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

A-Team Insight Blogs

SEB’s Strandberg is Unsure About the Benefits of XBRL for Corporate Actions STP

Share article

Some in the market may be convinced of the benefits of XBRL for the entire corporate actions process (see our interview with BNY Mellon Asset Servicing’s Paul Bodart for example), but not everyone agrees that it is the key to increasing end to end straight through processing (STP) in the space. Christine Strandberg, global product manager for SEB Global Transaction Services, explains to Reference Data Review that SEB is not planning to adopt ISO 20022 messaging in a big way in the near future and elaborates on some of the reservations her firm has regarding XBRL for the asset servicing sector.

SEB follows Swift’s Asset Servicing programme closely, but Strandberg notes that the firm has some concerns about the adoption of XBRL in the space. “The benefits to the securities community of improved asset servicing are indeed substantial, and we welcome Swift’s efforts in the area. We are less assured of the benefits for Swift as a network provider,” she explains.

The firm participates in the Securities Market Practice Group (SMPG) as well as the ISO Securities Standards Evaluation Group, and has therefore been involved in the work that has gone into making ISO 20022 and XBRL compatible for the corporate actions market (see more about the recently published business case for the adoption of XBRL). Strandberg indicates that SEB is pleased with the ISO 20022 messages created for corporate actions, however, she adds: “We are less certain that they will be adopted soon, and have no immediate plans to implement them ourselves (with the exception of the proxy voting messages).” Not a great vote of confidence in the standards.

Strandberg adds that the ISO 15022 messages are still not fully utilised as they should, be and for existing Swift users the willingness to move to ISO 20022 is not great. It seems that despite the work of Swift, the Depository Trust & Clearing Corporation (DTCC) and XBRL US, not everyone in the market is fully convinced of the immediate benefit of moving to these standards in the short term. She does note, however: “This will likely change during the next few years, especially if other central securities depositories (CSDs) join DTCC in implementing ISO 20022 messaging.”

The adoption of ISO 20022 by the securities market as a whole is therefore likely to be predicated on its acceptance and usage by a tipping point of market infrastructures across the globe. This means that Swift’s 2015 strategic focus on market infrastructures is a savvy move on the part of the industry network operator. It will be hard going, however.

“The goal of increasing the number of market infrastructures using Swift has been less successful than desired from a network perspective,” explains Strandberg. “On the other hand, from a strict cost perspective from CSDs, central clearing counterparties (CCPs) and their users this is perfectly understandable.”

She notes that the margins in securities settlement have been decreasing steadily for a number of years, and as long as cheaper alternative communication methods are possible and permitted then it will prove difficult for Swift to increase market penetration. However, she reckons that the work Swift has done together with market infrastructures such as Euroclear and DTCC is a good start and is likely to bring benefits to the entire community.

XBRL itself is limited in the benefits it could bring to the corporate actions space, she adds. “We agree that XBRL could result in significant efficiency increases when processing large amounts of narrative, such as prospectuses. We do not believe, however, that it is the key in increasing STP in corporate actions. Instead, the goal should be to ensure that issuers (and their agents) communicate with market infrastructures (CSDs and/or exchanges) using ISO messages. These can then be distributed throughout the chain of intermediaries easily,” she elaborates.

Certainly, Strandberg’s work as part of the SMPG is aimed at improving the adoption of standards such as these in the world of corporate actions. But, as she noted at a corporate actions event back in April, defining and agreeing standards for the market is merely the start of the process. The real challenge is convincing the market to use the standards.

Related content

WEBINAR

Recorded Webinar: Entity identification and client lifecycle management – How financial institutions can drive $4 billion in cost savings

A new model in Legal Entity Identifier (LEI) issuance has created significant opportunities for financial institutions to capitalise on their KYC and AML due diligence. By becoming Validation Agents and obtaining LEIs on behalf of their clients, financial institutions can enhance their client onboarding experience, streamline their internal operations, and open the door to new,...

BLOG

HUB Cloud Platform Aims to Transform Asset Management Operating Model

The HUB technology company set up by PIMCO, Man Group, IHS Markit, State Street, Microsoft and McKinsey & Company promises a utility style cloud-based platform designed to transform asset managers’ middle and back office operating processes, and accelerate them towards a digital operating model. This should reduce cost and mitigate risks, and leave asset managers...

EVENT

TradingTech Summit London

The TradingTech Summit in London brings together European senior-level decision makers in trading technology, electronic execution and trading architecture to discuss how firms can use high performance technologies to optimise trading in the new regulatory environment.

GUIDE

RegTech Suppliers Guide 2019

Welcome to our brand new RegTech Suppliers Guide. This unique guide provides detailed data profiles on close to 100 suppliers in the RegTech world, offering you an unrivalled selection of solutions for your most pressing financial regulatory challenges. The aim of the A-Team’s RegTech Suppliers Guide is to steer you through this complex marketplace, offering...