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In difficult times, why make corporate actions hard to handle too?
John Regan, senior product manager, Master Data Services, FIS
May 28, 2020
For some years now, the world of corporate actions has been growing significantly in size and complexity. So, what happens when a global health crisis hits this already overstretched back-office function – and how can investment operations teams best get through the multi-national lockdown?
Once, long before the coming of COVID-19 – and even before the financial crisis – corporate actions events, dividends aside, happened mainly in smaller companies and local markets. Today, increased global regulation and corporate oversight make events much more complicated.
In addition to being complicated, corporate actions are also confusing and reactionary, which makes it difficult to anticipate what types of events are going to be announced. And although digital technology vendors are making great strides to automate the corporate actions process, the constant data flux can be challenging to handle.
In particular, it can take operations teams a long time to check the details of announcements and cleanse or “scrub” the data – up to 60 percent of their working day, according to the clients I speak to. And that’s when they’re working in a fit-for-purpose, high-tech office environment, with large workstations and superfast broadband connections to support their research.
Transfer this process to lockdown conditions and it may take even longer. More importantly, it will waste hours that homeworking staff could better spend on more pressing matters, whether work or personal.
Ultimately, the cleansing of corporate actions data adds zero value for asset managers, broker-dealers and trust companies. All of these institutions will be processing exactly the same information on dividends and the like, which only adds to the inefficiency.
In these difficult enough days, the team behind FIS’ XSP corporate actions solution has found a way to win back our clients’ time from low-value data scrubbing tasks. Working closely with our own data partners, we’re offering to deliver a free feed of fully cleansed corporate actions data straight to home offices, through our XSPertise outsourcing service.
With our hosted, web-based workflow software, clients can already work on corporate actions from wherever they choose, making it ideal in uncertain times. Now, via the same internet connection, the updated data feed will be delivered straight to their home computers every weekday morning, too.
Rather than spending around 60 percent of their time verifying corporate actions announcements, participating clients will only need to set aside approximately 5 percent of their day for cleansing data. That will mean processing most events in five or 10 minutes, not half an hour.
Corporate actions are complex enough at the best of times. When the going gets tough, shouldn't we make life simpler wherever we can?