The Latest & Greatest in Corporate Actions

Last week, we held our 5th Annual Corporate Actions Processing Conference in New York City.  I always love this event because it brings together a niche sector of the financial services industry that is completely immersed in corporate actions on a day-to-day basis and an audience that is delightfully interactive and extremely interested in the latest and greatest when it comes to current struggles and benefits.  So, as was presumed, there was much talk about the adoption of ISO 20022 standards.  A morning panel went over how ISO 20022 will allow more time for a firm’s decision-making process.  Also, with 13 ISO 20022 messages there should be more details and clarity to make those decisions.  But will all this allow for automated election processing, which is key for custodians? Is the industry ready to migrate? Well, according to the conference panelists, no one is really ready for ISO 20022.  First, the industry has to accept that having one identifying standard will create substantial benefit for the financial industry.

One of the hot topics of the afternoon sessions was cost basis reporting.  There are no regulations for cost basis debt as of today, but the penalty for not complying with cost basis law is extremely high.  With cost basis reporting requirements now in Phase 1, it will be interesting to see what changes are ahead.

As always, current challenges in corporate action processing was addressed.  At the forefront of this conversation were discussions about the lifecycle, the state of automation and the front office’s visibility. Many felt that in order to make improvements the firms need to re-think manual processes that straddle the front-to-back office.  One speaker stated that “Back and front offices are often separated from an IT perspective” which doesn’t sound like a good thing to me! As for automation, it seems that investment firms can significantly reduce the cost in operations through corporate actions automation.  But will complete automation ever come to complete fruition?  It seems that year after year the attendees have concerns and struggles with ways to improve automation.  In fact, one speaker said that 80% of firms are not automated to give the front office visibility into shareholders’ entitlements — an extremely high percentage!  This to me means that we will still be discussing STP and automation for years to come.

A new hot topic on the agenda this year was data management and the role of enterprise data management in mitigating operational risk.  Speakers concluded that EDM needs to be accurate, consistent and transparent in order to mitigate risk.  It seems the goal of EDM is to create trust and confidence in data assets which is “the very core of the Corporate Actions Challenge.” In a corporate actions context, the role of Enterprise Data Management is to perform all corporate action tasks that are internal to the company.

So, as you can see, it was a great day with many thought-provoking conversations around corporate actions.  And, as always, we thank all the exhibitors and sponsors who helped make this event such a great success!  This year we were pleased to have XSP, Wolters Kluwer, SimCorp, Fidelity ActionsXchange, TATA Consultancy Services, DTCC, SIX Telekurs and Information Mosaic sponsoring the conference.

So that’s all for this year…We hope to see you all again at the 6th Annual event next October!

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