Contending With Complexity
IRD speaks to John Kirkpatrick, managing director of custody operations at Citi
What are the challenges posed by discrepancies in corporate actions?
Any discrepancy will slow the process and delay the announcement being received by the end-investor. It adds cost by the manual effort involved in researching and resolving any conflict in the data. Risk is also significantly increased, as the time during which investment decisions are made can be reduced and the exposure to manual error is increased.
How are debt exchange activity and bond issuance affecting the complexity of corporate actions data?
Debt exchanges can be very complex and often leave little time for investors to elect any given option. Volatility in these instruments can lead to significant profit and loss deltas for each option. These can quickly move as underlying bond and share prices change. There are often multiple options with varying outcomes, secondary events and tax implications.
How are corporate actions data managers responding to increased complexity in this data?
Coverage of debt exchange from data vendors varies by market and instrument type. When information is published close to deadlines and in physical form, the custodian will need to read, translate and consolidate information before publishing in digital form to clients.
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