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

A-Team Insight Blogs

ISITC’s CAWG Finally Releases Long Awaited Corporate Actions US Market Practice Guide

Following two years of revisions since the first draft was first released in October 2007, ISITC’s Corporate Actions Working Group (CAWG) has finally released its best practice guidelines for the corporate actions market in the US. As the Securities Market Practice Group’s (SMPG) designated US market representative, the ISITC group has been charged with compiling, reviewing and amending these best practices, which cover the complete lifecycle of a corporate action, from the notification of an event to final confirmation of a payment.

Genevy Dimitrion, chair of ISITC, explains: “Since our inception, we have been working toward improving trade processing across the industry. As part of these efforts, our CAWG has continued to push forward on putting forth industry best practices in order to benefit the global market as a whole. As the financial services industry continues to undergo change, ISITC is committed to effecting positive change in the industry through the cooperative efforts of our member firms.”

The group completed its final review of the guide during the association’s member conference in September, although it notes that the document will be reviewed and updated on an ongoing basis to reflect future industry changes. Currently, the market practice guide covers the corporate action announcement, instruction, status, processing advice and payment confirmation flows. It defines the roles of all players in the corporate actions lifecycle and provides details on the data flows between these parties.

Moreover, the document provides templates for communications between parties for different steps in the corporate actions chain, including codes and their meanings. This level of detail should go some way to harmonising market practices across the US and eliminate some of the costly data reconciliation work required due to firms using different formats, or so the logic goes.

Given that ISITC has some clout in the market (unlike its European counterpart) and has been endorsed by the SMPG to carry out this work, these best practice guidelines should hopefully be taken on board by some of the larger firms in the space. However, it has taken two years to produce this document and corporate actions is a particularly complex and, surprisingly, changeable part of the financial services market, so these best practices may need updating sooner rather than later.

Moreover, the work required to harmonise practices for one country doesn’t bode well for the future of global corporate actions standardisation. If it takes this long to come to an agreement on one country’s best practices, how much longer would it potentially take if you throw international disparity and political disagreements into the mix?

If you take the opinion of Werner Frey, chairman of the European Securities Services Forum (ESSF), as gospel, these future market practices should be developed irrespective of the current models being used by each individual country. But as we all know, theories such as these are wonderful but putting them into practice is another kettle of fish entirely.

Related content

WEBINAR

Recorded Webinar: Getting ready for Sustainable Finance Disclosure Regulation (SFDR) and ESG – what action should asset managers be taking now?

Interest in Environmental, Social and Governance (ESG) investment has exploded in recent years, bringing with it regulation and a requirement for buy-side firms to develop ESG strategies and meet disclosure obligations. The sell-side can help here by integrating ESG data with traditional financial information, although the compliance burden remains with asset managers. The EU Sustainable...

BLOG

How to Use Chatbots and Collaboration Tools to Improve Automation and Deliver On-Demand Data

Digital transformation in the financial services sector is forcing a rethink in how financial institutions access the data they need to support trading and investment activities. While traditional bulk data distribution arrangements are well suited to large sell-side institutions, they can be costly and lack flexibility for firms from large Tier 2 sell-sides down to the...

EVENT

Data Management Summit Virtual

The Data Management Summit Virtual brings together the global data management community to share lessons learned, best practice guidance and latest innovations to emerge from the recent crisis. Hear from leading data practitioners and innovators from the UK, US and Europe who will share insights into how they are pushing the boundaries with data to deliver value with flexible but resilient data driven strategies.

GUIDE

Entity Data Management Handbook – Seventh Edition

Sourcing entity data and ensuring efficient and effective entity data management is a challenge for many financial institutions as volumes of data rise, more regulations require entity data in reporting, and the fight again financial crime is escalated by bad actors using increasingly sophisticated techniques to attack processes and systems. That said, based on best...