DTCC, SWIFT and XBRL US Unveil Case for Automating Corporate Actions
The Depository Trust & Clearing Corporation (DTCC), SWIFT and XBRL US have announced the results of a business case advocating a transformation in the way corporate actions announcements are communicated in the US, allowing investors to receive information on such corporate actions as mergers, dividends, stock splits and other events in a more timely, accurate and less costly way, directly as specified by the issuer or offeror.
The business case, developed with key stakeholders from across the corporate actions processing supply chain – issuers, intermediaries and investors – documents the existing announcement process, highlights current problems, and provides recommendations to solve those issues.
The recommendations call for, among other things, a single set of global standards for corporate actions processing, which, according to the business case, will bring greater accuracy, reduced risks and lower costs by improving transparency and communication between issuers and investors. A pilot programme will be initiated late this year to implement the recommendations and further evaluate costs and benefits, with participation from issuers, intermediaries and investors.
The business case makes clear that use of the global standards by issuers will allow them to provide their key messages directly to investors or potential investors without the delays or potential errors inherent in the reliance, under the current process, on interpretation by financial intermediaries. It also examines the complete corporate action process from announcement to completion, using a case study of Pfizer’s acquisition of Wyeth in 2009.
James Anderson, manager financial reporting at AGL Resources, said: “Implementing these recommendations would result in corporate action information that is computer-readable, eliminating the need for intermediaries to interpret and transform our messages into structured data. This allows us to remain in control of these important disclosures, and ensure they are communicated exactly as we intended. This enables greater transparency, accuracy and timeliness of our data that is extracted from regulatory filings and press releases that we issue, giving our shareholders more time to make decisions. We believe our investors and those who receive our corporate action information will embrace this initiative.”