The appetite for corporate actions data is growing, driven by the increasing complexity within events themselves and the changing consumption patterns of event data.
Firms need to have access to high-quality corporate actions data delivered in a format that can be seamlessly integrated into their financial systems and applications.
If institutions cannot effectively process corporate actions, or if the information that they monitor is not timely or accurate, they could miss out on important investment opportunities or make a decision based on flawed or out-of-date information.
“The changes required to enhance corporate actions processing and distribution have been discussed at great length,” said Charlie Price, senior director in pricing and reference data at Interactive Data Corp., in a blog. “Yet despite the well documented inconsistency issues that create unnecessary delays and increase the risk of event misinterpretation, changes to practices have, to date, occurred at a relatively slow pace.”
However, with the industry endeavoring to promote efficient financial markets, there is an increasing appetite to transform corporate actions processing.
OTC Markets Group and Exchange Data International (EDI) has launched an OTC Corporate Actions Data Service which will provide corporate action data for companies trading on the OTCQX, OTCQB and OTC Pink marketplaces, including data on the underlying securities for American Depositary Receipts (“ADRs”) and foreign ordinaries traded in the U.S. market.
In addition to standard corporate action data such as symbol changes and dividend announcements, the service will provide information on actions initiated by depository banks including book closings and openings.
“The OTC Corporate Action Data Service provides a simple, cost-effective way for market participants and investors to mitigate trading risk associated with corporate actions,” said Matthew Fuchs, managing director of market data and strategy at OTC Markets Group. “Corporate action information on underlying securities and depository bank actions will provide investors a more complete data set for decision making.”
Interactive Data tracks numerous sources daily to collect and validate information to create a composite record of each event. These events are tracked throughout the lifecycle of the corporate action, providing critical updates and amendments as they are announced. The company’s global data collection team uses a wide range of sources, including corporate filings, exchange feeds, transfer agents, newswire services and other informative sources.
Relatively simple corporate actions, those that account for around 90 percent of overall volumes, have become more complex as shareholders can now elect to receive dividends in a variety of foreign currencies.
Also, new types of corporate actions continue to emerge and at an increasing rate, creating a greater variety of mandatory and voluntary events. An example would be a ‘multi-legged’ spin-off, where the holder receives more than one new stock or security with respect to the stock already owned.
“These more intricate event types often contain terms and conditions that can be highly complex and require particular expertise to avoid any misinterpretation,” Price said. “When these events are cross-border transactions they can also involve a large number of custodians and other intermediaries with differing terminology and practices.”
