Businessman with a bicycle in office

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.

To find out more contact us or why not sign up for a free trial to see how you can get Corporate Actions instantly on your desktop.

Brief Summary

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.

Share

Related Insights

  1. Simon Coughlan, ETD technology director and Matthew Cheung, CEO of ipushpull discuss the evolution of chatbots, the development of the TaDa chatbot, and where the technology will go from here.
  2. As CFOs plan for the year ahead, here are three key FX trends that are likely to affect the way in which fund managers oversee their currency exposures in 2023.
  3. Article
    Over the last decade, new regulations have been introduced in an attempt to harmonise reporting.