SIFMA advises modernisation of US corporate actions
13 February 2023 US
Image: Sikov
SIFMA, in collaboration with Ernst & Young (EY), has published a report on the need for standardisation around corporate action announcements in the US, outlining objectives for a modern corporate actions environment and culminating in a call to action for the industry.
Findings of the ‘US Corporate Actions Standardization Position Paper’ emerge from a working group established by EY and SIFMA’s operations and technology committee.
The report begins by outlining the current state of the process, which has no standardisation or dissemination requirements for corporate announcements and data. Only an estimated 46 per cent of global event data is published and received manually, SIFMA says, leading to increased risk, raised expenses and investors having an incomplete understanding of corporate actions.
Following this, the paper provides a case study of the Australian Security Exchange’s (ASX’s) migration from manual processes to straight-through-processing, which created, in effect, a single source for corporate actions announcements that is accessible to all investors simultaneously. SIFMA argues that similar modernisation initiatives would be beneficial to the US market, and suggests partnering with listing exchanges to find effective solutions.
Tom Price, managing director and head of technology, operations and business continuity at SIFMA, says: “Corporate action announcements and event processing in the US have not undergone any significant changes over the past decade, despite advances in technology and regulation of our financial markets.
Corporate actions materially impact shareholders, and it’s critical to investors that the dissemination of announcements to the market is accurate, timely and trustworthy, particularly as the industry works to accelerate the settlement cycle to T+1.”
“Transforming the corporate action lifecycle may require additional regulations governing the timing of notifications, submissions, disclosures and supporting activities, along with critical industry input.”
Findings of the ‘US Corporate Actions Standardization Position Paper’ emerge from a working group established by EY and SIFMA’s operations and technology committee.
The report begins by outlining the current state of the process, which has no standardisation or dissemination requirements for corporate announcements and data. Only an estimated 46 per cent of global event data is published and received manually, SIFMA says, leading to increased risk, raised expenses and investors having an incomplete understanding of corporate actions.
Following this, the paper provides a case study of the Australian Security Exchange’s (ASX’s) migration from manual processes to straight-through-processing, which created, in effect, a single source for corporate actions announcements that is accessible to all investors simultaneously. SIFMA argues that similar modernisation initiatives would be beneficial to the US market, and suggests partnering with listing exchanges to find effective solutions.
Tom Price, managing director and head of technology, operations and business continuity at SIFMA, says: “Corporate action announcements and event processing in the US have not undergone any significant changes over the past decade, despite advances in technology and regulation of our financial markets.
Corporate actions materially impact shareholders, and it’s critical to investors that the dissemination of announcements to the market is accurate, timely and trustworthy, particularly as the industry works to accelerate the settlement cycle to T+1.”
“Transforming the corporate action lifecycle may require additional regulations governing the timing of notifications, submissions, disclosures and supporting activities, along with critical industry input.”
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