HSBC Securities Services (HSS) has implemented CheckFree’s eVent solution to deliver automated corporate actions processing for its investment administration clients. eVent is live for data cleansing and event capture, interfacing to data vendor feeds, static data sources and custodians for Swift messaging.
Going forward, HSBC will roll out the eVent system to provide end to end corporate actions automation within its outsourcing business (in which it is servicing three customers out of London and a number in Edinburgh), before extending the implementation to other divisions within the group, including its custody, sub-custody and other adjacent divisions of the bank. HSBC’s investment banking business signed a deal for the Mondas corporate actions system Radica CAPS in 2003 but the implementation never made it off the starting blocks.
HSS’s primary data feed is IDC; HSS was the first institution of any scale to take IDC’s ISO 15022 feed, according to Naren Patel, securities business development manager, CheckFree, and the quality of the feed was able to be assessed and improved through its use in eVent. HSS’s static data project is being carried out with GoldenSource. HSS has relationships with more than 30 custodians/sub-custodians and eVent is taking in Swift ISO 15022 SMPG compliant corporate actions messages from a variety of custodians. CheckFree eVent captures the data, cleanses it and creates corporate actions master records for downstream processing and accounting updates.
Patel says around 18 months ago HSS evaluated the market for automated corporate actions solutions and shortlisted three options – CheckFree and one other vendor, plus the internal build option. “In December 2005, HSS committed to CheckFree,” he says. “Through extensive POC workshops they had gained an early comfort level with the solution: we were able to provide an early cut on a version of the solution which they could gain confidence from in a matter of weeks.”
CheckFree eVent is currently being implemented in the outsourcing division of HSS. The bank’s vision is to introduce a global methodology and offering for its customer base, he says, so it required a system that would enable it to move to a global offering for corporate actions automation. “For when HSS moves additional outsource clients on to the platform, it needs the product to be geared up for additional volumes, thereby making it scalable. It also requires the system to support its risk management requirements and to provide 24×7 global coverage.”
HSS has integrated eVent with its implementation of CheckFree’s TradeFlow solution for trade confirmation and settlement (it inherited TradeFlow following its bringing on of existing CheckFree client Gartmore Investment Management as an outsourcing client in 2004). Says Patel: “TradeFlow and eVent leverage the same architecture, so HSS was able to capitalize on the skills it had acquired through the earlier implementation and as a result the integration was made easier.”
Now that HSS is live on eVent in the first phase for data cleansing and event capture, the roadmap involves deepening the functionality for end to end corporate actions automation for voluntaries and mandatory events by the end of Q2/early Q3 this year, according to Patel. “HSS will be one of a few large global players with a physical end to end solution for corporate actions automation in the securities marketplace,” he says. Once the end to end solution is in place within the outsourcing business and has had time to bed down, it is a “definite strategy for all parties to extend and deepen the relationship across all parts of HSBC, in the 2008/2009 timeframe”, he adds.
Addition of further data vendor feeds should be straightforward, because CheckFree eVent comes pre-packaged with interfaces for all the major providers. Says Patel: “CheckFree eVent also comes pre-packaged with predefined workflows for all the 68 different event types in the marketplace. When HSS went through the evaluation of each event type, it only had to customize a few workflows for its specific requirements; a great deal of the work had already been done, thereby saving time.”
Alex Powell, global chief operating officer of HSBC Securities Services, says: “The automation of corporate actions is a notoriously difficult problem to solve, which is why we engaged CheckFree’s specialized knowledge and solutions to assist us with this project. A key selection criteria was the overall flexibility and scalability of CheckFree eVent, as well as its proven technology. CheckFree eVent enables us to cater to the fast changing requirements of our clients in the key corporate actions arena.”
eVent was among the first automated corporate actions systems to come to market. It was originally conceived in 2000 by Paul Fitzgerald and Dave Baxter when they were employed by treasury and securities reconciliations systems provider City Networks. Having failed to interest City Networks in pursuing the corporate actions STP opportunity, Fitzgerald and Baxter hooked up with STP specialist HelioGraph to bring the first iteration of the system to market. eVent was brought into the CheckFree fold following the Atlanta-based software giant’s acquisition of HelioGraph in 2003. Fitzgerald and Baxter jumped ship to rival corporate actions system vendor Information Mosaic in 2004.