The International Securities Lending Association (ISLA) has decomplexified corporate actions in preparation for the upcoming Securities Financing Transactions Regulation (SFTR).
This follows the comment made in ISLA’s ‘Reflections of a CEO’ where Andrew Dyson stated that the association was starting to look more closely at the handling of corporate actions in the context of securities lending, notably SFTR, where ISLA is developing a pan industry consensus of booking processes to overcome the as yet unfathomed regulatory reporting obstacles.
Since then, ISLA has held four working group meetings with the objective to determine SFTR specific best practice for all existing corporate action types.
The group aims to agree industry booking models which enable SFTR compliant reporting, and develop universal procedures for processing and communicating corporate actions (CAs) across all Securities Finance Transaction (SFTs) asset classes and jurisdictions.
Through consensus agreement with industry members the working group has formed a distinct list of all CAs, aligned with the ISO 15022 (SWIFT) and 20022 (STP) standards.
As well as this, they have determined attributes and effects on SFTs, reviewed groups of CAs which can be processed similarly, and confirmed CAs which have no material effect on SFTs.
In next week’s meeting, the group will discuss the best practice discussions for the first cluster of CAs: ‘Full or Partial Returns’, and two further meetings per month are then planned through Q3 2019.
Specific issues highlighted to date which influence the future CA discussion include unique trade identifier (UTI) generation for CA bookings and trade timestamp (and event date) matching for CA bookings.
Additionally, fractional rounding issue for non-cash dividends and non-tradable securities and other ineligible stock are also included.
The SFTR Corporate Actions Working Group is managed by James Langlois, Richard Colvill, and Adrian Dale, and ISLA encourages all member firms to participate.
