Action on Corporate Actions

Terry Flanagan

The Depository Trust & Clearing Corporation (DTCC) reached a milestone in June when the number of ISO 20022 corporate actions announcement messages it has distributed to banks, brokerages and other financial institutions surpassed the 100 million mark.

“The next milestone for the corporate actions transformation will come in the fourth quarter of 2013 when we begin testing in-bound instruction messages from clients,” said Rob Epstein, DTCC vice president, asset services. “This is a major development since it will be the first time clients will be able to submit their instructions for distributions events to DTCC in an automated fashion. Currently, these instructions are communicated to DTCC manually through terminal and browser interfaces. This represents a major gain in efficiency and risk reduction.”

DTCC, through its subsidiary, The Depository Trust Company (DTC), began distributing ISO 20022 announcement messages in November 2011 after a successful pilot with four leading corporate actions users. More than 30 clients are currently in the process of programming for the messages or are already processing the messages in their production environments.

Separately, SunGard has expanded its XSP business to build a presence in Singapore. SunGard’s XSP platform and XSPrisa Software-as-a-Service (SaaS) help broker-dealers, asset managers and financial services firms to eliminate traditional manual processing associated with corporate actions.

“SunGard’s XSP’s move to help improve corporate actions processing automation in Asia-Pacific comes at a time when the region is setting plans in motion,” said Virginie O’Shea, senior analyst at Aite Group.

Japan is planning to support ISO 20022 for issuer messages by June 2014 and the Australian Stock Exchange is currently working on its plan to mandate the use of ISO 20022 standards for issuers listing on the exchange, said O’Shea. Four additional countries-India, Thailand, Singapore, and Indonesia-are live on ISO standards and seven additional countries have projects in progress.

“As volumes and complexity of corporate actions increase, growing operational risk is being managed via costly manual processes,” said Harry Rana, director, business development, Asia-Pacific, SunGard’s XSP. “This is especially true in Asia, where the tendency has historically been to manage risk by increasing headcount rather than automation.”

SunGard’s XSP “delivers multiple advanced technology solutions to manage every critical step in the corporate actions lifecycle,” he said. “Our solutions increase firms’ levels of straight-through processing by reducing the need for manual intervention, thus minimizing the possibility of human error.”

The transition to ISO 20022 messaging is part of DTCC’s overall corporate actions transformation that will see standardized messaging and a new browser-based user interface replace the many legacy platforms that have evolved over the years.

In September 2012, DTCC launched a second corporate actions pilot program testing ISO 20022 messages covering the full entitlement and allocation lifecycle for distribution events. It began systemic client testing of these messages in February 2013.

DTCC clients are scheduled to transition to the new interface in the second quarter of 2014. The interface will ultimately incorporate all event types in one system and will cover the entire corporate actions lifecycle from announcements through instructions to allocations.

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