Corporate Actions Processing Gets Facelift

Terry Flanagan

Corporate actions processing is undergoing a transition to an international messaging standard spearheaded by Depository Trust & Clearing Corp., which plans to adopt ISO 20022 industry-wide standard messaging.

“ISO 20022 is a DTC reengineering effort that will be mandatory for all users in 2015,” said Henry Napier, vice president of corporate actions processing at Industrial and Commercial Bank of China Financial Services (ICBCFS). “DTC is focusing on streamlining corporate actions notifications both globally and domestically, and have all corporate actions data available on one screen. This change is very dramatic.”

ISO 20022 messaging includes enhanced data elements to help improve identification and representation of corporate actions events, thereby mitigating the risk of misinterpretation of data and ultimately enabling greater straight-through processing.

ICBCFS is using SunGard’s XSPrisa system on a software-as-a-service basis to process corporate actions in the new ISO 20022 messaging standard.

“We at ICBCFS thought it would be prudent to be an early adopter of the reengineering project,” said Napier. “We decided to work with SunGard to streamline the effort. This not only allows us to gain early knowledge of the project, but it also allows SunGard to inform their other clients that they’re ready as well.”

Prior to licensing XSPrisa, ICBFCS prepared and processed all corporate action events manually. It relied on daily reports which produced all trade and settlement positions. These positions were compared against nightly feeds from various vendors, and scrubbed manually to confirm if and what type of event occurred.

“Once we gathered the event details and compared them against our client positions, we would confirm details against DTC, Bloomberg, Swift, and send e-mails to each client outlining the details of events,” Napier said. “Our biggest concern was making sure all clients were contacted. SunGard took on our files from DTC without us ever having to see them, which relieved us of that responsibility.”

With the advent of ISO 20022 messaging support, DTCC users will be able to submit instructions using standardized messaging to DTCC for the first time.

As SunGard completes its planned development work, its customers will be able to manage the entire corporate actions processing lifecycle and therefore eliminate the need for multiple systems. There will no longer be a need for one system to process the corporate actions and another system for submitting election instructions to DTCC.

“The DTCC reengineering initiative is a key focus for SunGard’s XSP division. We are working with our customers to help them manage the required systems changes before DTCC’s 2015 deadline for transitioning to ISO 20022,” Brendan Farrell, executive vice president at SunGard’s XSP, said in a press release. “For XSP customers, SunGard is taking the lead and automating this effort.”

DTCC’s Corporate Actions Transformation project will be implemented in phases over the course of the next several years. The goals of the multi-year transformation project are to upgrade and replace many of the legacy systems that currently support corporate actions at DTCC.

“With the number of ISO 20022 corporate actions announcement messages surpassing the 250-million-reference mark, DTCC continues to work directly with clients as well as solution providers to help industry participants manage the soaring volumes and increasingly complex events,” Daniel Thieke, DTCC managing director and general manager, Settlement & Asset services, said in a statement.

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