensuring efficient and effective entity data management is a challenge for many financial institutions as volumes of data rise, more regulations require entity data in reporting, and the fight again financial crime is escalated by bad actors using increasingly sophisticated techniques to attack processes and systems. That said, based on best...