Following its rebrand under its parent company’s name in August, the vendor formerly known as Coexis, GBST, has decided to join the corporate actions vendor community. As one of a number of new entrants this year into this already fairly well populated market, GBST is attempting to set itself apart by tailoring its solution to meet the needs of small and medium sized brokers, says Sunil Shah, chief executive of Global Broker Services for the vendor.
“It is our second or third attempt to enter the corporate actions market in terms of our history but our first attempt as part of GBST,” explains Shah. “We believe that the corporate actions solutions in the market at the moment are primarily aimed at the heavy user end of the spectrum, such as custodians that hold a large number of positions. We are instead aiming our own solution at the small and medium sized brokers that may not be experiencing the same volumes as these big players, but still need to automate the manual processing of corporate actions data.”
The vendor is already rolling out the solution for one agency broker and the implementation process is due to be completed in January. “The corporate actions processing needs of an agency broker are not as high as those of proprietary brokers or market makers, but we have the ability to tailor our solution to meet the needs of different market players,” he contends.
Shah reckons players in the corporate actions vendor community such as Information Mosaic and SmartStream do not have much success in the broker community because they offer more services around corporate actions than these firms need or want. “It does not make economic sense for these smaller firms to roll out solutions with added services that they have to pay for but do not use,” he contends.
The vendor has therefore launched its Syn~CorporateActions solution, which it claims improves the management of complex corporate actions throughout their lifecycles across multiple geographies and markets and delivers a high level of straight through exception processing. Shah claims that GBST’s experience of back office solutions means that the vendor is better placed to be able to understand the integration needed and basic level of functionality required by these firms. “These firms want us to take out the risk in the corporate actions processing cycle, allow them to deal with higher volumes and decrease timescales involved in this process,” he elaborates.
Shah believes these firms are struggling with this data more now than ever before because of falling headcounts and rising volumes of this data. Rather than regulatory drivers, these firms are focused on risk management concerns and missing corporate actions data is a significant risk for them. “The environment they are trying to address has become very complex due to the increase in volumes and the number of positions held by these firms, which in turn means an increase in their risk profile,” he says.
The focus of the solution is therefore on providing “value for money” and a “fast rollout”, he continues, and this can apply to custodians and third party clearers, as well as brokers. Syn~CorporateActions has therefore been developed with this in mind over the last 18 months in cooperation with French vendor Atos Worldline, which is an exclusive reseller of GBST’s flagship Syn~ solution in France. The solution is based on Atos Worldline’s solution, which was only available and tailored to the French market, says Shah. GBST therefore took the French solution and adapted it to be more “generic” and therefore suitable for a global marketplace. Part of this process involved moving it onto the Syn~ platform and making sure it was fully integrated with GBST’s full solution set.
Atos Worldline already has 20 of its broker clients using the original French solution and GBST therefore looked at the requirements of this user group and added on top of this. “The process of development had a lot to do with changing the terminology of the solution and adapting Atos’ French specific offering, which had been tailored to the nuances of that market, so that it could be appropriate for a wider user base,” Shah explains.
The end result is a global rules and model-based solution that has been designed to automatically track multi-location owner positions, simplify the gathering of clean data and the accumulation of coherent positions, according to the vendor. The main differentiator between GBST’s solution and the rest of the market is its ability to integrate with a firm’s various back office solutions in a seamless way, says Shah. “The product can integrate with the Syn~ back office solution but it can also integrate with a firm’s own in-house solutions if required,” he adds.
A key advantage over existing products in the market is therefore the ability to calculate entitlements from numerous back office applications and feed the entitlements back to the appropriate back office. “Nothing on the market comes close to the rapid adaptability of Syn~CorporateActions for meeting end to end corporate actions processing in dynamic environments,” he claims.
Syn~CorporateActions can either be deployed as an integrated module with Syn~BackOffice or as a standalone corporate action processing engine. Core functions supported include: event capture, event lifecycle management, entitlement derivation, holder notification, movement generation, including adjustments, claims and transformations, settlement and elective event processing.
Some of the functionality of the solution includes the ability to track depots and depository accounts within owner positions while accumulating and scrubbing information from data vendors, he elaborates. It also enables positions and open transactions to be re-worked in real time throughout the life of a corporate action. The solution uses open standards such as XML and Java Messaging Service (JMS) for communication between Syn~CorporateActions and internal and external systems as well as support for specific interface connections such as Swift and vendor feeds.
Shah realises the competition in the market is “strong” but reckons the vendor’s back office integration experience will set it apart in the long term. “Most other solution providers in this space are focused from the perspective of corporate actions process whereas we are looking at the problem from a back office business process viewpoint,” he says.
He highlights GBST’s interfacing capability, which he says involves and “almost no code approach” because of its model-based foundations, as a key USP for the solution. The rollout time for the solution is also faster than other offerings on the market, he claims. “Some of the larger corporate actions solutions on the market can take a huge amount of time to implement but we can, on average, roll out our solution in six to nine months,” he continues.
Over the next 12 months, GBST will be actively pitching the new solution at its traditional equities and fixed income broker clients in the UK and the 44 broker clients of its parent company in Australia, says Shah. “Most of them don’t have corporate actions solutions in place and we will be looking to cross-sell our solutions into this market.”
Shah is, however, fairly realistic about the take-up he expects over the next year or so: “I’d be happy if we had a couple of clients implementing the solution over the next 12 months.”
Given the intense competition in this corner of the market, if GBST manage to net a couple of clients in this time, it should at least go some way towards validating their proposition.