A new report from Aite Group, LLC examines corporate actions, including the steps necessary to successfully complete a corporate action.
The report looks at the different ISO messaging standards now being applied to corporate actions, the different market practice groups who are working to standardize corporate actions messaging, and the critical requirements a firm should examine before selecting a corporate actions application.
The recent increased regulatory attention on corporate actions has brought them from being a “back-office” concern to having an impact that can be felt throughout an entire firm, from front-office trading strategies to risk and compliance. Manual processing significantly increases the risk of failure in handling a single, complex corporate action with potential losses running into the tens of millions of dollars, and the growth of structured products, both in Europe and the United States, has driven back office operational processes towards more complex territory.
Any system which promises to streamline and reduce risk will become a key component of the operational landscape in financial services. Recently, new messaging standards in the form of ISO 15022 have come about, to help standardize communications between parties involved in the corporate actions process.
“Corporate actions have long been a neglected area of back office operations, but greater regulatory attention is driving firms to seek ways to reduce risk and increase straight through processing. Executed well, corporate actions provide firms with significant efficiency gains, and a competitive advantage through better client service,” says Philip Silitschanu, senior analyst and author of the report.