SmartStream Technologies won the best buy-side corporate actions platform category in this year’s Buy-Side Technology Awards, mirroring its success in the same category at this year’s Waters Rankings in July. Victor Anderson chats to SmartStream’s Adam Cottingham about the product responsible for delivering the firm’s success in the corporate actions market, details around SmartStream’s client engagement model, and current market challenges facing buy-side firms.
TLM Corporate Actions has delivered significant recent success for SmartStream. What are its primary attributes and what is driving this success?
Adam Cottingham, product manager of TLM Corporate Actions: TLM Corporate Actions is realizing an accelerated development roadmap after the investments SmartStream has made in expanding the team. The solution already supports the processing of all ISO events through their complete lifecycle, but we are always looking to improve our offering and provide value to our users and the market. Over the last 18 months this has been expanded to include processing of ISO 20022 messages and support for their interoperability with ISO 15022 messages. Proxy voting capabilities have been added to the solution, allowing meeting events to be processed and elected upon within the same platform. Within this year’s release we have also expanded the multi-currency and fee-calculation capabilities within the solution.
The corporate actions processing market is a mature and highly competitive one. What does SmartStream bring to the table that it believes sets it apart from other market participants?
Cottingham: When TLM Corporate Actions onboards a new client, the main differentiator our customers cite is the quality of our engagement model. This is more than just the rich functionality set within the product. This comprises a Model Client Configuration and the Standardized Integration model that has been developed by our Business Consulting team, who all have multiple years’ operational experience within the corporate actions domain. This delivers industry best practice “out of the box” in a solution whose underlying technology is flexible enough to also accommodate each client’s proprietary processes. This approach drives down the effort and cost of delivery for a complete corporate actions processing capability to three to nine months, depending on the size of the operation. Now that our track record testifies to this capability, more clients are adopting this approach, which further strengthens the model.
What areas of corporate actions processing are buy-side firms struggling with at present, and how does SmartStream address those challenges?
Cottingham: Corporate actions processing challenges are common in the marketplace. Everyone carries event risk for operational failings and this is a key component for investing in improving legacy processes.
I would summarize the key challenges in the following two categories:
Market challenges: increasing volumes of events, event types, and managing their seasonality; attributing regional processing differences; keeping pace with changing regulations that require more data and cost-basis information to meet their reporting requirements; managing tax and currency calculations associated with cross-border holdings; and accommodating inconsistent industry standards from the Securities Market Practice Group within Swift with the associated ISO 15022 and 20022 definitions.
Secondly, processing challenges: reconciling multiple sources of upstream information that are often untimely, incomplete, and are subject to change; managing the communication flow across participants; keeping pace with internal and external deadlines; accurately calculating cash and security entitlements and their tax implications and managing adjustments when information changes; and apportioning different trading requirements for securities lending, collateral and finance trades across a traded and settled balance
Undertaking a corporate actions project has traditionally been resource-intensive and expensive. SmartStream is looking to make that experience redundant with our fair value-based approach and accelerated delivery model. This should mean that clients can realize their goals of automation and control of corporate actions processing in the immediate future with minimal expense.
What’s in the pipeline for TLM Corporate Actions for the next 12 months? Any new functionality on the horizon?
Cottingham: TLM Corporate Actions’ main focus will now be on delivering a new UI for the solution. The user experience will be modernized with HTML5 screens for the main UI and portal. This will leverage the TLM View capabilities of the platform, which have already been rolled out across the Reconciliations product.
We will also focus on managing the continuous improvement cycle for a Model Client Configuration, whether they are industry changes applied to ISO standards and regulations or best practices defined by our clients in their given markets.
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