Corporate Actions is the Lifeblood of Investment
Mark Woolfenden and Jonathan Bloch discuss the challenges companies face to get timely corporate actions which are essential for markets to function properly and how they are coming together with a new solution.
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What are Corporate Actions & why are they important?
Corporate actions are activities undertaken by a company, generally approved at board level and sometimes with the agreement of shareholders. Corporate actions include dividend distributions, M&A activity, rights offerings, and bankruptcy, among many others.
There are two types of corporate actions flag that have an impact on a company. Mandatory affect boards of directors and shareholders, for example, De-mergers, Dividends, Name Change, etc. Voluntary involves a meeting where the shareholders vote, for example, Buybacks, Class Actions, Takeovers, etc.
They are among the most important forms of information available to investors and other market participants about the underlying performance and trajectory of that company.
Original Source Access is Key
Timely information on corporate actions is essential for markets to function correctly. Investors need complete and accurate information about the securities they are holding, and corporate actions associated with a material change in the security in question might also necessitate action on the part of the investor. For example, there may be an immediate trade made based on the corporate action, or (in the case of institutional investors) a need to communicate new information to clients.
Some corporate actions may not have a material impact on the security, but they are critical, nonetheless. In particular, institutions must be mindful of changes in symbology as a result of mergers or acquisitions.
More broadly, market participants need to know that they are acting on the most up-to-date information, not only in order to execute an investment strategy as planned but also to fulfil their record-keeping, regulatory, and client-facing obligations.
Access to the original source of the corporate action is also vital, as without this, it is impossible to prove the accuracy of the information being acted upon. From a regulatory perspective, it is incumbent upon companies to show proof of validity of their actions. And without being able to access the original source of a corporate action, the potential for simple misunderstandings increases dramatically. Easy access to a trusted ‘single source of truth’ is therefore essential.
ETD and EDI are solving corporate actions
Despite their importance, there are major challenges for market participants seeking access to corporate action information. In response, ETD and Exchange Data International (EDI) have launched Corporate Actionson the instant access portal “ViewXone” a comprehensive solution for timely corporate action data.
ViewXone brings to bear the firms’ combined expertise in reference data and service provision. A single client portal offers real-time access to corporate action feeds, along with multiple notification options. Critically, though, ViewXone integrates fully within institutions’ existing workflows, enabling investors to not only access information but also to act on it. Seamless integration allows our clients to monitor, synthesise, and act on corporate actions rapidly.
Corporate Actions is the lifeblood of investment, and ViewXone provides the conduit through which derivatives corporate actions flow.