The Corporate Actions Joint Working Group has done its best to find “the best future market practices irrespective of the current models being used in the market today”, said Werner Frey, chairman of the European Securities Services Forum (ESSF), to delegates to last month’s Sifma Clearing and Settlement Conference in London. Frey and some of the members of the working group provided details of the progress made in the three main categories of corporate actions: distributions, reorganisations and transaction management.
The group, which was established in the autumn of 2007 has been working on this project since its inception, when it was tasked by the European Commission’s Clearing and Settlement Advisory and Monitoring Expert Group (CESAME) to come up with comprehensive proposals to revise the area of corporate actions processing. It comprises of 25 industry members from the various communities involved in the corporate actions world, focused on removing Giovannini barrier three. The working group is complemented by another working group that is led by EuropeanIssuers and is focused on standardising general meetings.
“We are focused on providing a toolbox rather than defining corporate actions processing in detail,” explained Frey. “The scope of the project includes all securities deposited in European central securities depositories (CSDs).” The focus is on getting the information flow from the issuer right the way to the investor in electronic form using either XBRL or ISO standards.
Ben Van Der Velpen, senior product manager at ING, discussed the progress being made in the area of distributions: “The category has been split into three separate areas: cash distributions, securities distributions and options distributions. We have therefore provided definitions for each of these types and defined timelines for the various dates involved – record date, x date and payment date.”
Edwin de Pauw, director at Euroclear, explained the reorganisations sub-group work: “We split the category into mandatory, mandatory with options and voluntary reorganisations. The information flow between the participants in this category is similar to that of distributions but one main component is different for voluntary reorganisations with regards to the corporate action being derived from an offer rather than an issuer announcement.”
De Pauw talked up the importance of the application of correct ISIN codes for corporate actions, especially with regards to identifying unique options.