21 February 2017
Visit EBAday.com

Corporate actions impact trading, share prices - study

18 May 2006  |  9930 views  |  0 zeroes

Even routine corporate actions events can have a significant impact on share prices and trading activity, according to research conducted by consultancy Oxera and sponsored by the Depository Trust & Clearing Corporation (DTCC).

The report studied five corporate action event types - takeovers, stock splits, spin offs, rights issues and exchange offers - and how they impacted share prices and trading activity.

The study found that corporate actions have potentially strong effects on share prices and trading activity, although these effects depend on the type of corporate action and the particular point in the corporate action processing cycle. According to the study, takeovers, spin-offs, stock splits and rights issues have the strongest effects, while exchange offers have only a limited impact.

James Femia, managing director, DTCC global corporate actions, says the study highlights the need for firms to make sure that trading desks have access to accurate, timely data on corporate actions in order to execute proper trading strategies.

"What this study demonstrates is that trading can be significantly impacted by even routine announcements, and that organisations need corporate actions information quickly and accurately throughout their operations," he says.

The results of the Oxera survey will be used to develop the DTCC's existing Global Corporate Actions Validation Service.

Femia says trading desks are increasingly pushing for better and more timely data on corporate actions and the DTCC is working on a new service that has an emphasis on speedy delivery of initial announcements information that is customised for trading desks, even if all the data hasn't been verified or completed.

"Traders and investors need early visibility of events. They can't necessarily wait until all the details of the event have been validated and verified," says Femia.

Earlier this week a new working group - jointly chaired by the British Bankers' Association (BBA) and CrestCo - was established to ensure that firms in the UK comply with new pan-European corporate action standards.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

DTCC hires Tata for corporate actions overhaul

DTCC hires Tata for corporate actions overhaul

15 November 2005  |  10194 views  |  0 comments
JPMorgan puts corporate actions documents on the Web

JPMorgan puts corporate actions documents on the Web

08 June 2005  |  6198 views  |  0 comments
Singapore Exchange to distribute corporate actions via Swift

Singapore Exchange to distribute corporate actions via Swift

08 April 2005  |  6331 views  |  0 comments
CSFB signs to DTCC corporate actions service

CSFB signs to DTCC corporate actions service

01 March 2005  |  7279 views  |  0 comments
Clearstream talks up corporate actions

Clearstream talks up corporate actions

18 January 2005  |  5337 views  |  0 comments
LSE delivers corporate actions data over Swift

LSE delivers corporate actions data over Swift

16 August 2004  |  8476 views  |  0 comments
DTCC issues blueprint for automating corporate actions

DTCC issues blueprint for automating corporate actions

18 June 2003  |  5248 views  |  0 comments
DTCC launches global corporate actions service

DTCC launches global corporate actions service

25 April 2003  |  4174 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
Visit contisgroup.comVisit capgemini.com

Top topics

Most viewed Most shared
IBM and Visa join forces to turn billions of connected devices into points of saleIBM and Visa join forces to turn billions...
17108 views 11 comments | 53 tweets | 87 linkedin
Nesta launches £5 million Open API challengeNesta launches £5 million Open API ch...
10328 views comments | 21 tweets | 19 linkedin
Jaguar embeds payments into digital dashboardJaguar embeds payments into digital dashbo...
10249 views comments | 49 tweets | 58 linkedin
The fintech effect: Banks buy in to benefits of boosting financial well-beingThe fintech effect: Banks buy in to benefi...
9244 views comments | 17 tweets | 12 linkedin
Kevin the bot uses blockchain to offer insurance for P2P transactionsKevin the bot uses blockchain to offer ins...
8321 views comments | 17 tweets | 14 linkedin

Featured job

Six Figure Base + Commission + Stock Options
London

Find your next job