Find out how by using the the right supplier of corporate actions reports, financial firms can turn mountains of data into actionable insights.
- In today’s volatile markets, financial firms require data that is cleaned, tagged, and standardized, and they need it fast.
- The main purpose of corporate actions reports is to help financial firms analyze investment risk. They can also be used to help in other ways, such as helping firms to consider reputational risk and to manage notification data.
- Best practice for financial firms to get the most out of corporate actions data includes: global coverage in a streamlined, standardized format; industry-standard ISO 15022 delivery; and best-in-class data that is constantly refreshed with intra-day updates.
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While both the volume and the complexity of corporate actions reports continue to accelerate around the world, progress toward standardized reporting requirements is still moving at a glacial pace.
Caught in the middle of these opposing forces are financial services firms, which are being buffeted by heightened uncertainty and volatility in global markets.
To effectively compete in today’s markets, firms need more than accurate data.
They need it delivered cleaned, tagged, and standardized so they can easily spot the links, relationships, and connections that enable swift action. And they need it delivered on a platform that is flexible enough to integrate easily with their proprietary data and trusted third-party feeds.
Most important: They need all of that — fast.
Navigating the new risk landscape
Helping firms manage investment risk is at the heart of corporate actions reports.
Knowing when a company plans to offer or raise a dividend, undertake a merger or acquisition, spin off an underperforming division, or take some other action is critical for financial services firms trying to mitigate exposure and effectively manage operational risk.
This information is especially important during times of economic uncertainty and market volatility, as we’ve experienced in the wake of the global COVID-19 pandemic.
After the massive sell-off that began in March 2020, when the World Health Organization declared a pandemic, the U.S. and most of the major international equity markets have rebounded
Looking ahead, though, there is little clarity about when and how economies will begin to recover after the virus is finally eradicated. Understanding how corporations are responding to these ongoing economic pressures will be key to successfully navigating this uncharted territory.
Still, investment risk is only one consideration. Financial services firms also need to consider their reputational risk.
Unhappy customers and disgruntled shareholders are increasingly using social media to broadcast even the smallest complaint.
In today’s fiercely competitive financial services industry, forward-thinking firms are replacing inefficient and expensive manual processes with automation to reduce errors and speed up operations.
Leveraging the right technology to effectively manage notification data can help ensure nothing falls through the cracks.
For example, machine learning can see to it that masses of semi-structured and unstructured action notification reports are progressively tagged and ranked more effectively for analyst review.
Finally, firms need to consider the impact of tightening oversights. Regulators across every major market are focusing on transparency in all aspects of corporate governance. At the same time, legislation governing the industry has grown in both scope and complexity, while the penalties for falling short are also increasing.
End-to-end clarity and consistency
Consistency is key when trying to use data to identify and capture market opportunities. Each time you try to cobble together streams from multiple sources using different formats and identifiers, you introduce wiggle room for conflicting interpretation by data providers, which erodes the usefulness of the information.
Dividends, for example, are announced in free-form text, and every company reports dividends at the same time.
If analysts have to search through multiple data sources using different formats, they could end up combing through dozens or hundreds of documents at a time. Those documents will need to be normalized, scanned and graded, requiring manual intervention, which amplifies support costs and magnifies risk.
Notification data are most valuable when they’re delivered through a consolidated hub for broader use across the entire organization.
Consider even the rudimentary activity of a stock consolidation: That single action can exert ripple effects upon valuation prices, share rallies, board lots, international securities identification numbers (ISINs), and so forth. As a result, a consolidation can simultaneously impact position valuations, regulatory holdings disclosures, and even basic asset identification.
Using the best available data with consistent identifiers, users can capture corporate actions data once and apply it across disparate models, reducing the potential for confusion and lowering overhead costs.
Best practices for corporate actions reports
A sea change in corporate actions reporting would mean formats that are well maintained and well understood.
If all providers supplied consistent distributions, we’d be much closer to straight-through processing. Until that happens, though, financial firms will continue to struggle with the inevitable anomalies and variations in layouts that are inherent when collecting information from different inputs.
Here are five ways that the right data source can help to make the most out of corporate actions data.
- Global coverage in a streamlined, standardized format
Today’s diverse markets and economies are inextricably linked. To keep up with the global economy, you need a single-source data stream providing consistent information and analysis across all major markets.
- Best-in-class data that is constantly refreshed with intra-day updates
Time is money, and the speed of change is accelerating. You need a data feed that continually refreshes itself, delivering up-to-the-minute information from around the world.
- An API-driven platform for smooth integration with existing systems
To get the most out of your data, you need a complete solution that can support multiple processing activities across your enterprise. It also needs to be customizable so that you can integrate the data you need in a way that works for your business.
- Industry-standard ISO 15022 delivery
You need content that covers ISO, non-ISO events and extensive historical corporate actions data, allowing you to manage all of your data efficiently through a single source.
- Transparency and an audit trail to meet compliance standards
You need an expert in holdings disclosure information that can offer a specialized data package of approximately 160 shares, voting rights, and reference facts.
Whether you’re a portfolio manager who needs to view performance and referential data, a fund administrator who requires large quantities of cross-asset pricing data on a fixed schedule, or a user who wants to make market data visible on your intranet, accessing reliable data about corporate actions is crucial for your business.
With Refinitiv’s variety of packages and delivery platforms, you can integrate the data you need in the format that works best for you.