Corporate actions tend to be a difficult field to navigate and can present many challenges. Whether it is bond redemptions or the sending of messages between issuers and investors, each action comes with its own set of hurdles. Corporate actions are viewed as expensive, risky and inefficient, yet they are a necessity in today’s financial services industry.
Currently, firms are trying to find new ways to maneuver and cope with the risks and challenges these actions tend to cause. Corporate actions systems are constantly being updated (coincided with a large cost each time) in order to decipher important messages more quickly and more accurately than the competition, and keeping up with system and technology updates aren’t the only things a firm must deal with. The sheer volume of actions in a day that must be interpreted can be a struggle to keep up with alone, especially when trying to keep or gain investor confidence. In response to this struggle, messaging standards have been introduced, but is that enough to stay on top of everything?
While technology is a large issue, there may be an even bigger one that firms are overlooking. Instead of focusing on the challenges associated with technology improvements, firms may need to redirect their focus to their corporate actions staff. If your current staff cannot work in harmony with the technology your firm has in place, you may still find mistakes and missing data that are associated with many corporate actions. Technology can only take a firm so far. Without a qualified staff in place to manage the risk that develops you will still be behind the competition. What is the point of great technology without a competent staff and vice versa?
The lack of automation in this field also tends to be a great challenge for many firms. Many actions must still be done manually, which takes time and resources that a firm just might not have at that moment. While not everything in the corporate actions world can realistically be automated, simply having more automated data feeds and messaging would help firms keep corporate actions from piling up a great deal.
These are just a few of the challenges firms’ face every day when managing corporate actions. What are some of your firm’s main difficulties?