With the explosive growth in corporate events – primarily due to the current restructuring of debt or refinancing – those financial institutions that have invested in technology and integrated data sets will be the best placed to cope with the increase in volumes, according to David Kane, senior vice president of securities and operations at JP Morgan Worldwide Securities Services.
The number of corporate actions are rapidly increasing, especially cross borders, driven by an increase in rights issues, mergers and acquisitions, refinancing and debt restructuring. But it is essential to get the principles and critical data points around complex events right so that risk can be accurately managed, said Kane.
Kane said that there are several aspects to managing corporate actions that clients expect. These include the need real-time access to the best information (there’s nothing worse than stale data); being able to provide them with the latest possible deadlines for them to make decisions on events; they want specialist expertise and support; and timely and accurate delivery of entitlements after the event is very important.
Of course the consequences of inaccurate corporate actions data are well known, but Kane cited an example of a company tracing a $10 million write-off directly to inaccurate corporate actions data.
Kane also suggested that regulatory scrutiny is likely to increase, with JP Morgan having had recent discussions with the OCC in the U.S. and the FSA in the UK.