Rahul Agarwal, Head, TCS BaNCS Cloud for Asset Servicing

Corporate Actions, with accurate event information capture, still remains as one of the biggest challenges for Financial Institutions. Organizations are spending heavily on data collection, IT systems and the human resources to minimize the risks which may include huge opportunity costs, financial losses, and a loss of reputation.

Corporate Actions data is sourced from Data Providers. These data providers collect the event details from various sources including regulatory bodies, issuers, newspapers etc. and furnish these details in a variety of formats. 

As per standard market practice, FIs usually subscribe to two or more data sources and hence, they are left with the task of scrubbing the data received to arrive at the ‘golden copy’. To deal with this complexity, they deploy IT systems to identify the differences and rely on experienced professionals to make accurate interpretations and decisions under data discrepancies.

However, these challenges can be solved if the data collection is unified and regularized right at the source, with a globally centralized Corporate Actions Data Pool. Sourced by the market regulators and issuers themselves, the participants should be obligated to publish and certify the information in this pool. All FIs and interested parties could be allowed to view the Corporate Actions details as well as the certifying market regulators. This minimizes the need of data scrubbing and additionally, the use of a data dictionary could solve the interpretation issues. This transforms the whole activity into a two-step process –

  1. Connect to the data pool
  2. Download the certified data regarding the Corporate Actions event

But, is this just a fictional delineation or could there a real possibility? Cloud and Distributed ledger technologies could make it possible to have a distributed ledger of events on cloud with the Market Regulators acting as the Publishers. Multiple subscribers can link to this ledger and retrieve the information on a need-basis. Bringing all the regulators on to a single platform will remain a challenge due to the lack of coordination and motivation. However, since most of the FIs also hold reasonable influence on the governing bodies of these market regulators, they can be persuaded to create a consortium to share the data on corporate actions events, and other information such as the data on Securities. 

This approach has the potential to significantly reduce the associated risks and cost of operations for financial institutions.

Disclaimer: Views or opinions represented in this blog is based on author’s own research and does not represent TCS BaNCS

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Rahul Agarwal, Head, TCS BaNCS Cloud for Asset Servicing

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