Utility offering single source of corporate actions data should be created
Asset managers would benefit from the creation of an industry utility offering a single source of accurate and timely corporate actions data, according to SWIFT.
Investment managers often complain that corporate actions’ data derived from various counterparties, including custodian banks and data vendors, can be wildly different which creates complications around reconciliations and validations.
“I believe asset managers would welcome a uniform standard around corporate actions provided by an industry utility. This would create operational efficiency and help asset managers lower their costs, and ultimately benefit end investors,” said Olivier Lens, head of funds and investment management for Europe, Middle East and Africa (EMEA) at SWIFT, speaking at the SWIFT Business Forum in London.
A lack of standardised message templates for corporate actions stifles automation. A SWIFT survey - Operational Challenges Facing Investment Managers in 2015 – said some fund managers received corporate actions data from up to 30 custodians and data vendors, meaning there can be up to 30 different or conflicting data sets. As such, some firms devote a huge number of internal operational resources to consolidate this data and re-convert it back into multiple instruction sets.
More than 70 per-cent of managers surveyed by SWIFT said they would like to see a utility providing assured and verified corporate actions for all publicly announced corporate actions. “Having a single source of corporate action data would certainly reduce the error and cost rate for asset managers, and enable firms to process the information in a timely manner. Having all of these different formats ultimately increases the complexity of corporate actions,” commented Lens.
The bulk of managers surveyed by SWIFT said a trusted utility would not work unless regulators imposed “a binding set of rules on issuers and their advisers to publish corporate actions in standardised formats that can be automated.”