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Challenges in a changing corporate actions landscape

Every link in the servicing chain is re-considered or re-evaluated in a post-T2S environment model. Post-trade industry is facing a changing landscape where the different actors are evaluating their future roles and business models. These were some of the challenges discussed earlier this week in CorpActions 2013 in London.


The agenda covered discussions on standardisation, corporate action data, and operational efficiency balanced again risk control and implications of regulatory initiatives and T2S. Andreas Lundell, Product Manager at Euroclear Sweden took part in the CorpActions conference and of this very ambitious agenda.

Andreas, the conference had an ambitious agenda, what is your main conclusion based on the different discussions?


-From my perspective the most interesting conclusion is that the custodian community is increasingly realising the importance and the difficulty in engaging issuers in the corporate action data creation and dissemination process.

This is an area where we in the Nordic have a major advantage with our existing relationship with issuers in combination with the current web-interface, says Andreas Lundell.

Where are the major challenges in Corporate Actions automation?


-The key challenge, as I see it, is accurate and reliable CA-data and more specifically to get the issuers on board as they are the source of the information. This is highlighted by the general divergence between issuers’ needs for flexibility and the securities industry’s strive for standardisation and harmonisation.

-Another major challenge for automation is the lack of legal harmonisation of company law and tax legislation, which preserves many of the local peculiarities, says Andreas Lundell.

 

Which impact will forthcoming regulations and T2S have on the corporate actions and asset servicing fields?

-As the asset servicing is currently a changing landscape where the different actors are evaluating their future role and business model, it is too early yet to state any firm views on the impact. One interesting conclusion from the conference was that, as T2S and CSDR will lead to an unbundling of custodians’ services, they would need to more specifically identify the cost relating to CA processing and the risk connected to it.

-Another view expressed during the conference was that consolidation among CSDs as well as among custodians will be inevitable facing the wave of regulations and investments needed for T2S adaptations. What can be identified so far is that many of the regulations and T2S will accelerate adoptions to standards even though CA processing as such will be handled outside of T2S, Andreas says as closing comment.

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