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

A-Team Insight Blogs

Industry Focus on Risk May Result in More Investment in Corporate Actions Automation, Says Swift and CityIQ Panel

Subscribe to our newsletter

Despite the downturn in the markets, corporate actions automation has not fallen off the industry radar, according to speakers at CityIQ and Swift’s London seminar at the end of October. Rather than driving down spending, a reduced tolerance for risk provoked by recent events could instead encourage increased investment in corporate actions automation in the coming months, attendees to the event were told.

Alan Parsons, product manager at corporate actions system provider CheckFree, now part of Fiserv, commented on the view of these automation projects in the current market: “There is always going to be a need to automate corporate actions, and we are still seeing interest in doing this from certain business sectors, either using new or existing project money.”

Max Mansur, global market manager, asset servicing at Swift, added: “There will be less tolerance for risk, and firms will have less ability to hold back 15% of the budget to pay out corporate actions claims. Though it seems counter-intuitive in the current environment, we may see firms invest in more automation to reduce risk, and therefore the amount of capital they must set aside to cover losses.”

Many of the discussions during the events focused on the need for improved corporate actions data quality to better support STP. Simon Hughes, head of UK corporate actions, Institutional Fund Services in Europe for HSBC Securities Services, highlighted the issue: “The problem overall within the corporate actions world is that there is no trust. There is no confidence that the information we receive is always right. Our sub-custodians have to validate information against a couple of sources before they send it to us. We then validate it before we send it on to our clients. The clients then validate the data before they elect and send their decisions back to us. This process isn’t just going to go away. The consequences of getting something even quite minor wrong can be disastrous.”

Panellists agreed that Swift’s Simulation Testing and Qualification Service (STaQS), which was launched this year, was a step towards improving the quality of corporate actions messages. Another important development, participants agreed, will be engaging corporate event issuers in the process. If issuers and their agents were to disseminate information about corporate actions in a standardised format upfront, it would help to eliminate the problems created as different players interpret differently the information they currently receive from multiple, disparate sources.

There was much debates about how easy it will be to secure the involvement of issuers and their agents in the standardisation process. However, Swift’s Mansur was able to point to a concrete example of progress – the ISO 20022 issuer agent messages that will be available to communicate to Euroclear in 2009. This will be the first time registrars have an ISO standard message to send out to the marketplace, he said, and therefore represents a strong start to the process of engaging issuers in corporate actions STP.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Strategies, technologies and services for successful corporate actions automation

Rising volumes and increasing complexity of corporate actions are challenging market participants’ efforts to reconcile data, automate corporate actions processing, and contain costs. The culprits causing these challenges include legacy systems, missing skills, manual processes, data quality issues, and a lack of standardisation. Added to these is the increasing complexity of corporate actions such as...

BLOG

DSB Publishes Final Report on a Fee Model for the UPI

The Derivatives Service Bureau (DSB) has published its final report on a fee model for the Unique Product Identifier (UPI) that will come into play in July 2022. The report – Principles Underlying the Fee Model for the Unique Product Identifier (UPI) Service – is based on two consultation papers and considers both the UPI...

EVENT

Data Management Summit New York

Now in its 12th year, the Data Management Summit (DMS) in NYC brings together the North American, capital markets enterprise data management community, to explore the evolution of data strategy and how to leverage data to drive compliance and business insight.

GUIDE

Regulatory Data Handbook 2018/2019 – Sixth Edition

In a testament to the enduring popularity of the A-Team Regulatory Data Handbook, we are delighted to publish a sixth edition for 2018-19 of our comprehensive guide to all the regulations and rules that might impact data and data management at your institution. As in previous editions of the Regulatory Data Handbook, we have updated...