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

A-Team Insight Blogs

DTCC’S Global Corporate Actions Validation Service Adds Equity Derivatives Coverage

The Depository Trust & Clearing Corporation (DTCC) today announced that it has expanded its Global Corporate Actions Validation Service (GCA VS) coverage to include listed equity derivatives, effective immediately.

Historically, financial services firms had to use manual processes to locate and adjust derivatives contracts to account for the effects of corporate actions (such as stock splits, mergers, special dividends, etc.) on the underlying security. Every time a corporate action occurs on an underlying equity, each exchange with a listed derivative on that equity issue publishes a notice to members detailing the required adjustment method, adjustment factor, lot size change, strike price change, etc. for the derivatives contract. Now, GCA VS will aggregate this information and deliver it to any interested customer firm through an electronic central information hub in a standardised format, saving firms time and effort and reducing exposure risk.

GCA VS will initially publish information from five main global exchanges and infrastructure organisations for equity derivatives – the Options Clearing Corporation, NYSE Euronext, Eurex, Borsa Italiana and the Tokyo Exchange – and will continue to add other exchanges as the service develops.

“As trading in equity derivatives has grown, customer firms reached out to DTCC last year to see if we could publish through GCA VS details on the impact of corporate actions on listed derivatives,” said Patrick Kirby, managing director, DTCC Asset Services. “We are delighted to be able to respond to our clients with this new addition to our validation service, so our client firms no longer have to trawl through various exchanges’ website to find these updates and re-key them into their systems themselves.”

Corporate actions involve almost any event that significantly impacts a security, including such events as name changes, stock splits, dividend and interest payments, mergers or tender offers, etc. GCA VS provides the largest central source globally of validated or “scrubbed” corporate action announcements on more than 2.5 million securities from more than 173 countries globally. The data is used by brokerage firms, banks, hedge funds, investment managers and others in both their front offices for trading decisions, and in back offices to ensure accuracy of their processing of corporate actions. In 2009, GCA VS handled more than 990,000 corporate actions announcements and issued more than 5.9 million announcements on scheduled payments for fixed income securities.

Nicholas Potter, DTCC product manager for GCA VS, noted that DTCC had built an infrastructure “that can support similar instruments that contain a structured component and an underlying asset.” He noted that it could be used in the future to provide comparable information for other asset types, including such instruments as OTC equity derivatives and indices.

GCA VS is continuing to add new securities and asset classes to its global coverage of corporate actions. Earlier this year, DTCC added coverage of structured securities handled by the US Federal Rserve Bank (mostly securities created by Fannie Mae and Freddie Mac) to GCA VS, along with scheduled payments for global fixed income securities.

DTCC has also been spearheading an effort along with XBRL US and SWIFT to promote straight through processing in corporate actions by electronically capturing data directly from the issuers in a standardised form when a corporate action is first announced.

Related content

WEBINAR

Recorded Webinar: Best practice approaches for corporate actions automation

Demand for timely and accurate corporate actions data is growing as volumes and complexity rise, and financial institutions acknowledge the increasingly costly gap between accurate corporate actions processing in real, or near-real, time and faulty processing caused by poor data and resulting in missed opportunities to optimise revenue. While many firms currently process parts of...

BLOG

Blackmore Capital’s Collaboration with OTCfin Completes Integration of ESG Factors into Investment Process

Blackmore Capital, a Melbourne-based asset manager set up in 2018, and New York-based OTCfin have completed the integration of ESG factors with financial data for all Blackmore portfolios. By incorporating ESG factors into Blackmore’s investment process, OTCfin’s risk and regulatory reporting solution will help the asset manager’s team improve portfolio monitoring from both a financial...

EVENT

Data Management Summit USA Virtual (Redirected)

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

BCBS 239 Data Management Handbook

Our 2015/2016 edition of the BCBS 239 Data Management Handbook has arrived! Printed copies went like hotcakes at our Data Management Summit in New York but you can download your own copy here and get access to detailed information on the  principles and implications of BCBS 239 on Data Management. This Handbook provides an at-a-glance...