Following a rapid 12 week implementation, institutional stockbroker Panmure Gordon & Co is live on the Radica CAPS corporate actions processing system from Mondas. The system is currently taking corporate actions data feeds from Panmure’s international custodian BNP Paribas and vendor Exchange Data International (EDI). The firm is also testing feeds from Telekurs Financial and the London Stock Exchange. In line with its strategy to adhere to industry standards where they exist, Panmure is taking in all its corporate actions data in the ISO 15022 format.
According to Nick Cook, director and head of operations at Panmure, EDI is currently its preferred source for UK corporate actions data, and it takes European data from BNP, its custodian for international markets. “Something we have learned through the experience of automating our corporate actions processing is that no provider is infallible,” he says. “One feed is not an option. How many feeds we need is what we are now trying to establish.”
So far, the Mondas system has proved capable of taking in data from multiple feeds in ISO 15022 format, Cook says. “Mondas may need to do some modification to handle feeds that it has not handled before, but we have easily made it take in data from the LSE, EDI, Telekurs and BNP. If there was another vendor we wanted to take a feed from, it is possible that somebody would have to do some work – whether Mondas or the reference data vendor.”
Cook is committed to automating around ISO 15022. “It’s important for any message format for any data we transmit and receive to be standard. We don’t want to take in lots of different format types and reparse them. Whilst there is a template, we should all try to stick to that template.” He adds: “ISO 15022 is a good format, but it’s open to interpretation. The Mondas system is able to cope with that interpretation where it occurs.”
Panmure made the decision to improve its corporate actions processing to reduce the risk inherent in its previous largely manual corporate actions environment. “We effectively part outsource our corporate actions processing to BNP, who are our UK Crest sponsor and global settlement custodian. We felt we needed back-up in our current situation, something that would help us reduce operational risk and give us flexibility for the future,” Cook says.
Panmure considered several options – building on what it had put in place already, outsourcing everything or buying a system. “Like many aspects of this business, there is a certain mystique around corporate actions,” Cook says. “But when you break the process down, in fact all you are looking for is the capability to take good reference data, apply it to what you are doing – whether holding stock or trading, run it against what is happening in the market, and create a golden record. Then it’s about applying rules and creating an entitlement. If the event is mandatory, working out what to do with it is not that difficult – you just post it to systems internally. If it’s electable, you need a quick, easy and accurate way of getting the election from internal or external customers. In our environment it’s mainly internal as we’re market makers. So we need to get the event on to the desks so the market makers can see it and decide what to do. Then it’s processing the outcomes. We realised there must be a system out there able to do that, and that we did not want to recreate that capability ourselves.”
Panmure reviewed a number of systems from other providers and established that the Mondas solution was the best fit for its needs. “In my view and in our team’s view, it did everything that we needed,” he says. “It was built for corporate actions – it had not been spawned out of any other system, for example a messaging, workflow or reconciliations system. There was no feeling that corporate actions was a secondary part of the Mondas business. We also had a reasonably warm feeling that Mondas had customers that wouldn’t walk away from the software – that they had good backing from the customers they had.”
In addition, Mondas committed to meet Panmure’s demands for a rapid implementation at a reasonable price, Cook says. “We wanted a fairly vanilla system and we reasoned that if their solution was as good as they said it was, it shouldn’t take that long to implement: we wanted little more than had already been demonstrated to us. So the fit was right, the price was right and they agreed to the implementation methodology.”
Panmure signed for the system in May. The implementation phase then took three months – six weeks to put the system in and six weeks on UAT and parallel testing. In spite of a couple of glitches – requiring additional work do be done on the Mondas web front end portal, and some improvements on the QA side at Mondas – Cook is satisfied that Radica CAPS “does what it said on the tin”.