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Corporate Actions - Are you ready for that unlimited loss

29 November 2016 - by Mark Lowe

The Corporate Actions department by definition is not something that any financial institution wants to invest in. Corporate Actions is very rarely a “Trading Strategy” nor is it a money making engine for any financial institution. Yet the Corporate Action team exists everywhere because if your client holds stock then they have to be made aware of any Corporate Action on that stock.

Supposing they hold 10,000,000 shares in a company going through a Warrants Exercise or even just a Dividend Reinvestment Plan. Then supposing you as an institution get that election wrong.  If this was ever the case then you could be looking at an “unlimited loss”, not only financially but imagine the man hours to put everything right.  The man hours to go through the post-mortem of what went wrong and why it went wrong and how it will not go wrong in the future. Institutions have been looking at straight through processing for corporate actions for decades. It is not a new thing, it is not revolutionary. Straight through processing with regards to handling corporate action files has been the “end game” for many an institution for many a year. And whilst the “big boys” may have proprietary traders bouncing corporate action elections onto the Corporate Action teams screens, what about the election from old Mrs Smith from down the road who still prefers to do everything by paper? The Corporate Actions revolution is a long time coming and it is a long time off.

The Corporate Action Pathway Audit sets you on the right path, it will highlight the weaknesses and get you “match fit” for the ever changing world of Corporate Actions.

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