“invest, comply and reap the rewards” the new buzz words in corporate actions
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“Invest, comply and reap the rewards” The new buzz words in Corporate Actions. John Falk. ACSDA - Sao Paulo, 9 th November 2006. INVEST COMPLY REAP THE REWARDS. Client. Issuer’s Agent. Market Data Vendors. Depository/ Exchange. Global Custodian. Sub Custodian. The chain…. - PowerPoint PPT PresentationTRANSCRIPT
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ACSDA - Sao Paulo, 9th November 2006
“Invest, complyand reap the rewards”
The new buzz words in Corporate Actions
John Falk
Slide 2 20061109_ACSDA
INVESTINVEST
COMPLYCOMPLY
REAP THE REWARDSREAP THE REWARDS
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The chain…
Depository/Exchange
Client
Issuer’s Agent
Market Data Vendors
GlobalCustodian
Sub Custodian
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INVEST: cost benefit analysiscost benefit analysis
Budget approval starts with a business case specifying the Cost-Benefit-Analysis and Return on Investment
But, how do you measure potential risk?
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INVEST: building a business casebuilding a business case
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INVEST: measuring riskmeasuring risk
External risk factors
– Corporate action type
– Country of issue/issuer
– Price volatility
– Default options
Internal/proprietary factors
– Agent performance
– Levels of STP for corporate actions processing
– Number of accounts
– FX exposure, level of stock lending activity, tax complexitySource: STP Magazine April 2005: Adam
Stern & James Levi
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““We have to focus on how we are We have to focus on how we are going to implement Standards, at the going to implement Standards, at the
same time and in the same way, same time and in the same way, across all markets.”across all markets.”
Michael Kempe - Euroclear Michael Kempe - Euroclear Sibos Copenhagen 2005Sibos Copenhagen 2005
COMPLY
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Securities Market Practice Group
Create globally agreed market practice which, integrated with standards, will bring STP.
STP
StandardsStandards
Market PracticeMarket Practice
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National Market Practice Groups
US IL
UK/IEDK
NO
TR
SG
AU
FRJPCH
DE
ES
FI
BELU
NL
SE
ZA
A role for ACSDA?
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SMPG
Market Practice means
– No requirement for bilateral implementations
– Develop once and use with everyone Success of Corporate Action
implementation depends on adherence to Market Practice
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A world without SWIFTDifferent Standards, Messaging & Connectivity
MarketInfrastructures
User
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Single Window from SWIFTReusing Standards, Messaging and Connectivity
MarketInfrastructures
User
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The five ISO 15022 CA message types
MT 564MT 564 Notification Notification
MT 565MT 565 InstructionInstruction
MT 566MT 566 ConfirmationConfirmation
MT 567MT 567 StatusStatus
MT 568MT 568 NarrativeNarrative
1,0001,000 Sending and Sending and 3,0003,000 Receiving, in Receiving, in 140140 countries. countries.
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SWIFTNet Data DistributionData Providers on SWIFT
Market InfrastructuresMarket Infrastructures
DTCC GCA service
London Stock Exchange
Tokyo Stock Exchange
SG Stock Exchange
AU Stock Exchange
Clearstream
Canadian Depository
Data ProvidersData Providers
FT Interactive Data
Telekurs
WM Datenservice
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InitiatorInitiator
Information Information providerprovider
Local Local marketmarket
FacilitatorFacilitator
InvestorsInvestors
Issuer Registrar/Transfer Agent
Market dataprovider
Stock exchange
CSD
Proxy agency
Custodian Proxy agency
Proxy agencyCustodian
Broker Fund/investment manager
CSD
CSD
Registrar/Transfer agent
Insurance company
SWIFTNet Proxy VotingRoles and Players
Meeting notification process(via an information provideror not)
Voting process
Finalisation process
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Value/Benefits for the industry
Reduction in risk associated with errors Cost savings Streamlining and standardisation of deadlines Audit trails/transparency Volume insensitiveness Future proofing to comply with regulatory
requirements Ability to integrate new customers/agents rapidly
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Reap the rewards
Move from “management by review” to “management by exception”
Greatly improved visibility into exceptions Audit trail greatly improved Prioritisation by date and market value to
determine resource Reduced errors
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Conclusion
““Automation of corporate actions Automation of corporate actions delivers premier customer service, delivers premier customer service,
attracts more business and manages attracts more business and manages risk in a very, very complex process.”risk in a very, very complex process.”
David Kane, JM Morgan Securities David Kane, JM Morgan Securities Sibos Copenhagen 2005Sibos Copenhagen 2005
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and a date for your diaries
BostonOctober 1-5, 2007
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ACSDA - Sao Paulo, 9th November 2006
“Invest, complyand reap the rewards”
The new buzz words in Corporate Actions
John Falk