Big Moves for Corporate Actions

Over the years at our annual Corporate Actions conferences the issue of automation has continually been a hot topic on the agenda. While many operational procedures have been automated over time, corporate actions have stuck to a process which involves faxing and emailing. Over all, it is a system that leaves a lot of room for error and can definitely be improved upon.

To back this point up, I refer to the results of a recently released survey by Aite Group and SimCorp in which 35 out of 45 fund managers polled stated that the lack of automation is their biggest cause of failures within the corporate actions space. So I was glad to read this week that automation of corporate actions is on its way to becoming a reality across the industry. With SWIFT’s ISO 20022 standards and new technology that is designed to streamline the automation process between the fund manager, custodian bank and back office, it is obvious that steps are being made in the right direction.
In April, SWIFT is actually starting their pilot program with the DTCC, who is partnering with SWIFT in this initiative, to see how things go for five firms that will exchange messages following the ISO 20022 format. Through this process it will be revealed how effectively the ISO 20022 messages can be transmitted to the participants. And hopefully all goes well because the DTCC is planning to shift completely from proprietary messages to the ISO 20022 format by 2015.

So standardization is on its way and, even better, now there is technology that will reduce the occurrence of human errors. So the question now is… Is the quandary of automating corporate actions really on its way to being resolved? If yes, I wonder what the next hot topic in Corporate Actions will be.

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