Left to right: Brad Barton, Senior Relationship Manager, SWIFT. Chris Church, Chief Executive Americas, SWIFT. Mark Bolgiano, President and CEO, XBRL. Michael Bodson, Executive Managing Director, DTCC. Brett Lancaster, President, DTCC

Attempts to automate coporate actions (CA) have bedevilled the industry for years because every CA issuer has a different way of doing things. Now, at last, a breakthrough is at hand. The US Depository Trust & Clearing Corporation (DTCC), SWIFT and XBRL US have joined forces to automate the issuer-to-investor information process based on a combination of SWIFT ISO 20022 messaging standards and XBRL’s digital dictionary of business reporting elements. A SWIFT Auditorium session on Tuesday provided a glimpse into the components of this partnership and how the trio is planning to revolutionise CA.

Brett Lancaster, President, DTCC Solutions, LLC, opened the session by outlining the challenges the DTCC faces “CA is a paper based nightmare,” he said. “Some documents consist of up to 300 pages of free text ‘legalese’ that has to be waded through to extract the relevant data. This is then keyed and rekeyed down the chain from issuer to investor, which takes up time and risks manual error.”

Given that DTCC handles some 200,000 CA events a year, representing 3.5 million securities, finding a way to standardise the process is crucial.

The third member of the trio, XBRL US (which stands for extensible Business Reporting Language) has already been institutionalised in the US since the SEC mandated that all publicly-listed companies, mutual funds and credit agencies must file their reports using XBRL formats.

As Mark Bolgiano, President and CEO, explained, “XBRL involves a process of tagging documents, mapping elements like headings, key words and phrases, calculation relationships, business rules and validations and designing these standard taxonomies (digital data sets) around XML business reporting standards.” But XBRL is not just being adopted in the US; it is also being taken up internationally and is currently in use at stock exchanges in Japan and China for disclosing dividend payments.

A bank perspective

Ranjit Chatterji, Global Network Manager Securities and Fund Services, Citi, was on the panel session representing ISSA (International Securities Services Association), an organisation active in promoting CA harmonisation. Chatterji confirmed that CA automation is also a top priority within the global securities industry. “Given the inefficiency, ambiguity and risk exposure of manual processes, the first mile in CA automation is getting information from issuers in a clear, standardised way that can be accessed by ISO formats. The DTCC, XBRL and SWIFT initiative has global applicability because it offers a simple way for issuers to tag CA announcements that can eventually be structured into an international syntax.”

While the benefit to investors and intermediaries of CA automation may seem obvious, why should the issuers care? As Lancaster pointed out, producing concise, unambiguous information in a timely way would greatly reduce calls from confused and irritated investors. Since XBRL reporting has already been mandated by the SEC, said Bolgiano, issuers – at least in the US – are already on the road to standardisation.



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