19 November 2014

Standards and market practice key for corporate actions automation success

SWIFT joins calls for more collaboration at CorpActions 2014 conference.

Around 80 per cent of corporate actions activity has the potential to be automated, reducing risk and increasingly efficiency. Great strides have already been made towards this goal and there is a strong appetite to reach it - but there is still more to be done. This was among the main messages to the 120 delegates at the recently-held 2014 edition of the annual CorpActions conference in London, where SWIFT once again played a lead role in driving the debate.

In addition delegates heard that one key success factor is buy-in from all participants in the corporate actions chain to ISO standards and the common market practices driven by the Securities Market Practice Group (SMPG). There are also lessons to be learned from markets like Singapore and Australia, which have opted to standardise all local corporate actions activity using ISO 20022. 

The CorpActions 2014 programme covered a broad spread of topics ranging from the implications of T2S and regulatory change on corporate actions processing to risk measurement in the corporate actions context. A recurrent theme was complexity - both of certain corporate event types, and in the chain of participants involved in processing each event. While the complexity of some corporate actions means they will likely never be fully automated (indeed, paradoxically, automation would be seen as increasing risk by eliminating checks from expert staff), the different levels of interest in and drivers for automation among different participants in the chain need to be reconciled.

There were calls for all players - buy sides, custodians, CSDs, issuers, data vendors - to "get on board" with standardisation and automation efforts, because "we have to work with a market perspective and not with a client to provider perspective".

Speaking on a panel about the evolution of ISO implementation globally, Jacques Littré, Lead Business Analyst, Standards, SWIFT, highlighted the value of the SMPG in fostering uniform adoption of ISO standard messages for corporate actions - essential for preventing the multiple interpretations which hamper true automation.

Littré also called on countries around the world to look to the examples of Australia and Singapore, where market infrastructures (ASX and SGX respectively) have driven local adoption of ISO 20022 for corporate actions. These projects include the creation of an ‘issuer to investor golden copy' - ensuring events are announced in an ISO 20022 based format to enable easier downstream automation.

When it comes to creating solutions that can be bought into by all players in the corporate actions chain, market infrastructures have the power to ‘unlock' situations, he said - and the door is open to other market infrastructures to take a similar route to expedite corporate actions automation in their own markets.

Olivier Connan, Market Manager, Asset Servicing & Investment Managers, SWIFT, said: "Delegate numbers at the CorpActions conference continue to grow year on year, and this shows that improving corporate actions automation remains high the agenda. This year, participants again acknowledged the importance of SWIFT and ISO standards in enabling operational risk reduction in this space. They also emphasised the need for more standardisation and automation at the start of the corporate actions chain - between issuers and the market - and are clearly looking to SWIFT to help address this issue."

For more information about CorpActions 2014 visit the web site.