BLOG — Aug 23, 2021
The ever-elusive ‘Golden Record’ continues to haunt all Corporate Actions functions
By Jatan Pathak
As the world of asset servicing becomes more global and diverse, the complexity of corporate actions is increasing with it. The ever-elusive 'Golden Record' continues to haunt all functions as we see some of the most complex bankruptcies, reorganization, and a very high volume of debt restructuring during the pandemic. At the same time, the operations teams managing these functions are looking to shift towards more analytical tasks necessitated by their front-office and portfolio managers (PMs). These two factors drive significant demand for outsourcing corporate actions functions, such as announcement capture.
While services in the market can produce an issuer golden record, the operations teams still must vet these records against their agents (custodians, sub-custodians, prime brokers) records to create a final golden copy. This process is highly time-consuming, as it requires chasing the agents for any missing records or data discrepancies, resolving these discrepancies, training teams, and creating the final golden copy as per the agreed operating processes.
Following a survey of our customers, it was clear to see that producing an issuer golden record can take between 40%-60% of an operations team's time based on the volumes and complexity of the corporate actions. There are also increased regulatory pressures with the Shareholder Rights Directive II (SRDII) and new tax regulations, requiring a timely, yet thorough review of corporate actions notices. The operations teams are continuously asked to do more with less, and they need a service that helps them manage these demands and challenges while augmenting their capabilities.
IHS Markit recognized this challenge and the need for a more customized solution and launched the Managed Corporate Actions - Agent Validation Service (AVS). AVS is tailored to meet the operation teams' demands and leans on our 18+ years of experience in the corporate actions announcement space. In addition, the service leverages our extensive relationship with the network of over 90+ agents.
IHS Markit works closely with our customers to understand their processes and create a solution that helps them maintain their internal service level agreements and standards. To meet their firm-specific requirements, customers can customize validation processes, deadline management, and narratives by markets and event types. The service allows customers to optimize their processes with the help of our experts while maintaining the agreed standards with the front office and PMs. Our managed services experts are highly specialized in understanding the nuances around the various markets, asset types, and corporate actions event types.
The service leverages our industry-leading Corporate Actions solution that brings together the power of our award-winning validated golden-source data, an industry-leading corporate actions processing platform, and a team of industry experts who work closely with customers to understand their processes around narrative scrubbing, tax breakdowns, data changes and makes recommendations. These recommendations create a set of procedures that help customers to improve their workflow and operational efficiency. AVS also provides unique reporting and insight into the custodian data and performance to help customers make better decisions.
In one recent engagement, our AVS team worked with a leading investment bank to transform their back-office corporate actions operations, onboarding over 250k+ securities across over 80+ markets and multiple asset classes. During our business process modeling, the teams agreed on over 150 standard operating procedures. This transformation allowed the bank to simplify its internal processes and reduce its internal processes from 255 to less than 10.
With IHS Markit's Managed Corporate Actions - Agent Validation Service, operations teams partner with a team of experts who understand what keeps them awake at night, how to augment and optimize their operational capabilities and reduce risks and costs associated with the growing demand of corporate actions.
Please visit our AVS webpage and speak to one of our Corporate Actions Managed Services experts for more information.