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“Invest, comply and reap the rewards” The new buzz words in Corporate Actions

“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….

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“Invest, comply and reap the rewards” The new buzz words in Corporate Actions

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  1. “Invest, complyand reap the rewards”The new buzz words in Corporate Actions John Falk ACSDA - Sao Paulo, 9th November 2006 20061109_ACSDA

  2. INVEST COMPLY REAP THE REWARDS 20061109_ACSDA

  3. Client Issuer’s Agent Market Data Vendors Depository/ Exchange Global Custodian Sub Custodian The chain… 20061109_ACSDA

  4. INVEST: cost 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? 20061109_ACSDA

  5. INVEST: building a business case 20061109_ACSDA

  6. 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 complexity INVEST: measuring risk Source: STP Magazine April 2005: Adam Stern & James Levi 20061109_ACSDA

  7. “We have to focus on how we are going to implement Standards, at the same time and in the same way, across all markets.” Michael Kempe - Euroclear Sibos Copenhagen 2005 COMPLY 20061109_ACSDA

  8. Standards STP Market Practice Securities Market Practice Group Create globally agreed market practice which, integrated with standards, will bring STP. 20061109_ACSDA

  9. National Market Practice Groups FI SE NO UK/IE DE NL DK BE FR TR LU ES JP CH US IL SG AU ZA A role for ACSDA? 20061109_ACSDA

  10. 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 20061109_ACSDA

  11. A world without SWIFTDifferent Standards, Messaging & Connectivity User Market Infrastructures 20061109_ACSDA

  12. Single Window from SWIFTReusing Standards, Messaging and Connectivity User Market Infrastructures 20061109_ACSDA

  13. MT 564 Notification MT 565 Instruction MT 566 Confirmation MT 567 Status MT 568 Narrative The five ISO 15022 CA message types 1,000 Sending and 3,000 Receiving, in 140 countries. 20061109_ACSDA

  14. Market Infrastructures DTCC GCA service London Stock Exchange Tokyo Stock Exchange SG Stock Exchange AU Stock Exchange Clearstream Canadian Depository Data Providers FT Interactive Data Telekurs WM Datenservice SWIFTNet Data DistributionData Providers on SWIFT 20061109_ACSDA

  15. SWIFTNet Proxy VotingRoles and Players Initiator Issuer Registrar/Transfer Agent Information provider CSD Stock exchange Proxy agency Market dataprovider Meeting notification process(via an information provideror not) Local market Custodian Proxy agency CSD Facilitator Custodian Proxy agency CSD Registrar/Transfer agent Voting process Investors Finalisation process Fund/investment manager Broker Insurance company 20061109_ACSDA

  16. 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 20061109_ACSDA

  17. 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 20061109_ACSDA

  18. “Automation of corporate actions delivers premier customer service, attracts more business and manages risk in a very, very complex process.” David Kane, JM Morgan Securities Sibos Copenhagen 2005 Conclusion 20061109_ACSDA

  19. and a date for your diaries Boston October 1-5, 2007 20061109_ACSDA

  20. “Invest, complyand reap the rewards”The new buzz words in Corporate Actions John Falk ACSDA - Sao Paulo, 9th November 2006 20061109_ACSDA

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