Corporate Actions special report

May 2012 - sponsored by: DST, Fidelity ActionsXchange, Information Mosaic, SIX Telekurs, Swift, Thomson Reuters

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The Trade-Off Fallacy

 

Some parameters are widening for what to include in a corporate action to be processed, as predicted by panelists in the Virtual Roundtable in this special report. Even so, without adoption of the ISO 20022 standard for corporate actions, which these same panelists point to, it may prove impossible to spread out the scope of information included in those action notices.

The detail now expected can include tax information, special processing requirements, and information on the country of origin or holder of the securities. It¹s not just busy work -these are important pieces of information for risk managers. Yes, there are economic pressures on data operations that could preclude improvements to include these additional details, as panelists acknowledge, but as the cliché goes -you get what you pay for -if firms cut corners at the outset, they are chancing not managing the risk properly as a result -and having to pay a lot more due to investment losses later on.

The other pressure on corporate actions processing is the drive to process the information ever more quickly, as panelists addressed in response to our question about straight-through processing. It¹s promising for the industry that these professionals also acknowledge that including greater complexity in corporate actions messaging standards, for the processing, is a challenge that must be met.

Our panelists wisely decline to accept a trade-off between accuracy and timeliness, as pressed in another question posed in our Roundtable. They largely respond by emphasizing the need for both. Front offices are demanding more preliminary announcement information, which does help with timeliness. Automation projects, if they live up to the ideal, can distribute accurate data faster. Pardon the use of a second cliché, but if people can put a man on the moon, surely the financial industry can do that.

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