The Corporate Actions Golden Copy: Cleansed Data for All

Brendan_farrell

Guest Contributor: Brendan P. Farrell, Jr., executive vice president and general manager, XSP, SunGard

As the volume and complexity of corporate actions events continue to grow, firms need to understand their risks and take action on events that require immediate attention. To achieve this, the process must start with complete, accurate and timely corporate actions data.

However, most organizations are tasked with capturing and cleansing corporate actions data from multiple sources in order to create their own “golden copy,” or single, issuer-approved communication. Industry analysts agree that a streamlined corporate actions lifecycle starts with clean data, which has led to discussions about managed data services to help firms automate the process of creating a golden copy. The demand for Business Process as a Service (BPaaS) data services is growing as firms seek experts to validate their data and automate the process earlier in the lifecycle.

The high-touch world of corporate actions

To create a single corporate actions event, staff must access data from disparate sources such as custodians, brokers, vendors and various publications to compile the necessary information. Without the right data in place, coordinating this communication may be difficult and sources could be missed. In addition, the corporate actions learning curve is steep and the cost of getting it wrong is very high.

The complexity of handling corporate actions requires a number of manual touch points, beginning with the creation of a golden copy as a first step.  In order to overcome risk, firms have resorted to redundancy through multiple data sources backed up by teams of “maker-checker” processors, and the expense can be significant. Corporate actions also require significant domain knowledge and experience. The risk of losing a senior expert on the team is a significant threat, as the industry lacks a sizable pool of skilled people to fill the gap, especially outside of the major traditional financial services centers.

Many firms are now realizing the value of a corporate actions data service to help them reduce the exposure, risk and cost of data management and staffing.

The corporate actions data service

Corporate actions data is universal; thousands of firms process the same information in the same way, every day, making it ideal for a utility environment. The top priority for any firm is getting the data right in a timely manner so it can serve its clients and ensure back-office systems work efficiently.

Firms that obtain corporate actions announcements from their custodians or prime brokers typically still subscribe to other market data feeds to prime the pump, allowing for preliminary notification to their downstream clients.  They often also perform additional scrubbing in order to validate the data and create their own golden copy. In contrast, an independent corporate actions BPaaS would provide one source of consolidated, cleansed and scrubbed corporate actions announcement data from multiple data providers to create a single golden record. Such a service could help firms alleviate staffing challenges, reduce risk and cost, and support entry into new markets.

 Exploring corporate actions data services

When deciding to explore BPaaS options for corporate actions, it is important to understand the provider’s strengths and weaknesses. Specialized expertise in corporate actions is a must. It is also crucial to learn the provider’s data management background and other offerings. The four main attributes of a qualified data service include the following:

  • Managed by a specialized team of corporate actions data experts
  • Quick to deploy and at a low total cost of ownership (TCO)
  • Available to and suited for any size organization
  • Provides bundle and integration options with other corporate actions and post-trade offerings

Technology providers usually offer solutions that help firms automate the corporate actions process from the point at which the customer obtained multiple data sources. With growing demand to reduce risk and cost, specialized BPaaS data services are emerging to give firms the ability to bypass multiple steps, reduce data fees and mitigate risk earlier in the process.

In theory, all firms should reach the same golden copy at the end of their data cleansing and scrubbing process.  An experienced technology and services vendor can manage the crucial data portion of the corporate actions life cycle and use economies of scale to make the process less expensive for everyone.

Hear more from SunGard and learn about corporate actions processing at CAPCon NY on Thursday, October 16th.

This entry was posted in Corporate Actions, Guest Blog and tagged , , , . Bookmark the permalink.

One Response to The Corporate Actions Golden Copy: Cleansed Data for All

  1. Karl Hanlon says:

    There has a been a significant focus on utilities across the post-trade space over the past few years as financial institutions try to remove fixed costs, outsource non differentiating functions and increase agility. However outsourcing an entire post-trade platform is not for the faint hearted, and whilst there are a few players taking a lead on this the challenge of creating common platforms in such a complex ecosystem is significant (although I’ve no doubt this will be the future). For me, the winning formula in the short term is to focus on specific areas which are non-differentiating, can be standardised and will benefit from scale. As such all roads are pointing to Corporate Actions, and within this area it makes sense to start with scrubbing. Whilst the market is starting to switch on to the opportunity here (with some banks and CSDs creating their own offerings) my sense is the winners will be vendors who have the experience, technology and data management capabilities to gain market share rapidly. I think Sungard/XSP are in an exciting space right now.

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