Invesco’s implementation of XcitekSolutionsPlus’s corporate actions automation platform, announced last month, was strategically important for the vendor and may be a pointer of the future direction of its global ambitions. Invesco will use the XSP platform currently deployed by its U.S. parent, Amvescap, to service its European and Asian operations, marking the first time an XSP client has supported global users from a single platform.
Brendan Farrelly, managing partner at XSP in New York, says few players can achieve such global implementations because of the nuances of processing between market centres. Invesco/Amvescap, he says, is the first firm to do that using the XSP platform, opting to use XSP as a standard based out of Amvescap’s offices in Houston. While the system had been in place at Amvescap for three years, Invesco opted for the extension after a full search of alternative providers.
In order to achieve global availability, Invesco piggybacked access to XSP on its existing network infrastructure. XSP worked with the firm on the relevant rules, processing requirements and training to allow local users in Europe and Asia to use the Houston-based platform for handling local corporate actions.
According to Farrelly, having U.S. functionality as a starting base is a help; he says the failure rate of transactions due to lack of corporate actions automation “is higher as you move east.” The existence of the Depository Trust Clearing Corp. for validation makes managing corporate actions in real time easier for U.S. players than their European and Asian counterparts, who have access to no such centralized utility.
Among the issues that needed to be resolved to allow European and Asian support from Houston were differences in nomenclature and terminology. For example, Farrelly says, a 2-for-1 stock split in U.S. jargon would be described as a 1-for-1 stock split in U.K. terminology. As such, any global system would need to be flexible enough to accommodate such local nuances.
Part of XSP’s ability to handle such flexible requirements relates to its commitment to handle as many vendor sources as is necessary. XSP currently collects and aggregates its own corporate actions data. It also handles third-party services from Standard & Poor’s, Telekurs Financial, FT Interactive Data, DTCC, Bloomberg, Nikkei and Fidelity ActionsXchange, and also handles ISO 15022-format messaging.
Farrelly says the data management component of a global solution is critical. XSP uses the capability to commingle the wide range of services it handles to best deal with market rules. Another component is control of the downstream process. “We handle all interfaces with custodians, notifications of corporate actions activity internally, interfacing with accounting systems,” says Farrelly. “This is important for a firm like Invesco.”
Farrelly reports stronger interest than ever currently in corporate actions automation. He says XSP sold nine systems in 2003 after relatively quiet market conditions during 2001 and 2002. He says XSP used that period to develop version 4 of its platform, adding substantial European capability, a move that is now paying dividends.
The company is now anticipating robust attendance at its inaugural user conference next month in Montgomery, Ala., where client users, IT staff and partners will discuss issues surrounding corporate actions automation.